Jump in Facebook Q4 revenue as ad sales soar

Facebook's headquarters in Menlo Park, California. Fourth-quarter sales for the company rose to US$5.84 billion (S$8.34 billion). About 80 per cent of that came from mobile devices.
Facebook's headquarters in Menlo Park, California. Fourth-quarter sales for the company rose to US$5.84 billion (S$8.34 billion). About 80 per cent of that came from mobile devices.PHOTO: EUROPEAN PRESSPHOTO AGENCY

SAN FRANCISCO • Facebook is turning into a well-oiled ad machine.

The world's biggest social network notched up another record period, with fourth-quarter sales jumping 52 per cent as the company capitalised on its reams of user information to serve up more ads. The shares rallied 12 per cent.

The company now has 1.59 billion users who log into the service every month, especially on smartphones and tablets. That expansion in turn generates more profit, giving Mr Mark Zuckerberg leeway to invest in the company's future.

On a call with investors on Wednesday, the chief executive officer spent most of his time talking about virtual reality, artificial intelligence and connecting the rest of the world to the Internet. While those initiatives will not contribute meaningfully for years, they are aimed at making sure that more people put Facebook at the centre of their digital lives.

Marketers are flocking to Facebook because of its knack for getting well-targeted ads in front of consumers. The same technology is now being deployed across Instagram, which just marked its first full quarter of ad sales across international markets.

Fourth-quarter sales rose to US$5.84 billion (S$8.34 billion), compared with the US$5.37 billion average analyst projection. About 80 per cent of that came from mobile devices.

Not only is Facebook adding users and advertisers, it is also putting more marketing messages in front of people. While the social network has been careful about overloading news feeds, it was able to boost the percentage, or ad load, in the latest quarter.

Facebook said it would stick with this strategy, by making sure that ads are targeted, specific and relevant, blending in with what people would see in their feeds.

Mr James Cakmak, an analyst at Monness Crespi Hardt, said: "Facebook remains the fastest-growing platform for advertiser spending, and as they open up new channels for users, that won't change."

Fourth-quarter profit more than doubled to US$1.56 billion, or 54 US cents a share, from US$701 million, or 25 US cents, a year earlier. Profit excluding some items was 79 US cents a share, beating analysts' average prediction of 68 cents.

Facebook shares climbed to US$105.87 in extended trading. The stock, which rose 34 per cent last year, has not been immune to this month's global equity sell-off, and is down 9.7 per cent this year.

Facebook has also been pushing to get more revenue from international markets - especially in Asia, where Instagram now advertises. Revenue from Asia jumped 19 per cent from the prior quarter to US$846 million, accelerating from an increase of 14 per cent in the third quarter.

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A version of this article appeared in the print edition of The Straits Times on January 29, 2016, with the headline 'Jump in Facebook Q4 revenue as ad sales soar'. Print Edition | Subscribe