Facebook profit dips, revenue surges on mobile ads

The world’s biggest social network said revenues surged 39 per cent on big gains in ad revenues.
The world’s biggest social network said revenues surged 39 per cent on big gains in ad revenues.REUTERS

SAN FRANCISCO (AFP) - Facebook reported a dip in its quarterly profit Wednesday but said revenues surged on mobile advertising gains, as its user base neared 1.5 billion.

The world’s biggest social network saw higher expenses cut into its bottom line, as it invests in new technologies and seeks to build a “family” of applications.

Net profit for shareholders dipped nine percent from a year earlier to US$715 million (S$976 million).

But total revenues surged 39 percent to US$4.04 billion on big gains in ad revenues, chiefly from paid messages delivered to mobile devices.

Monthly active users grew 13 per cent from a year ago to 1.49 billion, but the gain was modest from the first quarter when it had 1.44 billion. The number of mobile active users rose to 1.31 billion.

“This was another strong quarter for our community,” said Facebook founder and chief executive Mark Zuckerberg.

“Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services.”

Amid ongoing growth in Facebook, the company has been expanding its offerings of applications, including the photo-sharing service Instagram, the messaging service WhatsApp and virtual reality gearmaker Oculus.

Facebook’s capital spending in the quarter was US$549 million. Its research and development costs were US$1.17 billion.

The big gains in revenue came from advertising, and mobile accounted for 76 per cent of ad revenues in the quarter, up from 62 per cent a year earlier and 73 per cent in the first three months of the year.

Facebook shares dipped 1.9 per cent in after-hours trade following the results, even though most of the figures were ahead of market expectations.

Analysts have said the newly acquired services such as Oculus and Instagram are not delivering meaningful revenues now, but could build a base for future growth.

Facebook itself has been a rising star in online advertising.

It accounted for 7.9 per cent of worldwide digital ad revenues in 2014, up from 5.8 per cent in 2013, according to the research firm eMarketer, which predicts its share will reach 9 per cent by the end of this year.