(REUTERS) - Facebook Inc's mobile advertising business continued to expand in the first three months of the year, but the social network's rising spending restrained profit growth.
Shares of Facebook were up 11 US cents at US$27.54 (S$34) in after-hours trading on Wednesday.
Mobile ad revenue, which accounted for 30 per cent of Facebook's ad revenue in the first quarter, was at the higher end of the range analysts expected, said Macquarie Research analyst Ben Schachter. But he said, "it needed to be higher for people to get really excited about trend lines."
Facebook's advertising revenue growth, which slowed sharply last year, has regained some momentum as the company has pushed more ads to users on mobile devices such as smartphones and tablets. In the fourth quarter, mobile ads accounted for roughly 23 per cent of Facebook's revenue.
The world's largest social network said it now counts 1.11 billion monthly active users and about 665 million daily active users.
The company said the number of monthly users who logged on solely through mobile devices more than doubled to 189 million users from a year ago.
The company has rolled out a string of big product launches and revamps in recent months, including an overhaul of its newsfeed and search feature, as well an app for Android smartphones that puts Facebook features front and center on phone homescreens.
The various initiatives have contributed to rising spending, with Facebook's 60 per cent year-on-year increase in costs and expenses outpacing the 38 per cent revenue increase.
Facebook said it earned US$219 million, or 9 US cents a share, in the first three months of the year, compared to US$205 million, or 9 cents a share, in the year-ago period.
Excluding certain items, Facebook said it earned 12 US cents a share. Analysts polled by Thomson Reuters I/B/E/S were looking for adjusted EPS of 13 US cents.
Facebook's revenue in the first quarter totalled US$1.46 billion, versus US$1.06 billion in the year-ago period, and roughly in line with analyst expectations. Advertising revenue was up 43 per cent in the first quarter, the fastest growth rate since the end of 2011.