Facebook is no stranger to exceeding analyst expectations, but few within the inner sanctums of its Silicon Valley complex would have envisaged the immediate impact that mobile has had on the business.
The social network has been adamant of mobile’s potential for some time, claiming back in August 2012 that it would be kicking off a ‘mobile-first’ growth strategy with new versions of its iOS and Android apps. Recent estimates from Facebook have its mobile user base at one billion logins per month and, according to the company’s Q3 readings, it seems ad spend has followed suit.
A staggering 66% of the company’s biggest revenue stream comes from selling ads for mobile. Less than a year ago mobile’s total contribution to ad earnings was at 49% and barely contributing anything to the business upon its stock market debut in 2012.
A mobile-powered Facebook has managed to grow its user count to 864 million per day, with 703 million of these connecting via smartphone or tablet. Not only this, but 456 million of these users are mobile-only, representing a 14.2% increase on the 399 million from Q2.
Handheld success
Predictions for revenue have also been surpassed with news of a $3.203 billion haul for Q3, up from $2.910 billion in the previous quarter.
Ad earnings accounted for $2.957 billion of this total with an additional $234 million deriving from various payments and sales.
A large part of this success has been pinned on a rising mobile user count. Yet Nikhil Shah, Facebook’s vertical measurement lead, told PerformanceIN that its impact on the ad selling business has been unprecedented.
“More and more of our inventory is served on mobile and that shift has taken place quicker than any of us could have anticipated. The main driver for it is that if you invest in a Facebook campaign, you’re serving to the user wherever they turn up, and more and more of them are turning up on mobile devices.”
Shares still drop
One of the few reported declines on Tuesday was however witnessed on a highly significant front, as shares in Facebook dipped 11% in after-hours trading. This followed warnings of increased costs as the network’s chief financial officer, David Wehner, informed analysts of plans to raise expenses by up to 75% for the year to make room for new acquisitions.
Opportunities to purchase upcoming businesses to further enhance Facebook’s technical prowess will be pursued “aggressively” according to Wehner, who delivered a sobering reminder to investors looking to piggyback on the company’s recent successes with mobile.
Such an approach is not unfamiliar at the company, which sanctioned a 41% quarter-on-quarter rise in its total costs and expenses in order to take on an additional 1,200 members of staff.