By Alexandra Burlacu email: firstname.lastname@example.org | Jan 31, 2013 02:34 PM EST
Facebook has prioritized its mobile ad revenue and that strategy seems to be paying off, as the company's mobile revenue just beat Wall Street expectations.
The smartphone and tablet boom has significantly boosted the number of people accessing the Internet via mobile, and Facebook is no exception. The popular social network saw a constant increase in mobile users, and decided to bank on this trend.
"There's no argument, Facebook is a mobile company," CEO Mark Zuckerberg told investors as the company reported fourth-quarter adjusted earnings per share of 17 cents and revenue of $1.59 billion, beating Wall Street expectations. The $1.59 billion in revenue marks a 40 percent increase compared to the same quarter the previous year.
The social networking giant also reported 1.06 billion monthly active users and 618 million daily active users (DAUs), both figures marking a more than 25 percent increase compared to the previous year. On mobile, the company saw 680 million monthly active users and, for the first time ever, mobile DAUs exceeded Web DAUs.
Facebook's mobile revenue now accounts for 23 percent of all advertising revenue in the fourth quarter, a notable increase compared to the previous quarter's 14 percent and some analysts' expectations of 17 percent. Facebook drew roughly $306 million from mobile ad revenue in the fourth quarter, and made $256 million from payments and other fees.
On the other hand, it takes money to make money and Facebook is well aware of it. The company is spending significantly more as it keeps growing. Its costs and expenses, excluding share-based compensation, climbed 67 percent to $849 million. Research and development (R&D), including share-based compensation costs, accounted for 19 percent of expenses in the quarter, an 11 percent increase compared to the previous year.
Meanwhile, operating margins narrowed to 46 percent in the fourth quarter, down from 55 percent in the same quarter the previous year. Wall Street had expected $1.53 billion in revenue and earnings per share of 15 cents.
Facebook's mobile ad business is still in its starting phase, and the company's new Graph Search has even more revenue potential if it works out. For more details on Facebook's fourth quarter and full-year 2012 results, check out the company's report.