NEW YORK: Facebook FB +0.97% mobile advertising engine keeps revving up, as the company’s growing suite of apps continues to gather momentum.
The company reported financial results for the third quarter on Wednesday that beat revenue and earnings forecasts. The results were strong despite heavy spending by the social network on longer-term projects in virtual reality and artificial intelligence and on its recent $22-billion acquisition of messaging service WhatsApp. Shares rose as much as 5.1% in after-hours trading on the news.
Revenue in the third quarter rose 41% to $4.50 billion for the period ended September 30, from $3.20 billion in the same period a year earlier, topping the $4.37 billion expected by analysts polled by Yahoo YHOO +2.86% Finance. The gains were driven a strong shift to mobile advertising, where pricing is higher, and to Facebook’s success with video ads. The company said more than 8 billion video views occur on Facebook daily. Mobile ad revenue represented about 78% of total revenue in the latest quarter, up from 66% in the same period a year earlier.
The company posted a profit of $896 million, or 31 cents a share, up 11% from a year-earlier profit of $806 million, or 30 cents a share. Excluding certain expenses, Facebook said it would have earned $1.63 billion, or 57 cents a share, topping forecasts of 52 cents a share on that basis. (See the full results here.)
RBC Capital Markets analyst Mark Mahaney said in a note before the report that marketers appear to be increasingly satisfied with the return on investment they receive from Facebook ads and aren’t expected to taper spending any time soon. The trick for Facebook will be making sure that more ads and new formats don’t dampen user activity.
