Facebook for the first time has more mobile daily users than desktop users.
Facebook Inc. reported today that it generated $1.329 billion in advertising revenue in the fourth quarter of 2012, a 40.9% jump from $943 million during the same period in 2011 and a 22.4% increase from $1.086 billion in the third quarter of 2012.
Facebook says that 23% of that advertising revenue in the fourth quarter stemmed from mobile ads, up from 14% in the third quarter. That means mobile ad revenue increased 101% from $152 million in the third quarter to $306 million in Q4.
That’s good news for the social network, which has made mobile a major focus over the past year. It launched its first mobile ad format, Sponsored Stories, in the first quarter, and went on to add multiple mobile ad units that appear in consumers’ news feeds, which display updates from friends and from companies that consumers are fans of. 65% of Facebook’s advertisers use ads that appear in users' news feed, which run on both desktop and mobile, up from 50% at the end of the third quarter, Sheryl Sandberg, Facebook's chief operating officer, said today during a conference call with analysts. Reaching consumers in their news feeds is essential, says Facebook, because that is where they spend 40% of their time on the social network.
Overall, Facebook reported $1.585 billion in revenue during the quarter, a 40.1% increase from $1.131 billion in the same quarter of 2011. The social network earned $64 million during the quarter, compared with $302 million a year earlier.
The social network generated average revenue of $1.54 per worldwide user in the fourth quarter, up 11.6% from $1.38 a year ago. In the United States and Canada the average revenue per user was $4.08 per user, up 27.5% from $3.20 a year ago. Facebook calculates average revenue per user as its total revenue during a given period, divided by the average of the number of monthly active users at the beginning as well as the end of the period; that is why the average revenue per user doesn’t equal revenue divided by its number of active users.
Facebook says that it had 1.06 billion active users as of Dec. 31. And, for the first time, it has more mobile monthly active users (680 million, a 57% increase year over year) than desktop active users (618 million, a 28% increase year over year).
Mobile is key to Facebook’s future success, said Mark Zuckerberg, Facebook founder and CEO. "In 2012 we connected over a billion people and became a mobile company,” he said.
To continue Facebook's growth, the social network plans to significantly grow its headcount this year, Zuckerberg said. The hiring spree may come at the expense of some profits, he said, but is necessary to invest in new products like Search Graph and Gifts.
Several analysts were optimistic about Facebook's outlook, particularly given its success with mobile.
"This solid progress on the mobile advertising front should be applauded as a key challenge for Facebook has been how to monetize its growing mobile user base, particularly as an increasing number interact with the platform by only via mobile devices," Eden Zoller, principal analyst at Ovum, says.
Colin Sebastian, an equity analyst who follows Facebook for Robert W. Baird, says he expects Facebook to continue to find new ways to grow. "We expect Facebook to benefit from continuing growth in mobile and news feed advertising and potentially new revenue streams."
Facebook's mobile push comes as mobile commerce is growing fast. The Internet Retailer Mobile 400 found that in 2012 the combined sales of the 400 largest retail, ticket and travel companies grew 101.4% to $12.14 billion from $6.03 billion.
For the full year, Facebook reported:
• $5.089 billion in revenue, up 37.1% jump from 2011
• $538 million in profit, compared with $1.757 billion a year earlier. That’s thanks, in part, to a large charge of stock-based compensation in the second quarter.