Mobile-Ad Sales Power Strong Q3 for Facebook

The social media giant's stock hits an all-time high as third-quarter earnings beat analysts' expectations.
Matthew HellerNovember 4, 2015
Mobile-Ad Sales Power Strong Q3 for Facebook

Facebook stock rose to an all-time high Wednesday after the social media giant reported an 11% increase in third-quarter profit fueled by strong growth in mobile advertising sales.

Facebook earned 57 cents per share, excluding some items, on $4.5 billion revenue in the third quarter. Analysts had expected the company to deliver earnings per share of 52 cents on $4.37 billion in revenue.

Advertising revenue, which accounts for the vast majority of Facebook’s sales, jumped 45% from the prior year to $4.3 billion. Mobile ad sales accounted for 78% of ad revenue, up from 66% in the prior year.

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“Their core mobile-advertising business is still very strong and has a lot of runway,” Josh Olson, an analyst at Edward Jones & Co., told Bloomberg.

The Wall Street Journal said Facebook was “thriving by grabbing a bigger share of a growing digital-advertising pie.” Digital-ad spending is projected to increase 18% to $170.2 billion this year, while mobile-ad spending is expected to reach $72.1 billion in 2015, according to consultancy eMarketer, which predicts that Facebook will win 9.6% of total spending, up from 8% last year, and 17.4% of mobile-ad spending.

In after-hours trading Wednesday, Facebook shares jumped more than 4% to an all-time high of $108.52. The stock is up roughly 25% since mid-August.

User numbers were also up in the third quarter, with 1.55 billion people tapping the social network at least once a month, up from 1.49 billion in the second quarter. About 1.01 billion people checked Facebook at least once a day in September, the company said.

By bringing Instagram into Facebook’s advertising system, the company was able to expand the ad audience by more than 400 million users, Bloomberg noted.

Total costs and expenses increased 68%, reflecting Facebook’s heavy spending on a range of projects, including artificial intelligence, virtual reality and bringing Internet access to emerging markets.