updated 07:00 pm EDT, Tue October 23, 2012
Loss pinned on employee stock payouts, shifting market trends
Facebook has announced an increase of 32 percent in third-quarter revenue to $1.26 billion, but still posted a loss of $59 million. Advertising revenue increased 36 percent from the same quarter last year to $1.09 billion. Revenue from payments and other businesses increased 13 percent to $176 million. Mobile revenue compromised 14 percent of total advertising sales, which came in above most analysts' expectations.
"By the evidence of one quarter, they are obviously showing some progress," said Colin Sebastian, an analyst at Robert W. Baird. "But we still don't know which ad formats work and how much will advertisers will pay, that's something we'll have to track over time."
Third-quarter mobile revenue surged from the second quarter, when Facebook said that it was generating more than $1 million a day from the new mobile ads, that appear in users' news feeds. Facebook claimed that roughly fifty percent of that revenue was from the mobile division, suggesting that mobile advertising revenue totaled $45 million in the second quarter.
Facebook said it crossed the one billion monthly active use threshold on September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.
"Advertising revenue from mobile was the number that really stood out," said Sterne, Agee & Leach analyst Arvind Bhatia. "They are saying mobile ad revenue was 14 percent of total ad revenue. That would be about $140 million and I was expecting $40 or $50 million from this."
"They beat on the top line. They are talking about 60 percent of users on mobile. They are monetizing this OK," said Wedbush Securities analyst Michael Pachter. "Fourteen percent of total ad revenue is not chump change and some people were talking like it was zero. It's not bad monetization and a lot better than expected."