Facebook is the belle of the social media ball today. The social networking giant turned out a remarkable quarter in which it achieved many firsts – earning more than half of its revenue from mobile and crossing $1 billion in mobile ad revenue for the final quarter of 2014. Company stock is soaring more than 15 percent.
Approaching its 10th birthday next week, Facebook banked $523 million in net income on $2.59 billion in revenue, posting a 63 percent year-over-year jump in quarterly revenue. Mobile accounted for 53 percent of all ad revenue at $1.25 billion, nearly matching the company’s total ad revenue of one year prior.
Mobile engagement is on a tear, driving all of those gains in respective revenue. On mobile, daily active users nearly doubled year-over-year to 556 million and monthly active users increased 39 percent to 945 million. Overall, daily active users jumped 22 percent to 757 million, while monthly active users grew by 16 percent over the same period to 1.23 billion.
“One important trend from the last year is the continued growth in size and engagement of our community. In 2013, we added 172 million monthly actives and 139 million daily actives. That means that our daily engagement continues to increase. In the latest quarter, more than 60 percent of our monthly actives visited Facebook daily,” Facebook chief executive Mark Zuckerberg says on the earnings call with investors.
He also notes that Facebook will continue to develop more stand-alone mobile apps and features that put a priority on user experience and engagement. “A lot of the new growth we see is coming from giving people the tools to share with different sized groups of people,” Zuckerberg says.
During the call, cheif operating officer Sheryl Sandberg highlights the drivers of Facebook’s ad business. Calling mobile app install ads and mobile app engagement ads a “small but growing category,” Sandberg says the ads are being used by small- to medium-sized businesses, brand advertisers, and direct response advertisers. The pair of mobile app ad products are “working even better than we hoped,” she says.
“The second driver of our ad business is a continued growth in the number of marketers using Facebook. Again, this growth is broad-based and diverse, across marketers, verticals, and geographies,” Sandberg adds. “We’re also making remarkable progress with SMBs, a segment that many in the industry have long considered the Holy Grail of online advertising, and a segment that I’ve been particularly focused on throughout my career.”
Zuckerberg reiterates Facebook’s plan to increase revenue not through more ads, but better ad products and experiences. “Our plan is to continue focusing on improving quality, since we think this is the best way for us to improve the experience for people on Facebook, returns for advertisers, and our own revenue, as well as achieving our long term goal of providing ads that are as relevant as organic content,” he says.
Putting those ads in front of the right users, of course, is one of Facebook’s biggest goals. “Targeting is a huge, huge issue for us, and a huge opportunity and challenge. Our goal is in a privacy-safe way to get information we can about what consumers want, and then help connect marketers, so that the ad experience is great for users,” Sandberg explains on the call. “Whether that information comes from the kind of things people like on Facebook or other websites they visit, or contextual statements they might make in their status updates, our goal is to use that information in a privacy-safe way to improve the targeting of the ads on Facebook.”
Concluding the earnings call, Zuckerberg says: “We have this long-term goal of making the advertising quality content as good and as relevant and timely as the content that your friends are sharing with you…There’s a long way to go before we get to the quality level that we want. But I think over a multi-year period, we can get there, or at least very close.”