Facebook revenue surges 60% on strong ad sales

Facebook logo Facebook's share price has climbed to record highs in recent weeks

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Social network giant Facebook reported a 60% surge in revenue, to $2.02bn (£1.26bn), in the third quarter.

Revenue from advertising grew by 66% to $1.8bn, with nearly half of that coming from mobile ads.

"The strong results we achieved this quarter show that we're prepared for the next phase of our company," said Mark Zuckerberg in a statement.

Shares initially rose, but fell back after a suggestion that activity in younger teens was down.

The increase in revenue led to $425m in net profit in the three months to September. That compares to a loss of $59m in the same period last year.

Initially, Facebook's shares surged 15% on the news, but then fell back after the chief financial officer, David Ebersman, said in a conference call that internal analytics suggested that fewer "younger teens" were using the site.

"Our best analytics shows use by US teens overall stable, but a decrease in use by younger teens," said Mr Ebersman.

However, he cautioned that it was tricky to measure young people's engagement, as the age entered by a user on the site was not verified.

"That market is incredibly fickle," said Silicon Valley analyst Rob Enderle. "You don't want to see a trend that kids no longer think Facebook is no longer the place to be; that it is now their dads' service."

"The kids are Facebook's seed corn, and you don't want to lose that." he added.

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Mobile push

Shares in the company have nearly doubled in value since July, when it first announced a big jump in its mobile advertising revenue.

The company has made a concerted push to boost its mobile offering, and now says that 874 million of the site's more than one billion users access Facebook on their phone.

Speaking during a conference call, Mr Zuckerburg called Facebook a "mobile company" and noted more than half of people are only using Facebook from their phones.

"It's a pretty incredible sign of how Facebook has evolved as a company," he said.

By growing its mobile users, the company has also been able to sell more mobile ads, a crucial metric that is widely watched by analysts.

Facebook has grown its share of the mobile ad market in the US from just 9% last year to 14.9% this year, according to research firm eMarketer.

But Google is still by far the leader, accounting for close to half of all mobile ad spending in the US.

Revenue from mobile ads was around $880m this quarter, compared to just $150m a year earlier.

However, Facebook's user growth in the US and Canada appears to have slowed dramatically.

This is significant as the site earns about $4.19 for each user in the US and Canada, compared to just $0.74 for users in high-growth areas such as Asia.

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