Wednesday, January 28, 2015

Facebook Keeps Earnings Growth Coming, Share Price Follows

Facebook Inc. (NASDAQ: FB) released its third-quarter 2013 earnings report after markets closed on Wednesday. Sales rose by 60% year over year to $2.02 billion in the quarter. Adjusted earnings came in at $0.25 per share, versus $0.12 per share a year ago. Thomson Reuters was calling for the report to be $0.19 per share earnings and $1.91 billion in revenues.

Facebook investors are liking what they see this afternoon. We have broken out the main metrics that will drive most of the conversation on Thursday. The highlights are continued user growth, mobile ad growth, total revenue and income growth, solid cash balances, and more. Here are some highlights:

The non-GAAP operating margin rose sequentially from 44% to 49% and from 42% in the same period a year ago. Revenue from advertising totaled $1.80 billion, which is 89% of total revenue and is 66% higher than a year ago. Mobile advertising revenue was roughly 49% of advertising revenue for the third quarter, up sequentially from 41%. Payments and other fees revenue was $218 million for the quarter. Cash and marketable securities totaled $9.3 billion at the end of the quarter. Daily active users were 728 million on average in September. Monthly active users rose to 1.19 billion in the quarter, up 18% from a year earlier. Mobile monthly average users were up 45% to 874 million, while mobile daily average users were 507 million for September. Excluding share-based compensation and related payroll tax expenses, its expenses were up 45% from a year ago to $1.28 billion.

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The fact that mobile advertising now accounts for essentially half of Facebook's ad revenues is really the remarkable figure here. That and the fact that 728 million people a day look at their Facebook page.

Facebook's shares closed down 0.8% at $49.01 on Wednesday, against a 52-week trading range of $18.87 to $54.83. The reaction in the after-hours has shares up more than 11% at $54.59. Thomson Reuters had a consensus price target of about $54.60 before today's results.

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