After the bell on Wednesday, shares of Facebook Inc. (NASDAQ: FB) soared more than 9 percent in extended-hours trading after the company reported fiscal fourth-quarter earnings rose 83 percent to $780 million, or 31 cents a share, as revenue increased 63 percent to $2.59 billion, compared with a profit of $426 million, or 17 cents a share, on sales of $1.59 billion during the fourth-quarter of 2012.
Wall Street had expected Facebook to report earnings excluding items of 27 cents a share on sales of $2.33 billion, according analysts polled by Reuters.
"It was a great end to the year for Facebook," said Facebook founder and CEO Mark Zuckerberg in the company’s statement. "We're looking forward to our next decade and to helping connect the rest of the world."
Meanwhile, net income for the full year in 2013 came in at $1.50 billion, as revenue increased 55 percent year-over-year to $7.87 billion.
Facebook was scheduled to host a conference call at 5 p.m. EST on Jan. 29, 2014, to discuss its fourth-quarter earnings results with shareholders, and investors were set to focus on two things: If the company saw a gain in monthly active users in the younger teenage demographic, and its outlook for mobile ad growth in 2014.
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Although the social media giant saw a 60 percent increase in revenue through its mobile advertising business during the third-quarter, Facebook’s chief financial officer David Ebersman said in October during the company’s previous conference call that the social media giant saw a decrease in daily active user engagement in younger teens. In November, messaging app Snapchat turned down a $3 billion cash offer from Facebook after the social media company bought Instagram for $1 billion in 2012.
“I don’t think they’re all that concerned about getting the users back on the primary Facebook platform because I have a teenage son and he sits is on Instagram,” said Keith Bliss, senior vice president and director of sales & marketing at Cuttone & Co., Inc. “As long as they have that business thriving and growing, I think they’ll be satisfied with that, but the expectations for Facebook are that continual users will still get up to about 1.2 billion people. I mean, think about it that. That’s roughly a sixth of the globe’s population. When you have that type of mass that type of scale inside of it, they’ll be able to push advertising out through those platforms.”
Revenue from advertising rose 76 percent to $2.34 billion during the quarter from the same period in 2012. Mobile advertising revenue represented approximately 53 percent of advertising revenue for the fourth quarter of 2013, up from nearly 23 percent of advertising revenue in the same quarter of 2012.
“I also want to hear from Facebook, what they’re doing on the mobile platform,” Bliss added. “They’re mobile usage has grown pretty dramatically. So as advertising comes back to the fore, advertisers are starting to feel a little bit more comfortable about spending money in that space. I think you’ll hear that from Facebook.”
Facebook averaged 757 million daily active users in 2013, an increase of 22 percent year-over-year, while mobile daily active users averaged 556 million, an increase of 49 percent year-over-year. Monthly active users increased 16 percent year-over-year to 1.23 billion, and mobile monthly active users increased of 39 percent year-over-year to 945 million.
“I think they’ll be able to capture a few different demographic segments based on whether it’s Instagram or Facebook,” Bliss said. “If they’ve developed an environment where they can capture the large majority of the globe's population, they will just make money by default, particularly around advertising. Advertisers cannot ignore it no matter what platform they’re on.”
Ahead of Facebook’s earnings call with shareholders, the stock jumped 9.28 percent to $58.50 on news that earnings and revenue beat Wall Street estimates.