Facebook's mobile push seems to be working: mobile revenue now comprises 30 percent of all its ad revenue, that's higher than expected, and up from just 23 percent in the prior quarter.
That surprisingly high mobile ad revenue number reflects where Facebook is seeing its biggest usage growth, with 54 percent more mobile monthly active users than a year ago, 751 million. And 189 million people access Facebook ONLY on mobile devices.
CEO Mark Zuckerberg kicked off the earnings call by noting that 60 percent of Facebook users access the service daily. He honed in on the potential of mobile revenue, and Facebook Home in particular, cautioning that it's still early days, and it'll continue to roll out and evolve. And addressing concerns that mobile ads would turn off users, he said that the company hass been "measuring satisfaction in terms of ads," and "has not seen any impact."
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He was followed by COO Sheryl Sandberg who talked about her focus on "mobile, measurement, and product innovation." Again, she stressed the opportunity in mobile, the fact that billions of people check their phones multiple times a day, means "the opportunity for us to connect people to marketers has never been greater."
When it comes to measuring Facebook's ads impact, Sandberg says they're looking far beyond click-through rates, to understand how seeing an ad (even if it's not clicked on) influences in-store behavior, and using a range of information to help advertisers improve their campaigns. "We can take advancements we've made on measurement on Facebook and extend them to a much larger audience and many more purchases," Sandberg says of its acquisition of measurement firm Atlas.
Facebook reported earnings of 12 cents per share, exactly what it earned in the year-ago quarter, and a penny short of estimates. Revenue on the other hand, grew 38 percent, more than expected to $1.46 billion, instead of the $1.44 billion Wall Street expected. The big focus was on mobile, where Facebook is seeing its greatest growth, with 54 percent more mobile monthly active users than a year ago, 751 million people. Average revenue per user came in at $1.35, more than Wall Street projected, thanks to stronger advertising, which comprised $1.15 of that.
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On the earnings call there was very little focus on payments revenue, which came in stronger than expected at $213 million. But on the earnings call CFO David Ebersman said that while a record people are playing games on Facebook, Zynga's not part of that growth: Zynga's contribution to Facebook's payments revenue declined by 37 percent while other game-makers gained 60 percent.
In response to an analyst question about reports about declining usage among the key younger demographic, Ebersman said that younger users remain among Facebook's most active and engaged users. "The urban legends flow from surveys from younger users, and we take the feedback seriously," Ebersman said. "But much of this stems from the concern that this is a zero sum game. Services that allow you to connect and share are growing and it's great to be the leader."
In a conversation immediately following the earnings release, Ebersman said that this quarter is about "investing for growth as we said we would, ramping up our investments in products that can improve long-term engagement, and also in the infrastructure to make sure we can deliver." And he acknowledged the key role mobile is playing. "A year ago mobile ad revenue was zero; we're pleased to have grown that to 30 percent. We believed mobile had the opportunity to be huge, and we haven't seen anything to dissuade us from that."
Ebersman says Facebook is focused on advertising: "The real priority is to help create higher quality Facebook ads that are able to deliver to the right audience. To do that involved building better products, better tools to help advertisers understand and optimize their spend."