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Facebook earnings blow past expectations

Facebook topped Wall Street's sales targets on Wednesday, as robust growth in its mobile advertising business drove a 60 percent increase in revenue.

Following the earnings beat, Facebook's stock shot higher but erased gains after the company's earnings call. (Click here to get the latest quote.)

During the call Facebook Chief Financial Officer David Ebersman said that while youth engagement is stable, younger teens saw a decrease in daily active users.

In the third-quarter net income rose to $425 million, or 17 cents a share, from a loss of $59 million, or 2 cents a share, in the last year's quarter.

Excluding items, the company earned $621 million, or 25 cents per share, from $311 million, or 12 cents a share, in the year-earlier period. Revenue jumped 60 percent to $2.02 billion from $1.26 billion a year ago.

Analysts had expected the social network to report earnings excluding items of 19 cents a share on $1.91 billion in revenue, according to a consensus estimate from Thomson Reuters.

During the quarter, mobile monthly active users jumped 18 percent to 1.19 billion from the year-ago period.

Revenue from advertising increased 66 percent to $1.8 billion. Non-GAAP operating margin rose to 49 percent, from 42 percent last year.

Revenue from mobile ads, which appear on smartphones, represented 49 percent of Facebook's total advertising revenue in the third quarter, or roughly $880 million. Mobile ads generated roughly $150 million in the year-ago period, when Facebook was just beginning to develop its mobile ad business.

—Reuters contributed to this report.