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UPDATE 3-Facebook shares hit record high as mobile ad sales soar

(Rewrites lead paragraph, adds comments from Zuckerberg and analysts)

July 26 (Reuters) - Facebook Inc reported steady and steep quarterly revenue growth on Wednesday, as the world's largest social network attracted more advertising dollars to its mobile empire, sending its shares to an all-time high.

Facebook, which surpassed 2 billion active monthly users recently, owns four of the most popular smartphone apps on the planet: its centerpiece Facebook, the photo-sharing Instagram and messaging services Messenger and WhatsApp.

The company's stock rose more than 4 percent to around $173 after the stellar earnings report. Through Wednesday's close, the share price had climbed nearly 44 percent this year.

With Facebook squeezing more ads into its News Feed, and increasingly into Instagram and Facebook's Messenger service, the company said that total revenue rose 44.8 percent to $9.32 billion in the second quarter of the year.

That beat the average forecast of $9.20 billion among analysts tracked by Thomson Reuters I/B/E/S.

"In mobile we're continuing to see great strengths," Facebook Chief Financial Officer David Wehner said in a phone interview with Reuters.

"We're seeing more and more ad dollars getting allocated to mobile, and we think that trend will continue," he said.

Mobile ad revenue accounted for 87 percent of the company's total advertising revenue of $9.16 billion in the latest quarter, up from 84 percent a year earlier.

"They're killing it on mobile. They are the de facto mobile advertising monopolies, and that's a really big deal," Needham & Co analyst Laura Martin said, adding that she sees no weaknesses in Facebook's business.

Facebook and Alphabet Inc own half of the online advertising market worldwide, and Facebook's revenue growth this quarter outshone the owner of YouTube and Google.

Alphabet on Monday reported a 21 percent increase in quarterly revenue, though it started the quarter from a larger base than Facebook did.

Facebook has not said how much of its revenue is attributable to its Instagram unit, though the photo-sharing app has become a greater focus of its business.

"Clearly, the biggest driver of growth is, overall, Facebook News Feed," Wehner said. "Instagram is making a contribution, and an increasing contribution."

But investors want Facebook to find additional revenue streams because the company has warned it is hitting maximum ad load in the News Feed, potentially slowing its overall growth.

So far, though, the warnings have not come to fruition.

"They kept warning about ad load, but the ad load continues to be strong," said Ivan Feinseth, research director at Tigress Financial Partners. "I still think ad revenue will grow, because more advertisers are adapting to this platform, because there are so many people out there."

The popularity of Instagram has also put pressure on Snapchat, the app owned by Snap Inc. Instagram has added features similar to Snapchat's, and Snap's stock on Wednesday closed at an all-time low of $13.40.

Facebook is testing ads on its Messenger service and examining how to monetize its sibling unit, WhatsApp, which the company said on Wednesday has 1 billion daily users.

Chief Executive Mark Zuckerberg told analysts on a conference call that the company was still in the early stages of making money off those services.

"I want to see us move a little faster here, but I'm confident that we're going to get this right over the long term," Zuckerberg said, adding that he wanted ads on Messenger to feel "organic" to users.

A planned expansion in online video will be another source of advertising inventory, Zuckerberg said.

Facebook said about 2.01 billion people were using its service monthly as of June 30, up 17 percent from a year earlier.

The social media giant said in June it had surpassed the 2-billion user mark.

In the latest second quarter, net income attributable to shareholders rose to $3.89 billion, or $1.32 per share, from $2.28 billion, or 78 cents per share, a year earlier.

Analysts on average had expected earnings of $1.13 per share, according to Thomson Reuters I/B/E/S.

In the first quarter, Facebook changed the method it reports earnings, focusing on Generally Accepted Accounting Principles (GAAP) earnings instead of non-GAAP. (Reporting by David Ingram in San Francisco and Rishika Sadam in Bengaluru; Editing by Sriraj Kalluvila, Bernard Orr)