Ahead of Facebook’s (NASDAQ:FB) earnings report, Wall Street analysts were expecting a challenging quarter, and their estimates were certainly tempered. As I pointed out earlier today, this made it look like the stock was poised for a pop if Zuckerberg & Co. could show some traction.
And that’s just what happened. In after-hours trading, FB is up over 10% to $21.87.
In the third quarter, Facebook posted adjusted earnings of $311 million, or 12 cents a share, which beat the consensus by one cent. Revenues were up by 32% to $1.26 billion. The Street was looking for $1.23 billion.
About 14% of the revenues came from mobile sources. In fact, 60% of Facebook’s users are now accessing the service via their handheld devices.
Keep in mind that this figure doesn’t include Instagram’s base. When Facebook acquired the photo-sharing site back in April, it had 27 million registered users. Now it has over 100 million.
On the conference call, CEO Mark Zuckerberg made it clear that his company is obsessed with mobile. He pointed out that Facebook has completely rewritten its mobile apps, which has resulted in a 20% increase in engagement on Apple (NASDAQ:AAPL) iOS devices.
And all mobile engineering teams will now be “owning” monetization of their products (it seems Zuck’s two favorite words are “mobile” and “monetization”).
Still, there was some bad news. As expected, Facebook saw pressure on its payments business because of the problems at Zynga (NASDAQ:ZNGA), whose gaming business decreased by 20% over the past year.
Yet for investors, this is not the main concern. The focus is on how Facebook can effectively manage the transition to mobile without suffering a plunge in revenues. And so far, it looks like this is definitely possible. Consider that Zuckerberg has been aggressive with monetization, such as with “Sponsored Stories” and a new gift-giving program. According to the CEO: “We’ll monetize better on mobile than on desktop.”
If so, it would mean that Facebook could see a nice growth ramp over the next few years.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
