Facebook Earnings Reveal Mobile Ads Generate Two-Thirds of Revenues

Facebook investors are liking what they see here. We have broken out the main metrics that will derive most of the conversation on Thursday. The highlights are continued user growth, mobile ad growth, total revenue and income growth, solid cash balances, and more. Here are some highlights:

• The non-GAAP operating margin rose 57% compared with the third quarter of last year.
• Revenue from advertising totaled $2.96 billion, which is 92% of total revenue and is 64% higher than a year ago.
• Mobile advertising revenue represented 66% of advertising revenue for the third quarter, up from about 49% in the year-ago quarter.
• Payments and other fees revenue totaled $246 million for the quarter.
• Cash and marketable securities totaled $14.25 billion at the end of the quarter.
• Daily active users number 864 million on average in September, up 19% year-over-year.
• Mobile daily active users grew 39% to 703 million year-over-year
• Monthly active users totaled 1.35 billion in the quarter, up 14% from a year earlier.
• Mobile monthly average users were up 29% to 1.12 billion.
• Excluding share-based compensation, amortization of intangible assets, and related payroll tax expenses, Facebook’s expenses were up 39% from a year ago to $1.38 billion.

Facebook’s strength in mobile advertising, now at 66% of all revenues, is the salient fact here. It’s likely that the user growth numbers will be slightly below estimates, but there is no getting around the fact that Facebook again had a very strong quarter financially. Mobile ads are not priced as high as web ads, but Facebook is making up the difference (and more) in quantity.

The company has also added nearly $5 billion in cash and securities to its balance sheet in the past 12 months.

Facebook’s shares closed up about 0.6% at $80.76 on Tuesday, against a 52-week trading range of $43.55 to $81.16, a new 52-week high set earlier today. The reaction in the after-hours has shares down about the same amount at $80.48. Thomson Reuters had a consensus price target of $87.85 before today’s results.

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