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Facebook tops Q3 estimates, reaching 1.35 billion monthly users

LOS ANGELES — Facebook, the world’s largest social-media service, hit 1.35 billion monthly active users as of the end of the third quarter, up 14 per cent year-over-year, and exceeding Wall Street financial estimates.

Facebook CEO Mark Zuckerberg speaking during a conference in San Francisco, California in April. Photo: Reuters file photo

Facebook CEO Mark Zuckerberg speaking during a conference in San Francisco, California in April. Photo: Reuters file photo

LOS ANGELES — Facebook, the world’s largest social-media service, hit 1.35 billion monthly active users as of the end of the third quarter, up 14 per cent year-over-year, and exceeding Wall Street financial estimates.

The company’s third quarter revenue was US$3.20 billion (S$4.07 billion), an increase of 59 per cent year-on-year, and it posted a net profit of US$806 million (43 US cents per share), up 90 per cent versus the year-ago quarter. That beat consensus estimates of US$3.12 billion in revenue and earnings per share (EPS) of 40 US cents, per Thomson Reuters.

Still, Facebook shares dropped in after-hours trading by as much as 1.8 per cent, as investors were potentially looking for even stronger growth.

“This has been a good quarter with strong results,” Facebook founder and Chief Executive Officer Mark Zuckerberg said in announcing the results. “We continue to focus on serving our community well and continue to invest in connecting the world over the next decade.”

Facebook’s ad revenue was US$2.96 billion (up 64 per cent year-over-year), with mobile advertising revenue accounting for 66 per cent of that in the period, up from approximately 49 per cent in the third quarter of last year. Mobile monthly active users — a subset of its total monthly active users number — were 1.12 billion for the most recent quarter, a 29 per cent increase from a year ago.

On a call with analysts, Mr Zuckerberg said Facebook continues to make progress with Oculus Rift, the virtual-reality startup it acquired this summer for US$2 billion.

Oculus has shipped more than 100,000 Rift developer kits worldwide. But “it needs to reach a very large scale — 50 (million) to 100 million units — before it will really be a meaningful thing as a computing platform,” Mr Zuckerberg said. “I don’t think it’s going to get to 50 or 100 million units in the next few years... When you get to that scale, that’s when it starts to be interesting as a business in terms of developing out the ecosystem.”

Also on the call, Chief Financial Officer Dave Wehner said fourth quarter revenue is projected to increase 40-47 per cent over the previous year. For the full-year 2014, Facebook expects total expenses to grow 45-50 per cent versus last year, primarily related to the company’s US$19 billion acquisition of WhatsApp, he said. Next year, total expenses are projected to increase 55-75 per cent compared with this year, according to Mr Wehner, saying the company will continue to invest in the core Facebook experience, advertising technology, the WhatsApp and Oculus acquisitions, and other projects.

Facebook clearly didn’t buy WhatsApp for its financial prowess. Last year, WhatsApp generated US$10.2 million in revenue and reported a net loss of US$138 million, according to a regulatory filing yesterday (Oct 28).

Over all this year, Facebook is expected to capture 8 per cent of the US$140.7 billion global ad market, up from 5.8 per cent last year, according to research firm eMarketer. In addition, the company’s share of the US$36.5 billion worldwide mobile ad market is expected to reach 20.4 per cent this year, up from 16.5 per cent last year, per eMarketer. By comparison, Google is expected to lose mobile ad market share this year, falling from 46.4 per cent last year to 44.6 per cent this year.

Average revenue per user (ARPU) worldwide was US$2.40 for the third quarter of this year, versus US$1.72 in the year-earlier period (a 40 per cent increase). In the US and Canada, ARPU was US$7.39 for the most recent quarter, up 52 percent from US$4.85 in the third quarter of last year. As of the end of September, Facebook had US$9 billion in cash and equivalents, compared with US$3.3 billion at the end of last year. VARIETY.COM/REUTERS

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