SAN FRANCISCO (Reuters) - Facebook Inc advertising business grew at its fastest clip since before the company’s May initial public offering, helping the company’s revenue expand 40 percent to $1.585 billion.
”They were favorable results and overall consistent with our view of the stock. They did much better on mobile advertising than we had expected.
”Because of the rising mobile revenue, we think that’s driving the expenses up.
“Sticker shock” from higher expenses may have caused the initial stock drop. “It is really expensive to service mobile advertising. The fact that 23 percent of ad revenues are coming from mobile means their operating expenses are going to be higher.”
BRIAN BLAU, RESEARCH DIRECTOR IN CONSUMER TECHNOLOGY, GARTNER
”The user engagement number indicates people continue to use the service and engage with it, and Facebook is leveraging that and showing them more ads and providing more apps for them, especially around games.
”The (mobile) trend clearly seems be that users are adopting mobile and that Facebook and advertisers like the results they are getting. Facebook has a relatively easy time generating inventory and finding advertisers to fill that inventory.
“They were up 10 percent overall on mobile (ad revenue). That’s got to be relatively good news for those that are watching Facebook and seeing how they are dealing with their user adjustment over to that platform.”
”Overall a solid quarter, but maybe high expectations going into the quarter.
”The stock is trading off after the report. I think investors were expecting a little more, specifically on the advertising revenue. We were looking for a little stronger growth on the total advertising revenue and mobile revenue.
”Overall revenue growth, at 43 percent on the ad side, that was pretty strong. Last quarter, it was 42 percent. So we did see an acceleration.
“The expectations for revenue were closer to $1.6 billion. Mobile revenue was expected to be a little higher. They were 23 percent of the revenue, we were looking for that to be closer to 25 percent.”
Reporting By Poornima Gupta and Lisa Richwine