NEW YORK, NY – Facebook’s sales jumped 38% in the first quarter, boosted by the social network’s growing mobile advertising business.
Investors are heavily focused on mobile, which Facebook has said is the key to its future success. Mobile ad sales accounted for 30% of Facebook’s total ad revenue in the first quarter of the year — up sharply from the previous two quarters and from essentially zero a year ago.
Facebook delivered a new Apple iOS app in August that began showing ads to mobile users for the first time.
But the growth in monthly active users on Facebook’s mobile site and apps is slowing. It jumped 54% over the year to 751 million, but that’s below the fourth quarter’s 57% year-over-year jump, and the 61% annual increase in the third quarter.
That growth rate will likely continue to shrink as mobile users come into parity with total users. Facebook reported that overall monthly active users totaled 1.11 billion in the first quarter, 751 million of whom accessed Facebook on their phones and tablets.
Facebook shares were essentially flat in after-hours trading following the report.
Overall, the social network’s sales were $1.5 billion in the quarter — a solid performance in a typically a soft quarter for ad revenue at most companies. Brands typically spend heavily to market to holiday shoppers in the fourth quarter and ease off in the first quarter.
Earnings rose 7% over the year to $219 million, despite being crunched by massive expenses.
Costs jumped 60% over the year to $1.08 billion. Facebook executives had warned during last quarter’s earnings call that the company expects expenses to rise by about half this year. Facebook is spending cash on both infrastructure and headcount, and it’s putting that money to work: In 2013 so far, the company has already released four major new products.
Graph Search and a News Feed revamp came in the first quarter, while the third and fourth products came too late to be included in Wednesday’s results.
Earlier this month brought Facebook Home, a custom startup screen for Android smartphones that will eventually include ads. A week later, Facebook announced “Partner Categories,” which lets advertisers target specific users based on their past buying history — even if the purchases happened offline.
Rival social network LinkedIn is set to report its quarterly finances Thursday after the market closes.
By Julianne Pepitone
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