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Facebook Inc (FB) Mobile: A Key Growth Driver

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Facebook Inc (NASDAQ:FB) reported strong quarterly results and the highest revenue growth since the fourth quarter of 2011. Factors such as increasing mobile revenue growth accounted for 41 percent of ad revenue, and was one of the primary drivers for growth, says a report from Jefferies. Analysts at Jefferies noted that results were impressive given the fact that catalysts like video ads and Instagram monetization were not featured.

Facebook Inc (FB) Mobile: A Key Growth Driver

Facebook’s mobile business strongest

Mobile business was the strongest in all segments, which supported revenues of Facebook Inc (NASDAQ:FB). Revenue for the quarter came in at $1.81 billion, an increase of 53 percent y/y, more than the Jefferies estimate of $1.62 billion and Street estimate of $1.62 billion. Non GAAP Operating Income was posted at $794 million (44% margin), outperforming analysts’ expectations of $612 million. The Street was expecting 37 percent non GAAP Operating Income margin. Operating earnings per share of Facebook increased by 54 percent to $0.19 above Jefferies and street estimates of $0.14.

In the second quarter, Facebook Inc (NASDAQ:FB) had monthly active user numbers of 1.15 billion (MAUs), an increase of 27 percent. Daily active users (DAU) accounted for 699 million on average for June 2013, an increase of 27 percent Y/Y. Mobile MAU totaled  819 million as of June 30, 2013—an increase of 51 percent Y/Y. At the end of the second quarter, Facebook Inc (NASDAQ:FB) had $10.25 billion in cash and marketable securities.

Desktop revenue declined, as expected

Advertising revenue for the social networker came in at $1.60 billion, an increase of 61 percent Y/Y, beating the Jefferies estimate of $1.41 billion and Street expectations of $1.39 billion. Revenue from mobile ads increased to $656 million, up 76 percent ahead of Jefferies expectation of $458 million and Street expectation of $455 million. Mobile contributed 41 percent of total ad revenue in the second quarter, significantly above 30 percent in the first quarter. Revenue from Desktop came in at $943 million, a decrease of 5 percent less than the Jefferies estimate of $951 million.

Payments & Other revenue increased 11 percent Y/Y to $214 million, ahead of the Jefferies estimate of $211 million but below the Street’s $216 million.

Dan Niles of Alpha One Capital Partners said that this is the best ever quarter after Facebook Inc (NASDAQ:FB) issued its IPO. Among all the metrics, the major one to be noted is its profitability. Niles added “improvement in the company’s operating margin was why they had a 5 cent earnings per share beat.”

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