Facebook Q3 revenue rises 59%, shares down slightly

[SAN FRANCISCO] Facebook Inc's mobile ads powered the social network past Wall Street revenue targets in the third quarter, even as the company revealed deep losses in its recently acquired WhatsApp business.

Shares of Facebook, which are roughly up 47 per cent this year, were down less than one percent at US$80.20 in extended trading on Tuesday.

Facebook said revenue in the three months ended Sept 30 totaled US$3.2 billion, up 59 per cent from US$2.02 billion in the year-ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for revenue of US$3.12 billion on average. "They continue to show that there is a lot of demand for their product, both in terms of users wanting to spend time there and advertisers wanting to spend money," said Ben Schachter an analyst with Macquarie Research.

Facebook also for the first time disclosed the financial performance for WhatsApp, a mobile messaging app that the company acquired earlier this month for US$22 billion.

According to a filing with the Securities and Exchange Commission on Tuesday, WhatsApp lost US$232.5 million in the first six months of 2014, compared to a loss of US$58.8 million in the first six months of 2013.

WhatsApp does not currently show ads on its service and Facebook Chief Executive Mark Zuckerberg has said the company will not rush to monetise the service.

Macquarie's Schachter said investors understand that WhatsApp is a "long-term play," and that what's most important right now is for the app to continue to grow its base of users.

The world's No.1 online social network said its total number of monthly users reached 1.35 billion in the third quarter, with 864 million users accessing the service every day.

Facebook's net income increased to US$806 million, or 30 cents a share in the third quarter, compared to US$425 million, or 17 cents a share in the year-ago period. Excluding certain items, Facebook said it earned 43 cents a share.

Mobile ads represented 66 per cent of Facebook's advertising revenue, up from 49 per cent of ad revenue in the year-ago period.

REUTERS