Facebook doesn't have a mobile problem anymore, but it does have an expenses problem
When Facebook went public last year, the big reason given for its terrible performance was mobile revenue or rather, lack thereof. The failed IPO had more to do with the banks running it, NASDAQ's problems and poor planning, but that didn't mean Facebook had a mobile problem.Facebook moved quickly, though, to follow its users through the switch to mobile devices. It started showing ads in the mobile news feed and experimented with different types. Still, as the old adage says, mobile ads make less money than desktop ads.
For the all the doubters though, Facebook has pulled it off and has revealed that a huge chunk of the money it made in the last quarter of 2012 came from mobile advertising. Understandable since there are now more mobile Facebook users than desktop ones.
Facebook made $1.59 billion, €1.17 billion in Q4 2012, its biggest quarter yet and a 40 percent increase over the same period in 2011, but that's to be expected for a company growing so fast. Also unsurprising was that most of that came from ads, $1.33 billion, €980 million.
What is surprising though is that mobile revenue was 23 percent of all ad revenue, a huge increase over the 14 percent it contributed in the quarter ending three months prior.
Considering that mobile ads were introduced in June, it's a great feat and it shows just how much potential for growth the company has.
But all of this came at a cost as profits dropped dramatically for Facebook, it made just $64 million, €47 million compared to $302 million, €222 million in the fourth quarter of 2011. That's because it's spending a lot more money than before, expenses rose 82 percent year over year.
That's the cost of all the new employees, new ad tools and so on. It's not stopping here, Zuckerberg warns that expenses are going to climb 50 percent this year.