Facebook Growing Sales, but Move to Monetize Mobile Remains Challenging


Facebook Inc. (NASDAQ: FB) has released its first-quarter corporate earnings results. The social media giant reported earnings of $0.12 per share or $563 million on $1.46 billion in revenue. This compares to estimates from Thomson Reuters of $0.13 EPS and versus what was supposed to be almost 36% sales growth to $1.44 billion in revenue. The real takeaway is that mobile is not yet accounting for enough of the company's sales when you consider how much Facebook is moving to mobile rather than new users staying on the desktop PCs.

The big issue for Facebook remains the migration to mobile as well as the ongoing effort to capture (and then retain) ad money from advertisers. Tracking its monthly and daily active users is another measurement to pay attention to. Cash and marketable securities were $9.5 billion at the end of Facebook's first quarter for 2013.

Ad revenue was $1.25 billion and mobile accounted for 30% of that revenue. Payments remains in decline. Here is a breakdown as of March 31, 2013:

  • Daily active users rose by 26% to 665 million on average for March 2013.

  • Monthly active users were up 23% to 1.11 billion as of March 31, 2013.

  • Mobile monthly active users were up 54% to 751 million.

  • Instagram reached 100 million monthly active users.

  • Non-GAAP costs and expenses were up 56% from a year ago at $895 million in the first quarter.

  • Non-GAAP operating margin was 39% for the first quarter of 2013 versus 46% a year ago.

  • Non-GAAP effective tax rate would have been approximately 43%.

Facebook shares closed down 1.26% at $27.43 in active pre-earnings trading of 48 million shares. The social media giant's 52-week trading range on its stock is $17.55 to $45.00 and Yahoo! Finance gave it a market capitalization rate of some $65.4 billion.

UPDATE 5:15 PM EST: Shares are currently down by 1.6% at $26.91 shortly after the earnings.

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