Ad surge boosts Facebook profits

Social network giant Facebook reported soaring profits during the first quarter of 2014, driven by a major surge in advertising revenue.

Facebook's first-quarter results have soared
Facebook's first-quarter results have soared

The technology firm saw profits leap to 642 million dollars (£382.5m), a sharp rise of 193% on the 219 million dollars (£130.5m) for the same period last year.

Revenue was also up by 72% to 2.5 billion dollars (£1.49bn), from 1.46 billion dollars (£870m) in 2013, the company's quarterly figures show.

There was a marked surge in advertising revenue, up 82% on the first quarter of last year to 2.27 billion dollars (£1.35m). Key to this was mobile advertising, which was responsible for 59% of advertising revenue for the first quarter of 2014, almost doubling the 30% of 12 months ago.

Facebook founder and chief executive Mark Zuckerberg said: "Facebook's business is strong and growing, and this quarter was a great start to 2014.

"We've made some long-term bets on the future while staying focused on executing and improving our core products and business. We're in great position to continue making progress towards our mission."

The company also announced the departure of chief finance officer David Ebersman, who will step down later this year.

The social networking site, which was founded in 2004, increased its global reach during the first quarter of 2014.

Almost 1.3 billion people used the website in March, up 15% year-on-year - more than a billion using smart phones and tablets - and around 800 million people logged on to the website each day.

The surge in profits comes despite recent acquisitions, such as that of instant messaging service WhatsApp.

The mobile device market is a key area for Facebook, and the purchase of WhatsApp highlighted its determination to stay relevant in that sector.

It also recently bought virtual reality headset maker Oculus VR, developer of the Oculus Rift headset that many regard as the future of gaming.

Commenting on the mobile aspect of the results, Brett Dixon, director of DP Online Marketing, an online marketing agency said: "For Facebook, mobile is the next big thing. It's relying on this high growth area to save the day - and so far, so good. The growth of mobile couldn't have come at a better time for Facebook and is giving it new momentum.

"For a number of years, Facebook has been the king of social media but its crown has started to slip. The challenge it's facing is primarily two-fold: how does it monetise its users and how does it avoid becoming stale? For Facebook to remain at the cutting edge of social media, when surrounded by so much innovation, is no mean feat."

The general rise in revenue and profit suggests that Facebook' acquisitions so far this year are yet to be felt on the balance sheet.

"The impact of Facebook's recent acquisition of the instant messaging service, WhatsApp, remains to be seen", said Mr Dixon.

"Was this a last-ditch attempt to keep up with the ever-changing face of social media akin to its purchase of Instagram back in 2012? What's clear is that, done correctly, mobile could be what Facebook needs to silence the doubters and get firmly back on track."

Chief financial officer Mr Ebersman leaves Facebook after five years in the role. He will be succeeded by David Wehner, formerly of app developer Zynga, which was acquired by Facebook in 2012.

Mr Zuckerberg said: "David has been a great partner in building Facebook, and I'm grateful for everything he's done to help make the world more open and connected.

"David set us up to operate efficiently and make the long term investments we need, and built an incredibly strong team including Dave Wehner, our next CFO. I look forward to working with Dave in his new role."

Facebook announced its financial results on the same day as fellow technology giant Apple, with the Cupertino-based firm reporting profits of more than 10 billion dollars (£6bn).