Summary:

Facebook has announced its Q3 earnings, which shows not only growth in mobile ads but also a widening of the social platform’s user base.

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Despite its massive size, Facebook is still seeing big gains in user growth. In its Q3 earnings report, the social media giant said that September 2013 saw an average of 728 million daily active users, an increase of 25 percent year-over-year. The company saw huge gains in mobile, too, taking in 874 million monthly active users as of September 30, 2013 — a growth rate of 45 percent from 2012.

David Ebersman, Facebook’s CFO, spoke directly to the growth of Facebook’s user base on a conference call following the release of the results, touching particularly on Facebook adoption and loyalty among teens. He said that although it’s difficult to track how teens engage with Facebook due to the privacy measures in place for users under 18, the company is confident that engagement among teens has held steady between Q2 and Q3. The only trouble area, he adds, is among “younger teens.”

“We won’t typically call out some granular data, especially since it’s statistically questionable,” Ebersman said, “But we get many questions about it, so we chose to address that.”

The talk of teens apparently did more harm than good, causing a $0.60 drop in share price right after the confession. That erased the 15 percent bump the company got right after releasing its earnings, and caused plenty of chatter about Facebook’s “teen problem” on Twitter.

The increased user base accounted for an uptick in revenue for the company: Q3 2013 revenue was $2.02 billion, an increase of 60 percent from the Q3 2012 intake of $1.26 billion. Mobile advertising revenue was also a big winner for the company representing approximately 49 percent of its overall advertising revenue for the third quarter of 2013. The mobile numbers reflect Facebook’s focus on getting those ads right — the company continues to try out new ads, including a targeted app unit, to find the right value for the space.

Both CEO Mark Zuckerberg and CMO Sheryl Sandberg spoke directly to Facebook’s mobile ads, and doubled down on the company’s commitment to improving the quality of ads, rather than quantity.

“Facebook is well positioned to benefit from this shift to mobile,” Sandberg said. “Facebook and Instagram have more mobile time spent than most other major services combined.”

These overall gains have turned Facebook’s operating loss into a reasonable profit. This time last year, the company lost $59 million, but now it has turned around to a $425 million net income (based on GAAP) this quarter. The company now has a potential for even more growth, provided that it continues to capitalize on mobile ads and draw greater adoption on both its traditional platform and via app.

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