Facebook grew mobile advertising revenue at a faster-than-expected pace to help drive shares in the social networking giant nearly 13 per cent higher.
Facebook said it now gets 14 per cent of its advertising revenue from mobile ads, helping to reassure investors that the social network is beginning to figure out how to earn money off smartphone and tablet users.
Mobile ad revenues totaled roughly $150 million, up from an estimated $40 million to $50 million in the second quarter and almost nothing in the first.
They've started to generate decent revenues form their mobile applications.
"This certainly dispels the most bearish view, that Facebook couldn't monetise people on phones or tablets," said Colin Sebastian, an analyst with Robert Baird & Co.
"In about a six-month period they've actually started to generate decent revenues form their mobile applications," Sebastian added, though he said Facebook still needs to show that its mobile ads can command the same rates as its traditional ads.
Mobile advertising has been among the key investor concerns hanging over Facebook, helping slash more than $40 billion off its market value since its May IPO. As its users increasingly access the social network with their smartphones, Facebook has struggled to transition its business to mobile devices.
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The mobile ads helped reignite Facebook's overall advertising business during the third quarter, following several consecutive quarters of slowing revenue growth that raised questions about Facebook's long-term prospects.
Advertising revenue increased 36 per cent to $1.09 billion, up from 28 per cent growth in the second quarter. But revenue from its payments and other businesses increased just 13 per cent to $176 million.
Facebook CEO Mark Zuckerberg said mobile was the "most misunderstood aspect" of the company and took issue with the "myth" that Facebook could not earn money on mobile.
"Over the long run we're going to see more monetisation per time spent on mobile than on desktop," Zuckerberg said on a conference call with analysts yesterday.
The company's shares leapt nearly 13 per cent to $21.97 in after-hours trading on Tuesday.
Facebook said it had crossed the 1 billion threshold for monthly active users by September 30, of which 604 million were mobile users, a gain of 61 percent from a year earlier.
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