Facebook Inc. shares soared in after-hours trading yesterday on late news that the social networking company's mobile advertising sales boosted it to a stronger-than-expected quarterly profit.
"We made some really good progress this quarter with the growth and engagement of our community, the release of new products like Instagram video, and advertising growth, especially on mobile," CEO Mark Zuckerberg said in a call with analysts. "We now have more daily actives on mobile than on desktop. Nearly half a billion people use Facebook on their phones every day, and soon we'll have more revenue on mobile than on desktop as well."
Facebook posted $333 million in net income for the second quarter ended June 30, compared to a $157 million loss in the same period a year ago. Revenue jumped 53 percent to $1.81 billion from $1.18 billion. Both beat analysts' estimates.
"They were a legitimate surprise," said Ben Rose, an analyst at Battle Road Research in Waltham. "People were setting fairly conservative expectations. Going into the quarter, we, like others, were projecting about $1.6 billion in revenue."
Advertising revenue accounted for $1.6 billion or 88 percent of Facebook's total revenue, a 61 percent increase from a year ago. Mobile ad revenue, meanwhile, was about 41 percent of total ad revenue, compared to less than 10 percent in last year's second quarter.
Shares of the Menlo Park, Calif., company's stock climbed 20.6 percent to $31.98 after the bell and a $26.51 close.
"It does suggest that the sentiment is improving for the company," Rose said. "Their stock hasn't performed really well since their (initial public offering) more than a year ago."
Concern about its ability to capitalize on the shift to mobile devices from personal computers has weighed on Facebook shares since its $16 billion IPO in May 2012 — the largest technology IPO ever. Facebook's stock was priced at $38 when it went public and has yet to hit that level since.
"Finally, the blowout quarter that Facebook bulls have been waiting for," Bloomberg Industries analyst Paul Sweeney said.
Zuckerberg also rebutted concerns that teens are growing tired of Facebook in favor of newer services such as (Facebook-owned) Instagram. "… Based on our data, that just isn't true," he said.
Herald wire services contributed to this report.
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