Zuckerberg Debunks the Biggest Myth About Facebook

Mark Zuckerberg used Facebook’s third quarter earnings call to clear up what he sees as the biggest myth about the company: that Facebook can’t make money on mobile.

Early in the call, Zuckerberg referred to Facebook’s “opportunity on mobile” as “the most misunderstood” aspect of the company right now. “I want to dispel this myth that Facebook can’t make money on mobile,” he said during the call on Tuesday. “This might have seemed true earlier this year because we hadn’t started trying yet.”

Facebook released its first mobile ad product just a few months ago and now mobile revenue makes up 14% of the company’s total  ad revenue. As Zuckerberg put it, “We’re just getting started.”
In fact, Zuckerberg argued that the company will end up reaching more users on mobile than desktop and will see better monetization from mobile users than desktop users. Part of the reason for this, he says, is that mobile users are actually more engaged with Facebook than desktop users. Facebook has found that mobile users have a 70% likelihood of logging onto Facebook on a given day, compared to a 40% likelihood for desktop users.

Zuckerberg also noted that engagement on iOS devices in particular has improved since Facebook overhauled its iPhone and iPad apps in August, improving speed. Facebook has apparently seen an 80% increase in News Feed loads and a 20% increase in likes, comments and other forms of user engagement within those apps in the past two months.

It’s no surprise that Zuckerberg spent so much time talking about mobile, as concerns about mobile monetization have plagued the company’s stock to date. In fact, Zuckerberg revealed that monetization has become such a big focus for the company that each of Facebook’s product teams are now tasked with coming up with a revenue strategy for their products. This is a marked shift for a company that has traditionally been very user-focused, rather than monetization-focused.

Overall, Facebook’s third-quarter earnings came in slightly ahead of Wall Street estimates, posting an adjusted earnings per share of $0.12 on revenue of $1.26 billion. Analysts had expected Facebook to report earnings per share of $0.11 on revenue of $1.23 billion. Shares of Facebook rose by more than 11% in after hours trading following the earnings report and call.

Aside from debunking the myth of mobile monetization, Zuckerberg also tried to put a positive spin on the impact of declining revenue from Zynga, another big concern of investors ever since Zynga pre-announced some particularly lousy earnings results earlier this month. According to Zuckerberg, payment revenue from Zynga did decline 20% in the third quarter year-over-year, but revenue from the rest of Facebook games increased 40% year-over-year.
Nevertheless, Zynga continues to make up a significant portion of Facebook’s total revenue. Zynga accounted for 7% of Facebook revenues in the third quarter, down from 10% in the previous quarter and 12% in the third quarter last year.

Facebook’s earnings call got off to a sloppy start, as someone apparently forgot to press mute on the phone. As a result, listeners could hear Facebook executives fumbling and saying, “Oh my god.” The issue was fixed quickly enough and the rest of the call went relatively smoothly.