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.