Your Facebook account costs Facebook $1 according to Q4 earnings report

Facebook’s revenue is up but its profits are down according to its Q4 financial results. It exceeded analysts predictions but its share price fell. Will its mobile ad revenue live up to expectations?
Written by Eileen Brown, Contributor on

Facebook released its fourth-quarter financial results showing an increase in revenue but decrease in profits. Revenue rose 40 percent to $1.59 billion from $1.13 billion during the same period in 2011.

facebook earnings results
(Credit: Facebook)

Facebook now boasts over 1.06 billion monthly active users who accessed the site during December 2011--a 25 percent increase in users year on year.

After IPO in 2011 Facebook has been working to invest in its long-term future, which is why its fourth-quarter costs and expenses were so high. It reported costs and expenses of $1.06 billion. This represents an increase of 82 percent compared with the fourth quarter of 2011.

1.06 billion monthly active users and $1.06 billion for costs and expenses looks like it costs Facebook $1 for every Facebook account it has.

This investment can be justified when the increase in mobile users and upswing in mobile revenue is taken into account.

Facebook's revenue from mobile advertising is impressive: 680 million users accessed the site from a mobile device in December--an increase of 57 percent.

Users are accessing Facebook from devices more and more. In fact people logging on to Facebook from a mobile device exceeded users accessing it via the web for the first time in the fourth quarter of 2012.

Facebook is pushing ahead with its plans to monetise mobile and this strategy seems to be paying off.

Mobile revenue represented approximately 23 percent of advertising revenue for the fourth quarter of 2012, up from approximately 14 percent in the third quarter of 2012.

Facebook also reported earnings per share (EPS) of $0.17--above analyst expectations of $0.15.

In spite of increased revenue, the company's share price went down 3.43 percent to $30.17 after market trading hours and is currently trading at $30.30.

Facebook still has a long way to go before its investors who bought shares at $42 per share due to the technology glitch at IPO get to see a return in their investment.

If Facebook to grow the business, trims its costs, and exceeds analysts' predictions then it might yet surpass all our expectations.

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