Facebook reveals long-term goals

San Francisco - Facebook on Wednesday announced strong earnings on the back of soaring advertising revenue, nearly half of it from smartphones or tablet computers.

The world's leading online social network reported profit of $425m in the quarter that ended on September 30, compared with a loss a year earlier of $59m.

The third quarter results for the California-based firm were well ahead of most forecasts, with revenues rising 60% from a year ago to $2.016bn.

The company also disclosed increases in the number of users to 1.19bn.

Facebook shares jumped more than 9% to $53.43 in after-market trades that followed release of the earnings figures.

"For nearly 10 years, Facebook has been on a mission to connect the world," said co-founder and chief executive Mark Zuckerberg.

"The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy."

The number of people who use the social network daily in the quarter was 728 million in a 25% increase from the same quarter a year earlier, according to Facebook.

"Younger teens" not interested?

Chief financial officer David Ebersman mentioned, however, in an earnings call that internal analytics indicate decreased use of the social network by "younger teens."

About 1.19 billion people used Facebook monthly in a rise of 18% from the same period in 2012, the company reported.

Meanwhile, the ranks of Facebook members connecting to the social network with mobile devices at least once a month soared 45% to 874 million people.

On average, more than a half-billion people daily accessed Facebook using smartphones or tablets, according to the earnings report.

Advertising revenue in the quarter rose to $1.8bn, up 66% from the same period a year earlier.

Some 49% of that advertising money was made on marketing messages delivered on mobile devices.

The figure promised to appease investors keen to make sure Facebook's business model is adapting to the trend of modern lifestyles increasingly revolving around accessing the Internet using smartphones or tablets.

Shares in Facebook struggled after the company's keenly anticipated public offering in May 2012. The stock fell by some 50% last year, before turning sharply higher and hitting record levels in recent weeks.

Facebook is expected to take a 5.41% share of all global digital ad revenues this year compared with the 32.84% stake going to Google, according to industry tracker eMarketer.

Meanwhile, the social network was forecast by eMarketer to end the year with a 15.8% share of mobile ad spending worldwide while Google lays claim to a dominant 53.17% of the $16.65bn market.

Falling out of favour?

The notion that Facebook is falling out of favor with a budding generation prompts worry about the company's future earnings potential no matter what fiscal guidance executives provide.

"The kids are Facebook's seed corn, and you don't want to lose that," Enderle said.

Ebersman cautioned that Facebook engagement by young people is tricky to measure because users claims regarding ages are not validated. The social network used internal tools to get a sense of activity by teenagers.

"Our best analytics shows use by US teens overall stable, but a decrease in use by younger teens," Ebersman said.

Those goals include making internet access ubiquitous and affordable, and tapping into the mountains of information shared at the social network to provide answers to people's questions, according to Zuckerberg.

"When we get to a point where people can ask any question they want and get it answered by their Facebook community, that is going to be very powerful," he said.

"We don't build services to make money, we make money to build better services," Zuckerberg said, endorsing a statement he has said in the past.

"It's a different way to look at the world, but it is how we are going to keep succeeding as a company."