San Francisco - Facebook posted surprisingly strong profit and revenue growth as the world's largest social network grew even larger, with a spike in mobile users and advertising that lifted its stock to an all-time high.
The company on Wednesday reported audience numbers that suggest it is poised to take on mainstream media as an advertising force, helping investors to overlook Facebook's huge spending on hiring and building data centres.
Facebook now has eight billion video views per day from 500 million people, compared with four billion views in April.
And Facebook's website and Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than one in five minutes spent on mobile devices in the US, chief operating officer Sheryl Sandberg said.
"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.
Ad revenue
Facebook had 1.55 billion monthly active users as of September 30, up 14% from a year earlier. Of these, 1.39 billion used the service on mobile devices.
"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Sandberg said in an interview. "We're also pretty focused on helping bring the next set of people who are not online, online."
Market research firm FactSet StreetAccount had predicted 1.53 billion monthly active users, with 1.36 billion on mobile.
Ad revenue grew 45.4% to $4.30bn, with 78% of that coming from mobile versus 66% in the year-ago quarter.
"Part of the upside came from Instagram. The Instagram monetisation engine has been turned on really rapidly for the coming quarters and years," said Arvind Bhatia, an analyst with SterneAgee.
Facebook did not disclose Instagram's ad sales figures. But the app is expected to bring in $595m in mobile ad revenues this year, research firm eMarketer said. Its ad revenue is projected to grow to $2.8bn by 2017.
Facebook's huge $3bn spending, up 68% from the third quarter last year, did not seem to worry investors or analysts.
"I think the investors would like the company to continue to invest given that the opportunity is pretty large," said Shyam Patil of Susquehanna Financial Group.
The stock rose about 5% to an all-time high of $109.34 in extended trading, before paring gains to about 4%. It closed earlier at $103.94.
Total revenue jumped to $4.5bn in the third quarter, from $3.2bn a year earlier. Analysts had expected revenue of $4.37bn, according to Thomson Reuters I/B/E/S.
Net income attributable to stockholders rose to $891m, or 31c per share, from $802m, or 30c per share.
Excluding items, the Menlo Park, California-based company earned 57c per share, ahead of analysts' average estimate of 52c per share.