Facebook's third-quarter sales and profit topped analysts' estimates as advertisers boosted spending on promotions targeting smartphone and tablet users, sending shares up as much as 18 percent.
Revenue surged 60 percent to $2.02 billion, exceeding the average projection for $1.91 billion, according to data compiled by Bloomberg. Profit, excluding stock-based compensation, currency effects on revenue and other items, was 25 cents a share, the company said in a statement Wednesday, compared with analysts' average prediction for 19 cents.
Chief Executive Officer Mark Zuckerberg has been building ad features that make it easier for marketers to reach consumers as they check on their friends' activities via wireless devices. Revenue from mobile promotions made up 49 percent of the total in the third quarter, surpassing 41 percent in the prior period and analysts' average prediction for 45.6 percent.
"They're targeting ads better," said Ben Schachter, an
analyst at Macquarie Securities USA who has the equivalent of a buy rating. "To see a company continue to accelerate revenue growth at this stage in the game is quite impressive."
The shares of Facebook, based in Menlo Park, Calif., climbed as high as $57.98 in extended trading. The stock declined less than 1 percent to $49.01 at the close in New York, leaving it up 84 percent this year.
Net income was $425 million, or 17 cents a share, in the third quarter, as the social-networking service continued to invest in equipment, staff and services. That compared with a loss of $59 million, or 2 cents, a year earlier.
"The investments we're making in mobile in particular are really paying off," Chief Financial Officer David Ebersman said in an interview. "Mobile is already important, and we think it's going to increase in importance because it's where people are spending so much time."
Facebook had 1.19 billion users during the quarter, up from about 1.15 billion in the second quarter. The number of mobile users rose 6.7 percent to 874 million from the prior period.
Facebook surprised investors in July with second-quarter revenue and profit that exceeded estimates, boosting investors' confidence that the company is succeeding in selling ads that target wireless users. The stock climbed 30 percent the next day, and in August topped $38, the price at the company's initial public offering in May 2012.
Facebook, which didn't roll out mobile ads until early 2012, has been upgrading its offerings. Earlier this month, the company said it was expanding a service to let companies target users based on their online activity outside of the social network. Facebook's Instagram unit for sharing photos and videos from mobile devices is set to start selling promotions.
"Facebook is well on its way to figuring out mobile advertising," said Paul Sweeney, an analyst at Bloomberg Industries. "The good news for Facebook is that over 70 percent of its usage is mobile, yet only 49 percent of revenue comes from mobile, suggesting further upside."
-- With assistance from Beth Mellor in New York.