Facebook's mobile ad bonanza brought it record returns in 2014

Facebook finished the best quarter and the best year of its history on December 31, with its latest earnings report showing record annual revenues of $12.47bn for its fiscal 2014, up 58 per cent from 2013's haul.

Revenues for the fourth quarter were $3.85bn, a 49 per cent increase over the same period a year ago.

That figure was on the high side of what analysts estimated, with Wall Street expecting sales of around $3.77bn, on average.

Net income for Q4 was $701m, a 34 per cent year-on-year increase. But that number was still heavily influenced by various accounting items, most notably charges related to share-based compensation. Ignoring those factors, Facebook showed net income of $1.51bn, up 86.5 per cent from the year-ago period.

For the full fiscal year, the social network reported net income of $2.94bn, or $4.71bn if you disregard the aforementioned accounting items. Profits were up around 100 per cent since 2013, either way you slice it.

That in turn translated into earnings of $0.54 per diluted share for the fourth quarter, which also beat analysts' estimates.

"We got a lot done in 2014," CEO Mark Zuckerberg said in a canned statement. "Our community continues to grow and we're making progress towards connecting the world."

As expected, most of Facebook's revenues for the quarter came from advertising, which accounted for $3.59bn or 93.2 per cent of the total pot. Around 69 per cent of those ads were served to mobile devices, up from approximately 53 per cent in the year-ago quarter.

Facebook claimed 890 million daily active users (DAUs) in the fourth quarter of 2014, a 17.6 per cent year-on-year increase. Around 42 per cent of those users were in the US, Canada, and Europe, with the rest hailing from the Asia-Pacific region and elsewhere around the world. Three billion videos are viewed on the site every day, we're told.

Monthly active users (MAUs) hit 1.39 billion in Q4, up 34 per cent from the year-ago quarter. Equally important, the ratio of DAUs to MAUs – a metric often used to gauge users' engagement with social sites – held solid at 64 per cent, the same as the previous sequential quarter and the highest level in Facebook's history.

More users than ever are accessing Facebook via mobile devices, too. Mobile DAUs hit 745 million, or 83.7 per cent of the total, while mobile MAUs for Q4 made up 85.4 per cent of the total at 1.19 billion. The ratio of mobile DAUs to mobile MAUs for the fourth quarter was 62.7 per cent.

All of this is good news for the social network, which struggled early on to adapt to the shift from desktop web browsing to mobile. Yet Facebook's notoriously fickle investors seemed little moved by the good news, and they left the company's share price more or less flat following Wednesday's closing bell. ®