Facebook reports strong profits, adding millions of users

Facebook reported fourth-quarter profits of $701m (£462m), a 34% increase on the same period a year ago.

Advertising revenue grew by 53% to $3.59bn, with nearly 70% of that coming from mobile ad sales.

The social networking giant said it now has 1.39 billion active users each month, a 13% increase from a year ago.

“We got a lot done in 2014,” said Mark Zuckerberg in a statement accompanying earnings. Total profits for the year were $2.9bn, almost double the total for 2013.

However, the amount of profit the company made on each dollar of revenue decreased from 44% to 29% from a year earlier, as the social network invested more heavily in marketing and research and development (R&D).

The amount Facebook is spending on R&D nearly tripled to $1.1bn this quarter, as the company spent considerable sums on developing its various acquisitions such as Instagram, WhatsApp and virtual-reality headset maker Oculus Rift, as well as its own in-house messaging products and video services.

Facebook also echoed a common complaint amongst US firms this earnings season, saying its revenue would have increased by 53% instead of 49% were it not for unfavourable foreign exchange rates.

BBC