Facebook profit dips, revenue surges on mobile ads

Facebook reported a dip in its quarterly profit Wednesday but said revenues surged on mobile advertising gains, as its user base neared 1.5 billion.

The world's biggest social network saw higher expenses cut into its bottom line, as it invests in new technologies and seeks to build a "family" of applications.

Net profit for shareholders dipped nine percent from a year earlier to $715 million.

But total revenues surged 39 percent to $4.04 billion on big gains in ad revenues, chiefly from paid messages delivered to mobile devices.

Monthly active users grew 13 percent from a year ago to 1.49 billion, but the gain was modest from the first quarter when it had 1.44 billion. The number of mobile active users rose to 1.31 billion.

"This was another strong quarter for our community," said Facebook founder and chief executive Mark Zuckerberg.

"Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services."

Amid ongoing growth in Facebook, the company has been expanding its offerings of applications, including the photo-sharing service Instagram, the messaging service WhatsApp and virtual reality gearmaker Oculus.

Facebook's capital spending in the quarter was $549 million. Its research and development costs were $1.17 billion.

The big gains in revenue came from advertising, and mobile accounted for 76 percent of ad revenues in the quarter, up from 62 percent a year earlier and 73 percent in the first three months of the year.

Facebook shares dipped 1.9 percent in after-hours trade following the results, even though most of the figures were ahead of market expectations.

Analysts have said the newly acquired services such as Oculus and Instagram are not delivering meaningful revenues now, but could build a base for future growth.

Facebook itself has been a rising star in online advertising.

It accounted for 7.9 percent of worldwide digital ad revenues in 2014, up from 5.8 percent in 2013, according to the research firm eMarketer, which predicts its share will reach nine percent by the end of this year.