Q3 mobile driving growth for Facebook, Twitter user numbers disappoint

Facebook has reported third quarter results, again showing strong year-on-year growth in mobile, where daily active users (DAUs) rose by 39% to 703 million, while overall daily users rose 19% to 864 million DAUs. The social networking site also reported 59% revenue increase compared to Q3 2013. Advertising revenue increased 64% to $2.96 billion of which 66% came from mobile, up from approximate 49% a year ago.

“This has been a good quarter for Facebook and we’ve achieved strong results across the board,” Facebook CEO Mark Zuckerberg said. “We’ve continued to grow our community in both size and engagement, with 1.35 billion people now using Facebook each month and 64% using Facebook daily. On mobile, 1.12 billion people now use Facebook each month, and 703 million people each day – nearly 40% growth from this time last year.”

While Facebook also reported an impressive net profit increase of 90% to $806 million, it is not all glory for the social media site. The company’s share price fell after the report as the market was unnerved by Facebook’s comments at a conference call saying the firm faces significant expenditure next year, mainly because of recent acquisitions Oculus Rift and especially WhatsApp.

Messenger service WhatsApp, bought by Facebook in July, made net loss $232 million in the first half of the year. However, the majority of the loss at $206.5 million was due to share-based compensation expenses and issuance of common stock below fair value. Even so, Facebook needs to make some sizeable investment to keep it going, not to mention achieving growth.

“Our current expectation is that total costs and expenses on a GAAP basis, inclusive of stock-based compensation charges related to the recent transactions, are likely to increase 55% to75% compared to the full-year 2014,” Facebook CFO Dave Wehner said. “On a non-GAAP basis, we expect total costs to increase approximately 50% to 70% compared to 2014.”

Meanwhile, Twitter has posted revenue increase of 114% in the third quarter, but user growth was modest with a 23% year-on-year rise in average monthly active users, bringing the total to 284 million for the quarter. The site posted $320 million advertising revenue, a 109% surge, of which 85% was from mobile ads.

“We had another very strong financial quarter” Twitter CEO Dick Costolo, said. “I’m confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services.”

Although Twitter performed well in revenue terms, its share price fell shortly after posting Q3 results. In the social media business user growth is considered critical, and this let Twitter down in the last quarter.