Facebook reports £37m Q3 loss despite growth in mobile sector

Facebook has reported encouraging 32 per cent year-over-year revenue growth but suffered a $59 million (£37 million) loss in its fiscal third quarter, while highlighting progress in its mobile business and outlining a plan to monetise its social graph in the coming years.

"As proud as I am that a billion people use Facebook each month, I'm also really happy that over 600 million people now share and connect on Facebook every month using mobile devices. People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform," Facebook CEO Mark Zuckerberg said in a statement.

Facebook reported sales of $ 1.26 billion (£788 million) in revenue for its third quarter, up from the $954 million (£597 million) it pulled in during the same period last year prior to going public. Ad sales of $1.09 billion (£681 million) represented 86 per cent of its total revenue for the quarter. The company's loss, a contrast to net income of $227 million (£142 million) in the third quarter of 2011, was attributed to "share-based compensation and related payroll tax expenses and income tax adjustments."

Zuckerberg said Facebook's early years were spent mapping the social relationships between users but that the company would use the resulting social graph to grow "apps and experiences" based around that data in the next five to ten years. He described social data as a "new form of critical infrastructure" for enterprises, which he said were developing crucial business tools and processes around social networking.

Facebook's co-founder and CEO highlighted the growth of the company's improved mobile business, seen by some investors as a problem area for the company, but which he said accounted for 14 per cent of ad revenue in the third quarter.

"I want to dispel this myth that Facebook can't make money on mobile. That's because we hadn't tried it yet," Zuckerberg said during a call with investors and analysts. "We're actually better positioned on mobile now than we were on desktop when we started," he added later on the call.

Another area where Facebook showed some encouraging change for investors was in the diminishing of its share of revenue generated by social game developer Zynga, regarded by some since the company's 18 May initial public offering revealed its internal financials as too large a driver of Facebook's overall financial health. The company said revenue from Zynga was down 20 per cent in the third quarter, while revenue from other game developer partners was up 43 per cent.

In the third quarter, Facebook closed its Instagram acquisition, launched its Facebook Stories site and Facebook Gifts service, while rolling out a COPYnew mobile version of the site for Apple's iOS devices, and also introducing new ad products for mobile and other target markets.

The social network also celebrated a major milestone in the third quarter - earlier this month, Facebook announced that its monthly active user base had reached a whopping one billion.