MENLO PARK -- Facebook revenue in the first quarter beat Wall Street estimates, though profit fell short of expectations, as the company showed strong mobile growth in a period when it also launched a series of new online services.
Facebook on Wednesday reported net income of $219 million on revenues of $1.46 billion for the first three months of 2013. The social-networking company reported its revenue from mobile advertising continued to increase -- reaching $375 million, or 30 percent of its total ad revenue. That's up 23 percent from the previous quarter.
"We've made a lot of progress in the first few months of the year," said CEO Mark Zuckerberg in a prepared statement. The company said its monthly active users reached 1.1 billion in March, with about 751 million monthly users on smartphones and mobile devices.
Facebook's revenue was up 38 percent from the same period a year ago, while net income was up 7 percent. The company said earnings amounted to 9 cents a share, or 12 cents a share excluding one-time charges.
Wall Street analysts were expecting earnings of 13 cents a share, excluding one-time charges, on revenue of $1.39 billion for the quarter that ended March 31, according to a survey by Thomson Reuters.
The financial report came after Facebook held several high-profile launches for new products aimed at sparking users' interest and keeping them coming back to the world's largest social network.
Analysts said it was too early for Facebook's newest features -- including a redesigned News Feed, a beefed-up search engine and a new interface for Android phones -- to produce significant additional revenue. But they're looking for evidence that Facebook is keeping users engaged while the company continues to build its mobile advertising business, amid signs that some people are losing interest in visiting the network, at least on their desktop computers.
Recent data from the comScore research firm shows a "modest deterioration" in the number of monthly visitors and minutes spent on Facebook in the United States, according to a report this week from Mark Mahaney of RBC Capital Markets, who said the numbers suggest "potential disengagement" by some Facebook users. But Mahaney noted that those numbers only track desktop computer usage, so they may reflect a shift by many consumers toward using smartphones and tablets rather than traditional PCs to go online.
Some of Facebook's latest products, including the redesigned News Feed and its new Android interface, are designed to highlight photos and other eye-catching visual elements on the smaller screens of smartphones and tablets. Zuckerberg has said the changes are also intended to help the company show more engaging advertisements on those mobile devices.
But at least one new innovation, the much-vaunted Facebook Home interface for Android phones, has had what Sterne Agee analyst Arvind Bhatia called a "rough start." While the new interface reportedly has been downloaded more than 500,000 times onto Android phones, it has drawn critical comments and a relatively low rating of just two stars out five in the Google Play online store.
Although some users complained the Home software is balky, others said they just didn't like having Facebook's interface taking over their phone's home screen and making it less convenient to access other apps. In a note to investors, Bhatia wrote, "Home will probably be great for the avid Facebook users, but it is unlikely to have mass appeal -- at least not in the current version."
During a conference call scheduled for Wednesday evening, analysts are hoping to hear more about Facebook's mobile ad revenue, which grew to $306 million in the final quarter of 2012, and about the company's plans for selling new types of ads including video. Facebook also recently announced that it had purchased the Atlas online ad platform from Microsoft.
Facebook's stock price started to climb toward the end of last year, as the company showed signs of progress on the mobile front. Shares peaked at $32.47 in late January, however, and have fallen off since then, staying below $28 in recent weeks; the stock dropped 1.2 percent to $27.43 in regular trading Wednesday.
Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/BrandonBailey