The future is mobile and as the most used app in the smartphone-o-sphere, Facebook is perfectly positioned to take advantage of that burgeoning revenue stream, Mark Zuckerberg assured skittish investors Thursday.
"We're investing heavily in improving our mobile apps," Zuckerberg said.
"You should expect to see a frequency of improvement in mobile experiences," he added.
Also read: Facebook Q2: Revenue Up 32% to $1.18 Billion
Speaking in rapid-fire, serpentine sentences, Zuckerberg told a conference call filled with analysts and media that Facebook remains committed to being a dominate presence on iPhones, Androids and other smartphones and promised it will figure out a way to advertise effectively on the platform. He even refused to rule out the possibility that the company might one day manufacture a device of its own (though for now he insists it will stick to apps).
Noting that he anticipates 5 billion people will have smartphones in the next five years, Zuckerberg said the company has been actively recruiting engineers to bolster its mobile offerings. From an advertising perspective, he said, Facebook has had success with sponsored stories, which bring in roughly $1 million a day with half of that coming from mobile users.
This story, one told with a razor-like focus on the glories of mobile devices, was probably not the one Zuckerberg envisioned relaying when he rang the Nasdaq opening bell nearly three months ago to signal that Facebook's stock was ready to trade publicly. Yet after a disappointing quarterly earnings report that saw the social network's stock tumble more than 8 percent in after hours trading, the 28-year old CEO had the unenviable task of proving that he gets it — Facebook has had some growing pains.
That botched debut, which saw shares in the once white-hot tech giant down 30 percent from its IPO price of $38, continues to cast a shadow over the company that reinvented the way the world connects in the digital age. Compounding the sense that Facebook's first quarterly financial report as a public company would be one for the dust heap, was an anemic second quarter for Zynga. The game maker, which reported its results earlier Thursday, accounts for more than 10 percent of Facebook's revenue. It blamed changes in the social network's platform for a quarter that saw declines in engagement and bookings for its web games.
It's not that the numbers Facebook posted were awful; they just did little to prove that it has answered advertisers' worries that social networking is not an effective vehicle on which to hawk their wares. True, the company was in the red, reporting a quarterly loss of $157 million, but that was largely related to stock awards from going public. Without those one-time costs, Facebook would have posted a profit of $295 million or 12 cents a share.
On the revenue side, sales rose 32 percent to $1.18 billion, matching analysts' forecasts. So why the concern?
Facebook COO Sheryl Sandberg took the issue head on at several points during the call, maintaining that its ads are paying off for customers despite what major advertisers like General Motors have claimed. She said the company will continue to work with the advertising community to educate them about getting more out of their Facebook presence, but acknowledged that its advertising efforts were still in their nascent stages.
"We're still in that learning curve that took TV and search so long… Our view is that our ads work, and if they continue to work we will be able to educate the market," Sandberg said.