Facebook Q4 profit tops $1.56 bn as revenue zooms past $5 bn

Social networking site Facebook saw its quarterly earnings double to $1.56 billion in the fourth quarter of 2015 (October-December 2015) even as its quarterly revenue surpassed $5 billion for the first time.

At $5 billion, Facebook's quarterly revenue is more than what internet giant Yahoo now generates in an entire year.

Facebook, which is growing at an exceptional pace, propelling itself into a better position to challenge Google as the Internet's most powerful company.

The Menlo Park, California-based company invests heavily in virtual reality, artificial intelligence, Internet access in remote parts of the world and a mobile ad network for services other than its own.

Google is three times larger by revenue compared to Facebook, but the latter is closing that gap as it sells more mobile advertising on its addictive social-networking app. Its Instgram service has now started yielding revenues and the video library is expanding rapidly.

Facebook's acquisition of the Oculus Rift headset, part of the virtual-reality technology that it bought for $2 billion in 2014, could open another lucrative market.

Google is now hiring more virtual-reality specialists, a sign that is trying to catch up with Facebook in a still-nascent field that could transform computing.

Social networking, Facebook's primary service, added 46 million users during the final three months of last year to expand its worldwide audience to 1.59 billion users.

"I'm excited about our progress and the chance to build something great for the future," Facebook CEO Mark Zuckerberg told analysts in a conference call on Wednesday.

Total revenue rose to $5.84 billion from $3.85 billion a year earlier, with ad revenue increasing 56.8 per cent to $5.64 billion in the holiday shopping period, when spending on advertising typically spikes.

Excluding some items, the company earned 79 cents per share.

Apart from focusing on mobile, Facebook has been ramping up spending on what it calls "big bets," including virtual reality, artificial intelligence and drones to connect the remotest parts of the world to the Internet.

Zuckerberg, who returned from two months of paternity leave on Monday, has said virtual reality represents the next major computing platform.

The company has also begun monetizing some of its other units, such as photo-sharing app Instagram, which surpassed 400 million users last year and began selling ads in September.

Facebook said mobile ads accounted for 80 per cent of total ad revenue in the quarter, compared with about 78 percent in the third quarter and 69 per cent a year earlier.

The company, which has the world's most popular smartphone app, has also been benefiting from a surge in video views that has attracted advertising dollars.

Facebook said it had 1.59 billion monthly active users as of 31 December, up 14 per cent from the end of 2014. Of those, 1.44 billion used the service on mobile devices, an increase of 21 per cent.

The performance lifted Facebook's stock by $11.37, or 12 per cent, to $105.82 in extended trading after the report came out.