Facebook nears 2 billion users

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Facebook is three-quarters of the way to its next billion users.

The social network announced Wednesday that it had 1.79 billion monthly active users as of the end of the third quarter, up from 1.39 billion a year earlier.

To put that another way: Facebook (FB, Tech30) has added the equivalent of Twitter’s (TWTR, Tech30) entire user base in a year.

As Facebook’s user base continues to grow, so does its appeal to advertisers.

Facebook’s revenue surged to $7 billion in the September quarter, up 59% from the same quarter a year earlier. In fact, Facebook sales for this quarter are nearly as much its total revenue for all of 2013.

Facebook’s remarkable sales growth has been fueled by its success in transitioning to selling ads on smartphones and tablets. Mobile ads now account for 84% of Facebook’s overall ad revenue, compared to almost nothing in mid-2012.

Wall Street once viewed mobile as the Achilles’ heel for Facebook because the site was originally designed for desktop. Now, Facebook has one billion monthly users who only use mobile — and millions of businesses eager to reach them through ads.

Related: Facebook’s ad options could be discriminatory

Michael Pachter, an analyst with Wedbush, wrote in an investor note last week that Facebook’s business has achieved a “virtually insurmountable advantage” for that reason.

In recent months, however, there have been hiccups in its ad business. Facebook was accused of allowing targeted ads that could be discriminatory. It also went on an apology tour to the marketing community after mistakenly overstating a key video metric.

Yet, the most pressing concern for Facebook may simply be that there is only so much room left to squeeze ads onto the social network to keep up its incredible sales growth.

Facebook has quickly been building up an arsenal of other services that also have one billion users and are primed to make money. That list includes Facebook Messenger and WhatsApp, which are both expected to monetize interactions between businesses and customers.

Instagram recently topped the 500 million mark and has begun ramping up its advertising business. This week, Instagram also announced plans to make it easier to shop for items on the platform.

CNNMoney (New York) First published November 2, 2016: 4:28 PM ET



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