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Facebook's network keeps expanding, Zuckerberg's mobile bet pays off

The social-networking giant says advertising revenue rose -- as did the number of active users. But it's all the other stuff Facebook's up to that's getting interesting.

All those other social networks Facebook runs? They're getting big. James Martin/CNET

Facebook is well on its way to building another Facebook.

The world's largest social network has been steadily growing its audience outside its namesake website and mobile app, encouraging people to connect using its Instagram photo sharing network, Messenger communicator app and WhatsApp text message replacement service.

The result: Facebook said last month it counted more than more than 300 million people who use Instagram each month and 800 million who use WhatsApp. Together, that's close to the 1.44 billion people Facebook says logged into its service as of March 31, including the 600 million people who use Messenger.

For Facebook, the move to expand past its core social network stems from its aim to become the go-to service of mobile app developers and users. The company has promised to be, well, more friendly -- offering consistent and less buggy software and new technology for uploading videos, photos and other items more easily into Facebook.

But Mark Zuckerberg, Facebook's CEO, wants the company to focus even more on mobile devices. He's offered developers new ways to share videos and photos through the Messenger app, expanded advertising for Instagram, and created a team of experts called "Creative Shop" to help companies more effectively create photos and videos targeted at users around the globe.

He also said in a conference call today that he has no plans to integrate WhatsApp into Facebook's services, likely suggesting other services like Instagram will also remain independent. The reason, he said, is because they're used for different purposes--in Brazil, for example, WhatsApp is a more utilitarian replacement for cellular text messages, whereas Messenger is a way to connect directly with Facebook friends.

While Wall Street may be scratching its head over the way Facebook will continue to manage these separate social networks, Ken Odeluga, an analyst at City Index said the company clearly understands how important different types of mobile services are. "The CEO and management team have made little secret of the fact that they want to be a mobile-first business," he said.

Facebook's focus on mobile comes through even in its financial filings, which now offer many comparable data points about its mobile device business. "They've realized everything on the Internet will be mobile, essentially," Odeluga said,

The company has also begun offering more data to advertisers, both to help them understand what users are saying about companies and products and to help them test how effectively their ads encourage customers to buy things from stores.

Advertisers appear to be following Team Zuckerberg. Of Facebook's $3.32 billion in revenue derived from advertising for its first quarter, ended March 31, the company said that 73 percent came from ads shown on mobile devices. That figure was 59 percent a year ago.

In addition, more than 85 percent of the people who log into Facebook's service each day now do so from a mobile device.

Videos in particular are "exploding" on the social network, Facebook said. The trend has drawn in advertisers as large as movie makers, fast food chains and consumer electronics chains to small-and-medium sized businesses, 1 million of which Facebook said have created videos and bought ads on the service. Videos have been watched more than 4 billion times on the service, and more than 75% of those were by people using mobile devices.

"As consumers shift to mobile, businesses are following and we're focusing on helping them take advantage of this opportunity," said Sheryl Sandberg, Facebook's head of operations, said in today's call. "We have an ability to grow both the number of advertisers who use our platform, but also the percentage of their business that we get."

By the numbers

For its first quarter, Facebook's sales hit $3.54 billion, up more than 41 percent from the same time a year ago and slightly below the $3.55 billion expected by analysts polled by Thomson Reuters. But foreign exchange rates, and particularly the strong US dollar, put a drag on the business. Profit plummeted to $512 million, down more than 20 percent from the same time a year ago, mostly due to higher operating expenses that Facebook had warned investors were coming.

Wall Street was unfazed, barely moving Facebook's shares off their closing price of $84.63. The stock has risen 8.5 percent so far this year.

After adjustments for items like stock-based compensation, Facebook said it earned 42 cents per share, above the 40 cents per share analysts had been expecting.