Facebook profits soar on strong mobile ad growth

Facebook (FB) is quickly erasing any lingering doubts about its business model, with the social networking giant recording a big jump in sales and profits.

After markets closed on Wednesday Facebook reported first-quarter revenue of $2.5 billion, up a hefty 67 percent over the same period last year. Analysts expected sales of $2.4 billion. Facebook's net income also surged to $639 million, almost triple the $217 million in profit a year ago.

The company's stock was up 3 percent in extended trading, to $62.96.

There was much for investors to applaud. Monthly active users at Facebook were up 15 percent year over year, but daily users -- a better measure of those committed to the platform -- were up 21 percent. Mobile daily active users jumped by 43 percent.

Facebook is also making major strides in the increasingly important business of selling ads that run on smartphones, tablets and other mobile devices. Mobile ads accounted for 59 percent of total ad revenue in the period, up from 30 percent a year ago.

Another source of pressure comes from Facebook's recent acquisition spree. It isn't unusual for tech companies to acquire small firms, particularly as a way to obtain talent and innovation. Facebook is now mature enough as company that it looks to startups as a way to invest in social media and the Internet.

Unlike some large competitors, Facebook has a relatively limited amount of cash on hand. Such a level of investing, easily matched by Google, will require significant growth -- and some real return on the investments -- to sustain.