Facebook triumphant with mobile, less so with teens by Erin Griffith @FortuneMagazine January 30, 2014, 12:29 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons FORTUNE — Since its disastrous IPO in 2012, Facebook has worked to quiet the skeptics. With its annual earnings report Wednesday, CEO Mark Zuckerberg can finally relax: Facebook FB is officially a mobile company. The fourth quarter marks the first time mobile advertising accounted for the majority of Facebook’s revenue, representing 53% of income at $1.25 billion. Facebook’s daily mobile users now outnumber its desktop users by 200 million, said CFO David Ebersman. All told, Facebook announced $2.59 billion in fourth-quarter revenue, a 63% increase from the same time last year. Earnings per share for the quarter were $0.20, a jump from $0.03 over the same time last year. For the full fiscal year, Facebook earned $7.78 billion in revenue, up 55% from the prior year. Net earnings per share for the year were $0.60, a jump from $0.01 in 2012. Wall Street responded positively, with Facebook shares rising more than 11% in after-market trading. MORE: Is time running out for Marissa Mayer? For context, just six quarters ago, Facebook earned zero dollars from mobile. Now it’s earning $1.25 billion per quarter. Only three years ago, the entire U.S. mobile advertising market was worth just $1.45 billion. Facebook and Google GOOG have been driving overall ad spending in the mobile market, commanding 18.4% and 53.2% of the market, respectively. The news provides a stark contrast to Yahoo’s YHOO year-end earnings call Tuesday. In it, CEO Marissa Mayer stressed the importance of mobile as a “huge driver of growth,” and indeed, Yahoo’s mobile audience grew to 400 million last year. She has thrown plenty of people at the problem, increasing Yahoo’s mobile team from 100 to 500 employees. But none of the company’s numerous apps have cracked the top 50 in Apple’s App Store. Worse, Yahoo’s mobile ad revenue was “not material” enough to break out as a separate line of income. Still, there’s just one catch to Facebook’s blockbuster mobile business: those pesky teens. The narrative that young users are leaving Facebook has dogged the company throughout the last year. It was exacerbated last quarter when Ebersman admitted that Facebook had seen a decrease in daily users “specifically among younger teens.” (He dodged the question on Wednesday’s earnings call, noting there is “no new data to report.”) Losing young users is worrisome for a social network, and Facebook has become increasingly desperate in its efforts to reverse that trend. First it copied Snapchat, an app popular with teenagers, with Poke. That didn’t work. Then it tried to buy Snapchat for an eye-popping $3 billion. That didn’t work either. MORE: eBay CEO: Icahn’s call for PayPal spin-off is old news For now, Facebook’s answer to that persistent teen question is Instagram. Facebook bought the mobile-first company in 2012, and it has remained popular with younger users. Whenever a competing app begins to threaten Facebook’s position, Instagram can copy it. Instagram debuted a video feature after Vine, a video sharing app, took off. Then in December, Instagram revealed a new feature for sharing privately, similar to Snapchat. Last quarter Facebook began to monetize Instagram (and its teen users). On Wednesday, Zuckberg emphasized the program is very early stage. “We’re still trying to learn the right way to approach it,” he said. The slow start might be a result of losing a key hire. In December, Emily White, Instagram’s head of business operations left Facebook for a new gig that couldn’t have made Zuckerberg happy — White is now running operations at Snapchat.