Facebook said Chief Financial Officer David Ebersman is leaving as sales and profit blew past analysts' estimates. Ebersman is stepping down later this year, to be succeeded by David Wehner, who joined from Zynga in 2012, the California-based company said today in a statement.
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Revenue rose 72 per cent to $US2.5 billion ($2.69 billion), beating the average analyst estimate of $US2.36 billion, according to data compiled by Bloomberg. Mobile promotions accounted for 59 per cent of ad sales, up from 53 per cent in the prior period.
Having increased mobile advertising to a majority of its business from almost nothing at the time of its 2012 initial public offering, Facebook is seeking ways to make even more money on smartphones and tablets. That includes testing a mobile ad network and agreeing to buy text messaging service WhatsApp Inc. for $US19 billion, a deal that's yet to close.
"The core of this business is very strong, and their biggest challenge will be sustaining their growth rate in this range," Martin Pyykkonen, an analyst at Rosenblatt Securities in New York. "We don't know how big these new areas can be."
The stock dropped 2.6 per cent to $US61.36 at 4pm in New York.
Net income almost tripled to $US642 million, or 25 cents per share, from $US219 million, or 9 cents, a year earlier, Facebook said. Profit excluding some items was 34 cents per share, beating the average analyst estimate of 24 cents.
Surging use
Facebook has 1.28 billion monthly active users, or almost half the world's Internet population, up from 1.23 billion last quarter. WhatsApp will bring 500 million consumers of its texting app, though the company generates minimal revenue.
To make more money from Facebook's massive user base, Chief Executive Officer Mark Zuckerberg is building out a mobile portfolio that already includes Instagram, the photo-sharing app acquired in 2012, Facebook's Messenger service and Paper, a magazine-like news feature.
EMarketer expects Facebook to capture 22 per cent of the the $US31.5 billion mobile ad market in 2014, up from 18 per cent last year. That's second to Google Inc., whose share is likely to fall to 47 per cent from 49 per cent, according to EMarketer.
Even with digital-ad spending on the rise, Facebook has been limiting the number of ads in a member's main news feed to avoid annoying users. To compensate, the company must increase the effectiveness of their promotions and charge more for them, which may be difficult as competition increases. Google's first- quarter revenue trailed estimates, because it's getting less money for marketing spots on mobile than on desktops.
More services
In addition to its own services, Facebook plans to bring in revenue from a mobile ad network that's being tested and will allow other apps to use Facebook data for targeting promotions to consumers.
Zuckerberg is also pushing the 10-year-old company into new businesses. Last month, the company released a video product to some of its partners, aiming for a slice of TV's $US66.8 billion ad budget. And Facebook agreed to buy Oculus VR Inc., a virtual- reality headset maker, for about $US2 billion, a high-priced bet on the fledgling wearable-computing market. The Oculus deal was approved today by the U.S. Federal Trade Commission.
In an even more far-out wager, Facebook said last month it is working to deliver connectivity via drones, satellites and lasers after purchasing Ascenta, a U.K.-based aerospace company.
Bloomberg
