By Deepa Seetharaman 

Facebook Inc. posted a 52% surge in first-quarter revenue, underscoring the strength of the social network's newer mobile-ad products and rising popularity of its video ads.

Facebook also said it is proposing to create a new class of nonvoting capital stock, known as the Class C capital stock. The company said the proposal is designed to create a capital structure that will, among other things, ensure Chief Executive Mark Zuckerberg's leadership role at the company.

For the first quarter, the social network reported net income of $1.51 billion, or 52 cents a share, nearly tripling the $512 million, or 18 cents a share, it earned in the same period a year earlier.

Excluding certain expenses, the company said it would have earned 77 cents a share, up from 42 cents a share a year earlier. Analysts polled by Thomson Reuters were expecting 62 cents a share on that basis.

Revenue rose to $5.38 billion from $3.54 billion. Analysts expected revenue of $5.26 billion in the first quarter.

About 1.65 billion people checked Facebook at least once a month during the quarter compared with 1.59 billion in the previous quarter. Over the last two years, the bulk of Facebook's user growth has come from Asia, Africa and South America. About two-thirds of its users are outside the U.S., Canada and Europe.

The results were a rare bright spot in the technology industry after a string of disappointing reports over the past week. Tuesday, Apple Inc. reported its first quarterly drop in revenue in 13 years, while Twitter Inc.'s first-quarter revenue fell short of expectations. Google parent Alphabet Inc. missed analysts' expectations last week.

Shares of Facebook, up 33% over the past year, rose 9.1% to $118.77 in after-hours trading.

If the Class C proposal is approved by shareholders, Facebook said it would issue two shares of Class C capital stock as a one-time dividend for each share of Class A and Class B stock.

Google, now Alphabet, made a similar move a couple of years ago as a way to create stock to finance acquisitions and pay employees, but not dilute the voting power held by founders Larry Page and Sergey Brin.

Facebook discussed the Class C proposal in a preliminary proxy filed with the Securities and Exchange Commission. In the proxy, Facebook also detailed the compensation for its top officials. Mr. Zuckerberg's salary remained $1, but the value of his total compensation -- which includes security and travel expenses -- fell 19% to $5 million.

Chief Operating Officer Sheryl Sandberg saw the value of her total pay rise 20% to $18.7 billion, boosted by higher salary, bonus and security costs.

Facebook's strong first-quarter results, meanwhile, underscore how the social network continues to gain traction among advertisers. Facebook is expected to account for about 12% of the $186.81 billion global digital advertising market in 2016, according to eMarketer. That is up from 10.7% in 2015 and compares with Google's 31% share.

Over the past year, Facebook has launched several new ad types, such as dynamic product ads, which allow users to scroll through items in a company's product catalog. It also made it easier for companies to buy ads on its Instagram image-sharing network; those ads are inserted in users' feeds.

Video ads are gaining momentum as companies shift funds from their print and television budgets to pay for Facebook ads. Video ads on Facebook cost about $4 per 1,000 views during the first quarter, up from $3.44 a year ago and higher than the $3.14 average across Facebook, according to marketing-technology company Kenshoo.

Chief Executive Mark Zuckerberg often describes Facebook's growth path in three, five and 10-year arcs. It is now investing in Instagram and video to drive growth, while search and Facebook's two messaging apps, Messenger and WhatsApp, are expected to power the company's growth in five years. In 10 years, advanced projects in virtual reality and artificial intelligence will take center stage.

During the first three months of the year, Facebook took steps toward each of those initiatives. It launched the Oculus Rift headset last month, though a component shortage is delaying preorders. Facebook beefed up its live-streaming product, Facebook Live, paying creators to stream live and inserting a button for live video within the Facebook mobile app. However, many advertisers and creators question how Facebook plans to generate revenue from live-streaming.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

 

(END) Dow Jones Newswires

April 27, 2016 16:58 ET (20:58 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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