Facebook Revenue Soars on Ad Growth--2nd Update
April 27 2016 - 05:13PM
Dow Jones News
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.
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Feb 2024 to Mar 2024
Meta Platforms (NASDAQ:META)
Historical Stock Chart
From Mar 2023 to Mar 2024