Facebook Results Surge as Ad Revenue Keeps Climbing -- Update

By Reed Albergotti 

Facebook Inc. displayed new evidence of its advertising momentum as it posted first-quarter earnings that nearly tripled, giving the company more resources to challenge bigger players in the technology industry.

Revenue climbed 72% to $2.5 billion, beating the $2.36 billion expected by analysts, as online retailers and other advertisers increasingly use Facebook ads to boost sales.

Shares rose about 4% in after-hours trading.

"Facebook's business is strong and growing, and this quarter was a great start to 2014," Chief Executive Mark Zuckerberg said in a prepared statement. "We've made some long-term bets on the future while staying focused on executing and improving our core products and business."

The company also said Chief Financial Officer David Ebersman is stepping down later this year after serving in the role for about five years to return to the health-care industry.

He will be succeeded as of June 1 by David Wehner, who is currently vice president of corporate finance and business planning. Mr. Wehner was previously finance chief at Zynga.

The social network also continued to grow its user base with monthly active users increasing 15%, to 1.28 billion. The percentage of users who log in to the service every day--therefore more valuable to Facebook because they look at more ads and enter more personal information that can be mined for ad targeting--grew 21% to 802 million.

The company's strong revenue numbers, in a quarter when advertising sales are traditionally weak, come as Facebook plans expansions in two key areas.

Later this month, the company plans to launch both a mobile-ad network, which will allow advertisers to buy ads on other mobile apps using Facebook data, and video ads, which Facebook hopes will bring in ad dollars that otherwise would have gone to television.

Facebook has continued to capitalize as its users shift to mobile devices. Revenue from advertising climbed 82% from the prior year to $2.27 billion, with mobile advertising contributing about 59%. That metric rose from 30% a year earlier and 53% in the fourth quarter of 2013. After hesitating to embrace the global shift to mobile, Facebook has quickly adapted, making mobile its top priority.

Facebook reported net income of $642 million, 25 cents a share, up from $219 million, or nine cents a share, a year earlier. Excluding certain expenses, Facebook said earnings would have been 34 cents a share, up from 12 cents a year earlier. Analysts polled by Thomson Reuters expected 24 cents a share.

The world's largest social network has been on an acquisition tear this year, effectively moving to transform itself into a tech portfolio company. It reached a $19 billion deal for mobile-messaging service WhatsApp and agreed to pay $2 billion for virtual-reality headset maker Oculus VR.

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