Facebook (FB – Get Report) reported solid first-quarter results fueled by strong advertising growth.
Advertisement
Electronic-commerce giant Amazon will report March quarter results on Thursday in the U.S., providing more insight into how technology-focused companies are faring amid headwinds in the global economy.
Facebook’s net income attributable to common shareholders rose to $1.51 billion, or 52 cents per share, in the first quarter from $509 million, or 18 cents per share, a year earlier. Facebook‘s share price climbed over 6.6% in the moments after earnings were announced.
Facebook posted adjusted earnings of $.77 per share on revenue of roughly $5.38 billion for the quarter. The stock reached a peak in after-hours trading that would put Facebook at a new record high.
Facebook said it created a new class of nonvoting stock so that Zuckerberg can retain his current control of the company while donating 99% of his and his wife’s holdings in Facebook to charity during their lifetime.
Under this new scheme, Facebook will issue two of the so-called “Class C” shares for each outstanding Class A and Class B share held by shareholders.
This proposal is designed to create a capital structure that will allow Facebook CEO Mark Zuckerberg to sell some of his shares and to remain control of Facebook.
Since Facebook was founded in 2004, the company has been investing in messaging, delivering Internet to developing countries, virtual reality, artificial intelligence, live video and more. That continued strength should earn Facebook a lot of goodwill with investors. That way, Facebook said, Zuckerberg could remain in an “active leadership role”.
Facebook said the move would allow for a one-time dividend payout if the proposal was accepted at Facebook’s AGM in June. “I see more bold moves ahead of us than behind us”.
Competition in the mobile video market has been growing, especially between Facebook, Snapchat and YouTube. “Its share of digital advertising is continuing to grow, and it is steadily adding new revenue streams”, said eMarketer analyst Debra Aho Williamson. During the first quarter, Facebook said that, on average, 1.09 billion people accessed its service daily. They are expecting a 12.3% increase for this year, marking a deceleration from last year’s 13.8% increase.
Advertisement
Mobile advertising made up 82% of the total advertising revenue for the quarter, up from 73% on the same period past year. Operating margin also grew to 55% compared to 52% the prior year.
