Facebook’s Q1 results show progress, CEO says

MENLO PARK — Facebook’s sales slightly missed Wall Street’s expectations Wednesday, but the company continued to ride the mobile advertising wave in the first quarter.

The social networking company raked in $ 3.54 billion in sales from January to March, up 42 percent compared to the same period last year. Facebook earned $ 512 million, or 18 cents per share, in the first quarter.

Analysts surveyed by Thomson Reuters, on average, estimated that the company would report $ 3.56 billion in sales. Excluding some one- time expenses, Facebook would have earned 42 cents per share, surpassing Wall Street’s target of 40 cents per share.

“These results

show that we’re making progress on our mission to connect the world and we’re executing well against our priorities,” Facebook CEO Mark Zuckerberg said in a call with investors. “But this quarter also shows how Facebook is continuing to make progress for the years ahead.”

Facebook’s executives said during the call that the company’s sales outside of North America, especially in Latin America and Europe, took a hit because of fluctuations in foreign currency.

Brian Wieser, an analyst for Pivotal Research Group, called Facebook’s growth remarkable.

“I think it’s a really strong number. If there’s a miss, it’s because of currency,” Wieser said. “It’s hurting everybody. You have to account for it, but you can’t knock the company’s performance on that aspect.”

Facebook makes most of its money from displaying ads, and in the first quarter, mobile ad dollars made up 73 percent of its total advertising revenue.

But as Facebook ventures into virtual reality, messaging, video and more, the company is also spending money at a rapid pace.

In March, Facebook announced it purchased the shopping search engine TheFind to deliver more relevant ads to people on its website. The price was not disclosed. It has also been trying to grow the number of people who use Facebook’s stand- alone messaging app by introducing new features, allowing users to send money through Messenger and businesses to easily interact with its online shopping customers.

The company’s costs and expenses increased to $ 2.61 billion in the first quarter, up 83 percent compared to the same period in 2014.

“Facebook has established investor goodwill that they can execute on their ambitious goals, but it will be incumbent upon them to prove that the decrease in margins — which we model as a long- term outcome — is occurring as the result of high- leverage investments in ad- tech and new businesses,” wrote Carlos Kirjner, an analyst with Sanford C. Bernstein & Co., in a note before Wednesday’s earnings.

On Wednesday, Facebook’s stock closed at $ 84.63 per share, up 1.2 percent.