Facebook Inc.’s Chief Financial Officer David Ebersman is leaving on a high note, as the company’s first-quarter sales and profit blew past estimates.
The company said today that Ebersman will leave by year-end, to be succeeded by former Zynga Inc. CFO David Wehner. Facebook also announced that revenue rose 72 percent to $2.5 billion, beating the average analyst estimate of $2.36 billion, according to data compiled by Bloomberg.
Facebook’s growth follows a shift to mobile, which now accounts for 59 percent of its advertising revenue, up from almost nothing at the time of the company’s 2012 initial public offering. Facebook is seeking to make even more money on smartphones and tablets by testing a mobile ad network and agreeing to buy text messaging service WhatsApp Inc. for $19 billion, a deal that’s yet to close.
“The core of this business is very strong, and their biggest challenge will be sustaining their growth rate in this range,” Martin Pyykkonen, an analyst at Rosenblatt Securities in New York. “We don’t know how big these new areas can be.”
The stock rose as much as 4.3 percent to $64 in extended trading after dropping 2.6 percent to $61.36 at 4 p.m. in New York.
Facebook is known for its stable management team, with only one top executive, former technology chief Bret Taylor, leaving since the IPO. Ebersman has been at Facebook for almost five years, while Chief Operating Officer Sheryl Sandberg has been there since 2008. Ebersman is leaving to work in the health-care industry.
“He’s going to do something he really loves,” Sandberg said in an interview. She added that Wehner, who joined from Zynga in 2012, is “really strong, really strategic.”
Ebersman’s announced departure comes as the company said net income almost tripled to $642 million, or 25 cents per share, from $219 million, or 9 cents, a year earlier. Profit excluding some items was 34 cents per share, beating the average analyst estimate of 24 cents.
Ebersman earned $10.5 million in compensation last year, mostly through stock awards, down from $17.5 million in 2012. He owns $47.8 million worth of Facebook shares.
Facebook has 1.28 billion monthly active users, or almost half the world’s Internet population, up from 1.23 billion last quarter. WhatsApp will bring 500 million consumers of its texting app, though the company generates minimal revenue.
To make more money from Facebook’s massive user base, Chief Executive Officer Mark Zuckerberg is building out a mobile portfolio that already includes Instagram, the photo-sharing app acquired in 2012, Facebook’s Messenger service and Paper, a magazine-like news feature.
EMarketer Inc. expects Facebook to capture 22 percent of the the $31.5 billion mobile ad market in 2014, up from 18 percent last year. That’s second to Google Inc., whose share is likely to fall to 47 percent from 49 percent, according to EMarketer.
Even with digital-ad spending on the rise, Facebook has been limiting the number of ads in a member’s main news feed to avoid annoying users. To compensate, the company must increase the effectiveness of their promotions and charge more for them, which may be difficult as competition increases. Google’s first-quarter revenue trailed estimates, because it’s getting less money for marketing spots on mobile than on desktops.
In addition to its own services, Facebook plans to bring in revenue from a mobile ad network that’s being tested and will allow other apps to use Facebook data for targeting promotions to consumers.
Zuckerberg is also pushing the 10-year-old company into new businesses. Last month, the company released a video product to some of its partners, aiming for a slice of TV’s $66.8 billion ad budget. And Facebook agreed to buy Oculus VR Inc., a virtual-reality headset maker, for about $2 billion, a high-priced bet on the fledgling wearable-computing market. The Oculus deal was approved today by the U.S. Federal Trade Commission.
In an even more far-out wager, Facebook said last month it is working to deliver connectivity via drones, satellites and lasers after purchasing Ascenta, a U.K.-based aerospace company.
Facebook closed the quarter with $12.6 billion in cash and marketable securities. Costs rose 32 percent from a year earlier to $1.43 billion, mostly from an increase in headcount and infrastructure expenses.