By Sarah Frier
(Bloomberg) — Facebook Inc.’s revenue growth was stunted in the first quarter by the effects of the strong dollar, causing the social-media company to miss analysts’ sales estimates for the first time since 2012.
Sales rose 42 percent to $3.54 billion, when they could have risen 49 percent without the currency effects, Facebook said Wednesday in a statement.
Facebook, after acquiring a messaging application popular in Europe and working to appeal to customers in Asia, generates more than half of its revenue outside the U.S. The expansion has come at a cost. The dollar’s 6.2 percent rally in the quarter bruised an otherwise strong performance as Facebook enhanced the reach and quality of advertisements, especially on mobile phones.
Advertising sales gained 46 percent to $3.32 billion from a year earlier, and would have increased 55 percent excluding currency fluctuations, Facebook said. Ad sales make up about 94 percent of the company’s annual revenue.
“Fifty-five percent underlying growth is remarkable,” said Brian Wieser, an analyst with Pivotal Research Group. “I don’t think investors accounted for the gravity of the currency effects.”
Facebook said its main application has 1.44 billion monthly active users, compared with 1.39 billion in the fourth quarter and analysts’ estimates of 1.43 billion.
While the company expects a bigger effect on revenue from currency fluctuations in the current quarter, Chief Operating Officer Sheryl Sandberg said they are taking the long view.
“If we grow our business and we grow our ads business and our users and our engagement, that’s the most important thing we can do.” she said in an interview.
