Date
22 May 2018
Facebook announced that monthly active users in the first quarter stood at 2.2 billion, up 13 percent from a year earlier. Photo: Reuters
Facebook announced that monthly active users in the first quarter stood at 2.2 billion, up 13 percent from a year earlier. Photo: Reuters

Facebook reports profit surge, user growth despite scandals

Facebook on Wednesday reported a 63 percent rise in quarterly profit and an increase in users, suggesting that its business has suffered little damage, at least for now, from recent scandals.

Net income for the first quarter came in at US$4.99 billion, or US$1.69 per share, compared with US$3.06 billion, or US$1.04 per share, a year earlier, Reuters reports.

Analysts on average were expecting a profit of US$1.35 per share.

Revenue was up 49 percent at US$11.97 billion, above the analyst estimate of US$11.41 billion.

The better-than-expected results propelled Facebook shares 7 percent higher in US after-hours trade, with investors relieved that the social network giant appeared unscathed financially despite getting caught up in a user data misuse controversy.

Facebook disclosed in March that a London-based consultancy, Cambridge Analytica, had harvested data belonging to millions of users.

The scandal, affecting up to 87 million users, sparked calls for regulation and for users to leave the social network, but there was no indication advertisers immediately changed their spending, Reuters noted.

Facebook said monthly active users in the first quarter rose to 2.2 billion, up 13 percent from a year earlier.

The company reversed last quarter’s decline in the number of daily active users in the United States and Canada, saying it had 185 million users there, up from 184 million in the fourth quarter.

Facebook, which generates revenue primarily by selling advertising personalized to its users, has demonstrated for several quarters how resilient its business model can be as long as users keep coming back to scroll through its News Feed and watch its videos.

It is spending to ensure users are not scared away by scandals.

Chief Financial Officer David Wehner told analysts on a call that expenses this year would grow between 50 percent and 60 percent, up from a prior range of 45 percent to 60 percent.

Much of Facebook’s ramp-up in spending is for safety and security, Wehner said. The category includes efforts to root out fake accounts, scrub hate speech and take down violent videos.

The Cambridge Analytica scandal, which has sparked government investigations globally, was mentioned only once on an hour-long conference call between analysts and Facebook management, when one analyst asked Zuckerberg what he learned from testifying in US congressional hearings.

Zuckerberg said the two days of hearings this month were “an important moment for the company to hear the feedback, and to show what we’re doing.”

– Contact us at [email protected]

RC

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