Home / U.S. / Facebook's profits surpass despite the reaction, the increase in shares

Facebook's profits surpass despite the reaction, the increase in shares

Revelations of incorrectly handled data from 87 million users did nothing to stop the money machine from Facebook Inc.

The data privacy scandal involving Cambridge Analytica broke down in mid-March, but the company He seemed to ignore the concerns with huge profits and revenues in the first quarter. In a report on Wednesday, Facebook

FB, + 0.00%

recorded $ 4.99 billion in quarterly earnings on sales of $ 11.97 billion, surpassing analysts' average estimates of $ 4.01 billion for net income and $ 11.41 billion in income.

"Despite facing significant challenges, our community and our businesses have had a strong start in 2018," Chief Executive Mark Zuckerberg said in a conference call Wednesday afternoon. "During the next three years we will continue to build Facebook so that it is not only a service that people love to use, but also that it is good for people and for society."

Facebook shares gained more than 4% in after trading hours after the earnings report was published, and went up 7% after its conference call. Prior to Wednesday's gains, Facebook shares had fallen approximately 18% from their February high, after closing close at $ 159. The stock has lost 9.5% this year, as benchmark S & P 500

SPX, + 0.18%

has fallen 1.5%.

Head of technology research at GBH Insights Daniel Ives wrote in a note to clients on Wednesday evening that the company's results were "solid" and announced the company's earnings and earnings as a "key initial victory" "for the action as investors measure the Cambridge Analytica rain damage.

See also: Facebook says it is NOT the product, but the explanation confuses the privacy experts

Facebook added 70 million users in the first quarter, meeting the growth expectations of the user despite public calls to remove the social media application. The company now has 1.45 billion daily users and 2.2 billion monthly members. The company's operating expenses were below consensus expectations, although Zuckerberg warned that they will continue to consume Facebook's profits, adding 20,000 workers to address security and privacy concerns.

According to the earnings report, Facebook increased its workforce by 48% to 27,742, compared to the same quarter of the previous year.

CFO David Wehner reduced part of the costs of security and protection and told analysts that the growth of sales and marketing expenses of 51% compared to the same quarter of the previous year driven by "investment in community operations. " That unit includes part of the money that the company is spending on quality and safety initiatives, and Wehner expects the expense to be "maintained throughout the year."

Do not Miss: Why are the big technology companies too big to succeed?

Previously, the executives said that the costs related to security would be extended through several sources of expense, including research and development and general administration, but did not provide further details.

Impressions, a key data point in terms of measuring the advertiser's interest during the quarter, grew by 8% and the price of ads grew by 39%. In the period of the previous year, Facebook increased impressions by 32% and ads by 14%. Because Facebook ads are in demand, when the social network restricts the offer, ad prices generally increase, and if that happens and prices remain constant or fall, it is likely to signal a weaker demand from advertisers.

the vast majority of sales, but investors often look to the nascent Messenger and WhatsApp divisions of the company as potentially massive revenue sources in the future. Zuckerberg said the company did not see these services as means to charge for payments, but that messaging applications "can be a more transactional medium than the feed."

In terms of how that might look in the future, Zuckerberg said: "You can click through a message thread or click on it, and then you can get customer support or complete a transaction or make a follow-up transaction And that will be very valuable for companies. "

Read: Facebook leaves the technology sector, and that may be good news for technology investors

Much of the attention of lawmakers and the public has been focused on the scandal of Cambridge Analytica that exploded on March 17. Zuckerberg said recently in early April that it has not had any material effect on the company's financial operations.

But the changes that the company announced earlier this year have had much more time to play. In January, Zuckerberg said that the company would give more priority to publications and other content of friends and family members than the material produced by third parties, such as news organizations, marketing companies and other corporate pages for and non-profit .

call Wednesday, at least two analysts asked Facebook executives if the time spent on the platform had changed due to changes in the news. The executives did not directly answer the question.

In January, Zuckerberg sent a warning to investors: Facebook executives expected "some compromise measures" to fall and that their US $ 2 billion user base would spend less time on the platform.

When asked about the business impact of the changes at the Morgan Stanley technology conference in February in San Francisco, Facebook CFO David Wehner told analysts that spending less time on the platform does not necessarily mean a corresponding decrease in Revenue.

"The impact of the business is much more moderate because we are still seeing that there is a lot of engagement," he said. "So when you take time away from things like passive video, it does not mean you're not seeing so many news publications … I do not think the impact on the business is so profound in relation to the impact on time."

On the contrary, the General Regulation of Data Protection of Europe, which will come into force on May 25, will have an impact on Facebook operations. The company expects that the counts of European daily and monthly active users will be stable or decrease in the second quarter as GDPR goes into effect, but is not sure of the long-term implications.

CEO Sheryl Sandberg told analysts that the entire advertising industry has to deal with the changes and what worries the company are the trends over time.

"We will all know much more after launching, but what will not change is that advertisers will see the highest opportunity [return on investment]," Sandberg said. "And the most important thing to gain budgets is the relative performance in the industry."

Source link