No impact on Facebook from privacy scandal, profits up in first quarter
San Francisco April 26: Despite the controversy over privacy, Facebook on Thursday reported a sharp jump in profits in the past quarter, with gains in its user base and strong ad growth.
Profit in the first quarter of 2018 jumped 63 per cent from a year ago to USD 5 billion, and total revenues increased 49 percent to USD 11.97 billion, Facebook said in an earnings update which topped most analyst forecasts.
Facebook chief executive Mark Zuckerberg, who has spent most of the past month on the fallout from the revelations on the hijacking of personal data by a political firm, sought to reassure investors in the latest update.
"Despite facing important challenges, our community and business are off to a strong start in 2018," Zuckerberg said.
"We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together."
Facebook shares climbed more than 4.7 percent to USD 167.33 in after-hours trades that followed the release of the earnings figures.
The number of people using Facebook monthly climbed 13 per cent from last year to 2.2 billion as of the end of March, despite concerns that users would abandon the network.
The earnings results "should give the bulls finally something to hang their hat on after the company (and its investors) have just gone through the darkest chapter in Facebook's history," GHB Insights analyst Daniel Ives said in a research note.
Facebook's strong earnings report comes as it grapples with a data privacy scandal that strikes at how the huge social network makes money from what it knows about people. Zuckerberg two faced questioning in congressional panels about revelations that personal data was harvested on 87 million users by Cambridge Analytica, a consultancy working for Donald Trump's 2016 campaign.
Whether the scandal is taking a toll on membership or advertising at the online social network was not likely to be revealed in earnings numbers from the first three months of this year, and the topic was expected to come up during a routine call with financial analysts.
Using information about people's lives to target advertising is a standard internet business model, and any effort to rein it in could ripple through the industry.