Facebook beats earnings expectations
Investors warned that rising expenses will eat into company’s profit in 2018
MENLO PARK » Controversy swirling around how Russia used Facebook to meddle in the U.S. presidential election didn’t appear to hurt the social media giant’s third-quarter ad sales.
But as Facebook spends more on technology and workers to keep the site safe, the tech firm warned investors that rising expenses will eat into the company’s profits in 2018.
“I believe this will make our society stronger and, in doing so, will be good for all of us over the long term,” Facebook CEO and co-founder Mark Zuckerberg said in a conference call after the earnings were released. “But I want to be clear about what our priority is: Protecting our community is more important than maximizing our profits.”
The tech firm plans to double the amount of workers on the company’s safety and security team to about 20,000 in 2018.
Under pressure to do more to combat fake news
and misinformation on its site, Facebook is trying to assure users that it cares about the social space the company creates online.
“If it isn’t — or (is) perceived not to be — a safe environment, then people will stop using Facebook, and that translates to less revenue,” said Debra Aho Williamson, an analyst with eMarketer.
Facebook is also investing in other efforts such as video content, artificial intelligence, virtual reality and more. The tech firm estimates that expenses will grow between 45 percent and 60 percent in 2018 compared to the previous year.
“We’re bringing the same intensity to these security issues that we’ve brought to any adversary or challenge that we’ve faced,” Zuckerberg said.
In the third quarter, from July to September, Facebook raked in $10.33 billion in revenue, which was higher than the $9.84 billion that analysts surveyed by Bloomberg expected. The tech firm’s third-quarter sales grew 47 percent compared to the same period last year.
The company reported earnings of $1.59 per share, above the $1.28 per share expected.
As of September, Facebook had 2.07 billion monthly active users, an increase of 16 percent compared to the same period last year. About 1.37 billion people log into the site daily.
“For a platform the size of Facebook to continue growing at that pace is really astounding,” Williamson said. “It shows advertisers that this is where people are and spending their time.”
Facebook has seen its stock price soar about 47 percent since the presidential election.
The company’s shares closed up 1.4 percent at $182.66 per share on Wednesday.
In after-hours trading, Facebook’s shares slightly increased, but then fell about 2.2 percent to $178.70 per share by around 4:05 p.m. PDT — after the conference call with the company’s executives.
Facebook reported its quarterly earnings on the same day that lawmakers were grilling the company’s lawyer, Colin Stretch, about how Russia used the social network to divide Americans and meddle in the 2016 U.S. presidential election.
Some lawmakers expressed frustration on Wednesday about the vague answers they were getting from Silicon Valley tech firms, which also included Twitter and Google.
Sen. Dianne Feinstein, DCalifornia, told the companies that she doesn’t think they understand the seriousness of the issue.
“What we’re talking about is a cataclysmic change. What we’re talking about is the beginning of cyber-warfare. What we’re talking about is a major foreign power with sophistication and ability to involve themselves in a presidential election and sow conflict and discontent all over this country. We are not going to go away, gentlemen. And this is a very big deal,” she said at a Senate Intelligence Committee hearing.
House lawmakers also released some of the Russian-linked ads shown on Facebook, which were tied to hot-button issues such as gun control, illegal immigration, gay rights, or racial tensions.
Zuckerberg outlined what the company has been doing to protect election integrity. The tech firm is doing everything it can to help the U.S. government get a “complete picture” of what happened and has been working on new tools so users can see what ads are being purchased by advertisers on the social network, he said.
“I’ve expressed how upset I am that the Russians tried to use our tools to sow mistrust. We built these tools to help people connect and to bring us closer together, and they used them to try to undermine our values,” Zuckerberg said. “What they did is wrong, and we’re not going to stand for it.”