Facebook reveals record quarter as profits soar 61% to $6.9 BILLION and users continue to flock to the platform despite its string of privacy disasters
- Facebook profits soared 61% to $6.9 billion alongside growing user numbers
- Shares of the social media giant jumped 11% to $168.21 in after-hours trading
- The firm was helped by growth in the Instagram and advertising businesses
- Record results come despite the company facing numerous privacy scandals
Facebook on Wednesday reported huge revenue increases and sizable user growth for its fourth quarter, despite it facing a difficult year riddled with privacy scandals and waning trust among users.
The social media giant said profits soared by 61 percent from a year ago to $6.9 billion.
Revenue came in at $16.9 billion, which trumped Wall Street’s expectations of $16.3 billion.
It reported earnings of $2.38 per share, a 65 percent increase from the same quarter last year, vs. analysts’ estimated earnings of $2.19 per share.
The blowout results pushed Facebook’s stock higher by 11 percent to $168.21 in after-hours trading.
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Facebook reported better-than-expected results for the fourth quarter late Wednesday. Shares of the social media giant soared 7.7% in after-hours trading on the back of the report
FACEBOOK IN NUMBERS
Revenue: $16.9 billion vs. analysts’ expectations of $16.3 billion
Earnings: $2.38 per share vs. analysts’ expectations of $2.19 per share
Monthly active users: 2.32 billion vs. analysts’ expectations of 2.32 billion
Daily active users: 1.52 billion vs. analysts’ expectations of 1.51 billion
Average revenue per user: $7.37 vs. analysts’ expectations of $7.11
In a call with investors, Facebook CEO Mark Zuckerberg acknowledged Facebook continues to confront ‘important opportunities and challenges’ and that it still has ‘a lot of work to do.
He called out Facebook’s investments in security, ‘reducing viral videos’ and cleaning up fake accounts on the platform.
‘We had a number of substantive issues that we needed to address,’ Zuckerberg explained.
Some of these ‘increased costs and reduced revenues,’ he added.
‘But I believe these investments are the right thing to do and will make our business stronger over the long term,’ Zuckerberg said.
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Zuckerberg also addressed a bombshell report from the New York Times last week, which said Facebook plans to integrate the messaging systems of WhatsApp, Messenger and Instagram.
The shock decision would mean that all of Facebook’s sprawling social media properties would be integrated for the first time.
‘We’re really early in thinking through this,’ Zuckerberg explained.
The social media giant said profits soared by 61 percent from a year ago to $6.9 billion. Revenue came in at $16.9 billion, which trumped Wall Street’s expectations of $16.3 billion
‘There’s a lot more we need to figure out before we finalize the plan. This will be a long term project that will be – to whatever extent we end up doing it – a 2020 thing or beyond.
He said it will ultimately benefit user experience, adding things like end-to-end encryption, across all of its services and improving security as a result.
End-to-end encryption protects messages from being viewed by anyone except the participants in the conversation.
Zuckerberg also emphasized that the integration was not being considered ‘for commercial reasons,’ such as more advertising opportunities.
The company was helped by growth in its Instagram business and a steady rise in advertising spending by companies.
Monthly active users rose to 2.32 billion, in line with estimates.
Daily active users for the quarter were 1.52 billion, which also matched Wall Street’s expectations.
Net income rose to $6.88 billion, or $2.38 per share, in the fourth quarter ended December 31, from $4.27 billion, or $1.44 per share, a year earlier.
Average revenue per user, or the amount of money squeezed out of each user, came in at $7.37, which was way above Wall Street’s estimated $7.11.
Facebook’s recent string of privacy scandals didn’t seem to impact monthly active users or daily active users, both of which saw increases in the fourth quarter compared to last year
Revenue grew 30 percent year-over-year in the fourth quarter. Facebook is looking to rebound from a horrific year marked by a series of scandals over data protection and privacy and concerns that it had been manipulated by foreign interests for political purposes
‘Our community and business continue to grow,’ Zuckerberg said in a statement.
‘We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect.’
The glowing earnings report shows that Facebook’s string of recent privacy scandals hasn’t made a dent in its business model.
Facebook is looking to rebound from a horrific year marked by a series of scandals over data protection and privacy and concerns that it had been manipulated by foreign interests for political purposes.
The company so far has been able to keep revenue momentum thanks to its unique advertising model.
FACEBOOK’S PRIVACY DISASTERS
Facebook in late September disclosed that it had been hit by its worst ever data breach, affecting 50 million users – including those of Facebook boss Mark Zuckerberg and COO Sheryl Sandberg.
Attackers exploited the site’s ‘View As’ feature, which lets people see what their profiles look like to other users.
The unknown attackers took advantage of a feature in the code called ‘Access Tokens,’ to take over people’s accounts, potentially giving hackers access to private messages, photos and posts – although Facebook said there was no evidence that had been done.
The hackers also tried to harvest people’s private information, including name, sex and hometown, from Facebook’s systems.
Facebook said it doesn’t yet know if information from the affected accounts has been misused or accessed, and is working with the FBI to conduct further investigations.
However, Mark Zuckerberg assured users that passwords and credit card information was not accessed.
Facebook says it has found no evidence ‘so far’ that hackers broke into third-party apps after a data breach exposed 50 million users (stock image)
As a result of the breach, the firm logged roughly 90 million people out of their accounts earlier today as a security measure.
Facebook made headlines earlier this year after the data of 87 million users was improperly accessed by Cambridge Analytica, a political consultancy.
The disclosure has prompted government inquiries into the company’s privacy practices across the world, and fueled a ‘#deleteFacebook’ movement among consumers.
Communications firm Cambridge Analytica had offices in London, New York, Washington, as well as Brazil and Malaysia.
The company boasts it can ‘find your voters and move them to action’ through data-driven campaigns and a team that includes data scientists and behavioural psychologists.
‘Within the United States alone, we have played a pivotal role in winning presidential races as well as congressional and state elections,’ with data on more than 230 million American voters, Cambridge Analytica claims on its website.
The company profited from a feature that meant apps could ask for permission to access your own data as well as the data of all your Facebook friends.
The data firm suspended its chief executive, Alexander Nix (pictured), after recordings emerged of him making a series of controversial claims, including boasts that Cambridge Analytica had a pivotal role in the election of Donald Trump
This meant the company was able to mine the information of 87 million Facebook users even though just 270,000 people gave them permission to do so.
This was designed to help them create software that can predict and influence voters’ choices at the ballot box.
The data firm suspended its chief executive, Alexander Nix, after recordings emerged of him making a series of controversial claims, including boasts that Cambridge Analytica had a pivotal role in the election of Donald Trump.
This information is said to have been used to help the Brexit campaign in the UK.
It has also suffered several previous issues.
2013, Facebook disclosed a software flaw that exposed 6 million users’ phone numbers and email addresses to unauthorized viewers for a year, while a technical glitch in 2008 revealed confidential birth-dates on 80 million Facebook users’ profiles.
Its global user base has risen to more than 2.2 billion, although growth has stalled in North America and Europe.
Analysts say the trust issue is key for Facebook if it wants to move forward on its mission to connect the world.
‘Facebook needs a fresh start in 2019, and what it reveals about its usage and revenue… will tell us just how feasible that fresh start will be,’ said eMarketer principal analyst Debra Aho Williamson.
‘In order for Facebook to move forward, it needs to show that its daily and monthly active user counts in the US and Canada and in Europe have stabilized, and that its ability to grow its ad revenue in those important regions has not been seriously impacted by the scandals and investigations of 2018.’
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