SAN FRANCISCO: The crisis of public trust confronting Facebook has yet to affect the company’s bottom line — at least for the time being.
On Wednesday, Facebook said its first-quarter revenue, which is dominated by advertising, grew by 49 per cent to $12 billion (Dh44.07 billion). Net profit jumped 65 per cent from the same period a year earlier to $4.9 billion.
Shares in the social media company surged nearly eight per cent on Thursday, AFP reported.
Despite many users saying they deleted Facebook as the result of a privacy scandal that erupted in mid-March, 3.4 per cent more people logged on each day in March than in the previous quarter. It’s possible that the effect of deletions and other fallout will be more notable in the second quarter.
“Despite facing important challenges, our community and business are off to a strong start in 2018,” Mark Zuckerberg, Facebook chief executive, said in a statement.
Facebook is at the most perilous moment in its 14-year history. The social network is weathering the fallout from a scandal over data privacy, in which the company’s lax policies enabled a Trump-affiliated consultancy called Cambridge Analytica to inappropriately siphon the private profiles of up to 87 million Facebook users. Facebook is facing several class-action lawsuits as well as a Federal Trade Commission investigation into its practices.
Its stock has dropped 14 per cent since the controversy erupted. But the strong quarterly growth sent its stock price up more than 7 per cent in after-hours trading Wednesday.
“This is probably the most important earnings they’ve had,” said Daniel Ives, chief strategy officer and head of technology research for the research firm GBH Insights. “In light of consumer outrage after Cambridge Analytica, there is massive pressure to show that their advertising model hasn’t been significantly impacted by the black cloud of the last few months.”
The company did not discuss whether it lost users as a result of the Cambridge Analytica controversy. Chief Operating Officer Sheryl Sandberg said a few advertisers stopped spending on Facebook in the weeks after the revelations, and that one advertiser had returned to the platform.
The biggest impact of this turbulent period was visible in Facebook’s expenses and costs. Executives expect expenses to grow considerably in the year ahead, as the company continued to hire more staff. Expenses were already up 39% due to a record number of new hires.
The company is also in the midst of a costly hiring spree as it beefs up security to address disinformation and other forms of manipulation of its platform. The company plans to hire around 10,000 additional workers, including content moderators around the world, to bolster this effort.
