Facebook employees sit at their stations during a tour of its new 130,000-square-foot offices, which occupy the top three floors of a 10-story Cambridge, Mass., building on Jan. 9, 2019.Elise Amendola/The Associated Press
Facebook Inc. said it is turning the page on a year marred by controversy as it reported its strongest ever quarterly financial results.
The past 18 months have seen the social-media giant forced to repeatedly – and sometimes clumsily – apologize for growing worries over data security and a chorus of complaints that the company aided campaigns of political interference and misinformation. Chief executive officer Mark Zuckerberg had a clear message for markets on Wednesday: Facebook wants to move on.
“We’ve fundamentally changed how we run this company,” he told an analysts' conference call.
The focus now, according to Mr. Zuckerberg, is to build out its services such as encrypted messaging apps, the photo-sharing platform Instagram and the video-streaming service Watch.
Facebook’s stock surged in aftermarket trading after it reported revenues increased 30 per cent in the fourth quarter of 2018 compared with the final three months of 2017, to US$16.91-billion. Profits rose 61 per cent to US$6.88-billion, while diluted earnings a share hit $2.38, beating analyst expectations.
The company also said it had added one million new daily active users in Canada and the United States and four million in Europe. Facebook now has more than 1.5 billion daily active users, up 28 million from the previous quarter, while 2.7 billion people now use at least one Facebook-owned app.
The jump in users is likely to allay investor concerns that a public backlash against the company over the past year prompted large numbers of users to abandon the platform. Facebook said it earned an average of nearly US$35 in revenue for every user in the United States and Canada, up from slightly below US$26 a user in the third quarter of 2017.
“Contrary to popular belief, our data checks do not point to users and advertisers leaving in droves,” Jeffries analyst Brent Thill wrote in a recent note to investors.
“The worst is over for this social-media giant,” said Haris Anwar, an analyst at Investing.com.
Mr. Zuckerberg spent the better part of 2018 apologizing for his company’s missteps in the wake of revelations last March that a political consultancy had improperly accessed data on millions on Facebook users.
But he has indicated in recent weeks that he is keen to move on. To mark Facebook’s 15th anniversary this year, Mr. Zuckerberg published an editorial in The Wall Street Journal last week defending his company’s practice of collecting large amounts of user data to show targeted ads in order to keep Facebook’s services free.
After promising to spend last year fixing the platform, the Facebook founder said his personal challenge for 2019 will be to hold a series of public discussions about the role of technology in society.
However, some observers warned that Facebook continues to face a stream of new controversies over its data-privacy practices, while regulators are still closely scrutinizing the company’s business practices.
“The list of problems the company is grappling with is vast,” wrote Pivotal Research Group’s Brian Wieser, who has a sell rating on Facebook. He added that regulatory intervention against the tech giant “seems inevitable.”
Earlier this week, Apple said it was revoking Facebook employee’s access to a program for developers, saying the social-media firm had violated Apple’s policies. The move came after technology website TechCrunch reported that Facebook had been using the program to pay users as young as 13 to install mobile software that allowed Facebook to track how they used their smartphones.
Facebook also continues to face foreign interference on its platform. The company said it removed hundreds of pages and accounts tied to Russian news agency Sputnik for “co-ordinated inauthentic behaviour.”
The U.S. Federal Trade Commission, which opened an investigation last year into whether Facebook violated a 2011 agreement over privacy issues, is preparing to issue a record fine against the technology behemoth, the Washington Post reported in January.
In Canada, the federal government is creating a team of senior officials to sound the alarm about threats to elections by hackers or foreign adversaries. The announcement came even as Facebook blocked a browser plugin created by U.S. news non-profit ProPublica and used by The Globe and Mail to crowdsource information about political ads.
The data-privacy scandals and Facebook’s costly efforts have slowed the company’s revenue growth and eaten into its profit margins over the past year. They have also put added pressure on the company to show it can grow its user base and advertising revenues outside of its core Facebook app.
Facebook chief financial officer Dave Wehner warned on Wednesday the company expects to see revenue growth slow over the course of this year, with expenses rising by 40 per cent to 50 per cent.
He warned that Facebook’s advertising growth may be challenged this year by continuing concerns about how tech businesses such as Facebook use personal data to target ads. “There are headwinds that we might face on targeting given the overall privacy landscape in 2019,” he told analysts. “So I think that is another factor that presents risk in our ability to grow” ad revenues.
Facebook’s share price on Wednesday closed up more than 6 per cent at US$150.42.
With a report from Reuters.