Facebook advertising, user base strong after data breach scandal
Facebook released its quarterly earnings and revenue, beating expectations. FOX Business’ Deirdre Bolton, Nicole Petallides, Mashable’s Michael Nunez, Bubba trade show host Todd Horwitz and Capitalistpig Asset Management’s Jonathan Hoenig discuss.
Facebook easily topped Wall Street’s expectations for its quarterly earnings on Wednesday despite fallout from the Cambridge Analytica data breach.
The embattled social media giant reported adjusted earnings per share of $1.69 in its first fiscal quarter of 2018, well above a Thomson Reuters consensus estimate of $1.35. Revenue reached $11.97 billion, topping a projected $11.41 billion. Facebook also said it would increase share buybacks by $9 billion.
Facebook shares rose by nearly 5% in after-hours trading after the earnings beat.
"Despite facing important challenges, our community and business are off to a strong start in 2018," Facebook CEO Mark Zuckerberg said in a statement. "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."
The company’s stock has been under pressure since mid-March, when news outlets reported that Cambridge Analytica, a British data firm, had accessed the personal information of as many as 87 million Facebook users without consent. Facebook has since taken steps to alter its data privacy practices amid scrutiny from lawmakers.
Advertising revenue reached $11.795 billion, up 50% from $7.85 billion during the same quarter a year earlier. Mobile ads accounted for more than 90% of that total.
Facebook Chief Operating Officer Sheryl Sandberg said on a call with analysts that a "handful of advertising" paused spending after the data breach was made public, but one of those advertisers has returned to the platform. Facebook hasn't seen a "meaningful trend" to suggest concern from advertisers," Sandberg added.
"Targeted advertising and data privacy are not at odds," Sandberg said.
Several Wall Street analysts indicated that Facebook’s advertising revenue stream and number of engaged users could suffer as a result of the data scandal – especially after Facebook’s number of daily active users in North America sank in the final quarter of 2017.
Yet the company’s number of daily active users in the region grew slightly to 185 million, while global monthly active users rose 13% to 2.2 billion.
"Recent events have left many wondering about the future of Facebook, and uncertainty doesn’t usually play well on Wall Street. But we have not seen any slowdown when it comes to advertising on the platform,” Aaron Goldman, chief marketing officer at 4C Insights, told FOX Business. “The company still offers one of the most powerful platforms for brands to reach engaged consumers at scale.