Facebook sees higher profits, more friends

A lit sign is seen at the entrance to Facebook’s corporate headquarters location in Menlo Park, California. (AFP pic)

SAN FRANCISCO: Facebook said Wednesday quarterly profit climbed to an all-time record US$6.9 billion as it boosted its global user base despite scandals that have dented the leading social network’s image.

Revenue soared 30% from a year ago to US$16.9 billion while the number of people using it monthly rose nine% to 2.32 billion, Facebook said in its fourth quarter update.

Net profit for Facebook, which makes most of its money from online advertising, was up a strong 61% from the same period last year.

“Our community and business continue to grow,” co-founder and chief executive Mark Zuckerberg said in an earnings release.

Facebook shares jumped 7.7% to US$161.99 in after-market trades that followed release of the earnings.

The latest update showed Facebook increased its user base both in the United States and Europe, where the social network has faced challenges over data protection scandals.

“With these results, Facebook has clearly demonstrated that the challenges of 2018 have not had a lasting impact on its ability to increase both revenues and usage,” said analyst Debra Aho Williamson of the research firm eMarketer.

“Advertisers are clearly still very reliant on Facebook, and the fact that daily active usage in both the US/Canada and Europe increased is a surprise after the flatness we saw in the US and Canada last year and the falloff we saw in Europe.”

Facebook has pledged to hire thousands of employees and invest in new technologies to respond to concerns about manipulation and abuse, and to take data protection more seriously.

The number of employees as of Dec 31 was 35,587, an increase of 42% year-over-year.

“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,” Zuckerberg said.

According to eMarketer, Facebook’s share of the global digital ad market will be 20.5% of an overall US$327.28 billion spent in 2019.

But analysts say the trust issue is crucial for Facebook if it wants to move forward on its mission to connect the world.

Facebook estimated that approximately 2.7 billion people use its “family” of services including Instagram, WhatsApp, Messenger, and its core social network.

The company faces demographic challenges as younger users shift to other platforms, seeing Facebook as less cool than it was.

Analysts are watching to see whether it will compensate with gains in other services, including its popular visual social network Instagram, messaging services WhatsApp and Messenger and its Oculus virtual reality division.

As it approaches its 15th anniversary, Facebook has been able to keep revenue momentum thanks to its unique advertising model that allows marketers to reach specific segments of users.

Zuckerberg last week renewed his defence of the social network’s business, arguing that targeting ads based on interests was different from selling people’s data.

“If we’re committed to serving everyone, then we need a service that is affordable to everyone,” Zuckerberg wrote in The Wall Street Journal.