Facebook sets aside up to $5bn over US privacy investigation
Microsoft revenue rises 14% to $30bn thanks to Azure cloud computing, beating estimates
Facebook has added more active users than analysts had estimated
Facebook ’s first-quarter revenue rose a better-than-projected 26 per cent, underscoring the strength of the largest social-media company’s advertising business in spite of regulatory threats and privacy concerns.
The company also said it set aside between $3 billion (€2.68 billion ) and $5 billion in the quarter related to an ongoing privacy investigation by the US Federal Trade Commission, which hasn’t yet been resolved.
Excluding that cost, profit was $1.89 a share, topping the average analyst estimate of $1.62. Sales rose to $15.1 billion, the company said Wednesday in a statement. That topped the $14.97 billion average estimate of analysts surveyed by Bloomberg.
Facebook’s namesake social network now reaches 1.56 billion users every day and 2.38 billion a month on average, compared with Wall Street estimates of 1.56 billion daily active users and 2.37 billion monthly visitors.
Facebook is reaching saturation in its most lucrative advertising markets, the US and Europe, while faster growth is coming from developing countries that aren’t as profitable. The company’s sales gains are increasingly being driven by photo-sharing app Instagram and advertising in its ephemeral Stories feature.
Facebook also recently started testing an e-commerce product called Checkout, allowing people to buy products within Instagram, another potential source of revenue via the fast-growing app.
“Advertisers love Stories ads, because they are engaging and fun, and because they can cost less than in-feed advertising,” EMarketer analyst Debra Aho Williamson wrote in a note before earnings.
“Advertisers say they are concerned about Facebook’s many problems, but that concern hasn’t led to a drop in ad spending.”
The company’s shares jumped about 5 per cent after the report. Earlier, they declined less than 1 percent to $182.58 at the close in New York.
Facebook employs 4,000 people in the Republic.
Microsoft also beat Wall Street estimates for quarterly revenue, fuelled by its Azure cloud-computing unit and the continued shift to the subscription version of its Office software.
“We’re seeing Microsoft disproportionately benefit in this phase of cloud adoption,” said Dan Ives, an analyst at Wedbush Securities. “These are enterprises who have been core Microsoft shops for the last 30 years.”
Total revenue rose 14 per cent to $30.57 billion in the third quarter ended on March 31st, beating analysts’ average estimate of $29.84 billion, according to IBES data from Refinitiv.
Net income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96 cents per share, a year earlier.
Microsoft employs around 2,000 in the State. – Bloomberg/Reuters