Coverage: Facebook earnings beat expectations despite scandal

Facebook Inc. reported quarterly earnings and revenue well above expectations on Wednesday, as it made more ad money from each user despite recent scandals.

Anita Balakrishnan of CNBC.com had the news:

The quarterly results also emphasized Facebook’s ongoing hiring investments and expansion into mobile. Mobile ad revenue is now 91 percent of the total, and headcount increased 48 percent year over year to 27,742.

But CEO Mark Zuckerberg said on a conference call that the company is investing “heavily” on safety and security, including workers with language skills for detecting hate speech, and tools for verifying government IDs ahead of elections in the U.S. and abroad by the end of the year.

“Beyond the investments we’re making to secure our platform, we’re going to invest even more in building the experiences that bring people together on Facebook in the first place,” Zuckerberg said.

Max Cherney of MarketWatch reported that Facebook added 70 million users in the quarter:

Facebook added 70 million users in the first quarter, meeting user-growth expectations despite public calls to delete the social-media app. The company now boasts 1.45 billion daily users and 2.2 billion monthly members. The company’s operating expenses came in below consensus expectations, though Zuckerberg has warned they will continue to eat into Facebook’s profits as it adds 20,000 workers to address security and privacy concerns.

According to the earnings release, Facebook increased its workforce by 48% to 27,742, compared with the year-earlier quarter.

Chief Financial Officer David Wehner broke down a portion of those security and safety costs, telling analysts that the sales and marketing expense growth of 51% compared with the year-earlier quarter was driven by the “community operations investment.” That unit includes some of the money the company is spending on quality and safety initiatives, and Wehner expects the spending to “carry through the year.”

Previously, executives said the costs related to safety and security would be spread across a number of operating-expense line items, including research and development and general administration, but had not given more detail.

Seung Lee of the San Jose Mercury News reported that daily active users also increased:

Facebook’s daily active users in the U.S. and Canada reached 185 million in the latest quarter, bouncing back from a 1 million-user drop in the fourth quarter, an earnings-presentation slide showed. The daily active users in the region had dipped in the fourth quarter after Facebook made changes to the content it shows users.

During testimony this month before the U.S. Senate, Zuckerberg said he did not see any dramatic falloff in users.

“As you know, we have important issues to address,” Zuckerberg said, during a Wednesday conference call with analysts. “2018 is a year of important investments. We are taking a broader view of our responsibilities. We also need to keep moving forward.”

Facebook’s first-quarter revenue, at $11.97 billion, comfortably beat market forecasts compiled by Bloomberg that averaged $11.41 billion. Its revenue this quarter was 49 percent higher than in the same period last year.

Mobile advertising generated 91 percent of Facebook’s total revenue, up from 85 percent last year.