Fri, Jul 27, 2018 - Page 10 News List

Facebook reports slower-than-expected Q2 growth


Facebook Inc’s user base and revenue grew more slowly than expected in the second quarter as the company grappled with privacy issues, sending its stock tumbling after hours.

The company said that it expects revenue growth to decelerate in the next couple of quarters as it promotes new, and for now less profitable, products — such as its Stories disappearing message feature.

Facebook is also allowing users to make “more choices” regarding data privacy amid public outcry and regulatory pressures, it said.

Analysts attributed the user growth shortfall largely to European privacy rules that went into effect in May.

Shares sank 17.8 percent to US$178.77 in after-hours trading after closing at US$217.50. While the stock fell modestly after the initial earnings numbers came out, it tumbled more sharply after Facebook chief financial officer David Wehner told reporters about the revenue deceleration during a Facebook earnings conference call.

Facebook earned US$5.1 billion, or US$1.74 per share, up 31 percent and better than analysts’ estimates of US$1.71. However, revenue — up 42 percent to US$13.23 billion — was slightly below the US$13.34 that Wall Street was expecting.

The company had 2.23 billion monthly users as of June 30, up 11 percent from a year earlier.

Analysts were expecting 2.25 billion, according to FactSet.

User growth — both on a monthly and daily basis — was flat in the US and the rest of North America, while it declined slightly in Europe.

Facebook said the European privacy rules, called General Data Protection Regulation, did not have a big effect on the quarter’s revenue, but added that they were only in effect for about a month before the quarter ended.

One bright spot for Facebook has been Instagram, the photo-sharing app it bought for US$1 billion in 2012. Instagram now has more than 1 billion users, and analysts expect it to be a model for how Facebook molds its other big app purchase, WhatsApp, into a lucrative business.

So far, WhatsApp does not show ads.

Its founders Jan Koum and Brian Acton left Facebook amid disagreements over advertising and other issues.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top