Facebook profits hit record high (despite year of scandals)

01/02/2019

Facebook's increased its user base in the US and Europe, with profits up $6.9bn (£5.3bn) despite a year of scandals plaguing the social media giant.

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Facebook recorded a strong fourth quarter boosting its global user database and revenue shot up 30% from a year ago to $16.9bn (£12.9bn).

The number of monthly users on Facebook went up 9% to 2.3 billion, the firm said in its latest update. Net profit was up 61% from the same period last year.

Shares in the tech giant, which makes most of its money from online advertising, jumped 11.5% to $167.67 (£127.80) in after-market trades following the release of the earnings.

Mark Zuckerberg, Facebook's co-founder and chief executive, said the platform's "community and business continues to grow".

The update showed the social network had increased its user base in the US and in Europe, where the platform has faced challenges over data protection.

Zuckerberg added: "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."
However, Facebook executives warned that expenses this year would soar 40% to 50% as they invest in data centres and security.

It also emerged that Facebook paid children as young as 13 to install software on their phones which allowed the company to collect data on how they used its competitors' apps.

Analysis

Commenting on the results, eMarketer Principal Analyst Debra Aho Williamson, said: “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. 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.”

Rakhee Jogia, VP, Strategic Partnership & Supply at Rakuten Marketing, added: “These results are testament to Facebook continuing to empower brands with new advertising and ecommerce options across its portfolio of platforms. At a time when the high street appears vulnerable, updates like Shopping for Instagram have given all businesses new ways to connect with customers by expanding shopping in Stories. Meanwhile launching the test of a shopping channel in Explore, and further investment in video platform Watch, cements Facebook’s position as a challenger video channel. It’s important to remember there will be nearly 1.9 billion Internet video users by 2021, a statistic that seems to have been adopted into the very core of Facebook’s global strategy.To this point, Facebook remains one of the few platforms that can claim a truly global presence - in 2019, the number of Facebook users in China is expected to reach 56.58 million. This kind of reach presents enormous potential for Western brands looking to tap into lucrative markets overseas, which will undoubtedly continue to be a priority among businesses for years to come.”

Aaron Goldman, CMO, 4C Insights, said: “Facebook’s Q4 performance represents continued advertiser confidence in the company’s suite of platforms. Despite a challenging year, Facebook has continually increased value for brands through developments like the expansion of Shoppable Advertising in Instagram Stories and Explore as well as new platforms for improving ad targeting like Portal. In 2019, video will become an even bigger focus with formats like Stories taking center stage across the Facebook Inc. portfolio, which includes Messenger and WhatsApp alongside Instagram and Facebook. We also expect growth with in-stream video as Facebook delivers more long-form, curated and original programming through Watch and IGTV. Overall, the Facebook family of apps is well-positioned to help marketers deepen their connections with engaged consumers.”

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