Jan 31, 2019

Despite ongoing scandals, Facebook keeps getting bigger

Photo: Thomas Trutschel/Photothek via Getty Images

Facebook reported stellar earnings Wednesday, despite a scandal-ridden end to 2018. It beat estimates on revenue, earnings and user growth and said it's making far more money per user than analysts expected, much more than it ever has before.

Why it matters: The company is facing unprecedented scrutiny from policymakers, business partners and privacy advocates, but strong growth — particularly overseas — demonstrates that users and advertisers are largely unfazed by the corporate drama.

The new numbers:

  • 2.7 billion monthly active users across all of its apps
  • 2 billion daily active users across all of its apps
  • 66% of Facebook core app users also are daily active users 
  • 500 million daily active users of Instagram Stories
  • 7 million total advertisers across all apps 
  • 2 million total businesses active on Stories 

The big takeaways on growth:

  • Facebook has improved its ability to monetize users. While user growth was strong, just about matching estimates, average revenue per user was up much higher than expected, by 20% year over year.
  • The Asia-Pacific region is booming. The company added more daily active users and monthly actives users across every region in the world, including North America, which is largely saturated with existing Facebook users, anyway. It experienced especially strong growth in the Asia-Pacific region.
  • It posted a record $6.8 billion in profits, despite executives' assurance that investments in safety and security on its platform have been so costly that they have affected its bottom line.
  • Facebook warned revenue growth would slow. "Revenue growth rates will continue to decelerate throughout 2019 on constant current basis," said chief financial officer David Wehner. The company said it will rely more heavily on Story ads than News Feed ads for growth.

The big takeaways on policy:

  • Facebook's earnings call didn’t touch policy, per Axios' David McCabe. Neither analysts nor the company addressed one of the the company's main concerns in Washington, an ongoing Federal Trade Commission investigation into its privacy practices.
  • But Facebook says the privacy issue could hurt its bottom line this year. Wehner warned that Facebook could face "headwinds" on its ad-targeting business due to privacy concerns in 2019.
  • Safety and security cost the company more than expected. "A lot of our business challenges have been self imposed," said CEO Mark Zuckerberg, "Investment in security and safety increased cost and reduced revenue."

The big takeaways on the future of the business:

  • Messaging is a massive priority: Executives spoke at length about the importance of monetizing and improving Facebook's messaging services. The company has made plans to integrate the workings of its messaging apps.
  • Stories are driving advertising growth: The company announced that 2 million businesses are actively using Facebook Stories. Zuckerberg said stories and messaging are becoming more central to the user experience.
  • The company took PR around earnings seriously. Executives called reporters with prepared talking points as soon as the earnings were released Wednesday afternoon. Chief operating officer Sheryl Sandberg did a few televised interviews as well.

Go deeper

NYPD commissioner: "I'm extremely proud" of officers' response to protests

New York City Police Commissioner Dermot Shea in February. Photo: Yana Paskova/Getty Images

New York City Police Commissioner Dermot Shea said in a public statement Sunday that he is "extremely proud" of the New York City Police Department's response to protests over the death of George Floyd Saturday night, writing: "What we saw in New York City last night and the night before was not about peaceful protest of any kind."

Why it matters: New York City residents captured several instances of police officers using excessive force against demonstrators. In one video, two NYPD SUVs are seen ramming into protesters who were blocking a road and throwing traffic cones at the vehicles.

16 mins ago - Science

SpaceX capsule carrying astronauts docks with space station

The Crew Dragon just before docking on Sunday. Photo: NASA TV

SpaceX's Crew Dragon safely delivered two NASA astronauts — Doug Hurley and Bob Behnken — to the International Space Station on Sunday after the company's historic launch Saturday.

Why it matters: This marks the first time a private company has delivered people to the space station and it signals the beginning of the end of NASA's reliance on Russia's Soyuz spacecraft for flights to orbit.

Minnesota AG: Prosecution of officer in George Floyd case shouldn't be rushed

Minnesota Attorney General Keith Ellison cautioned in an interview on "Fox News Sunday" that the case against Derek Chauvin, the former Minneapolis police officer involved in the death of George Floyd, is "very early in the process" and that charges could be amended or added.

Why it matters: Chauvin was arrested last week and charged with third-degree murder and manslaughter, which implies that he did not intend to kill Floyd. Some protestors have demanded more severe charges and Floyd's family has asked Ellison to serve as a special prosecutor in the case.