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In its first true test of how data privacy concerns would impact its business, Facebook posted second-quarter revenue that missed the expectations of analysts even though profits came in better than expected.
The company said revenue was $13.23 billion and it earned $1.74 a share. The social media giant was expected to report quarterly earnings of $1.72 a share and revenue of $13.36 billion, per Thomson Reuters.
Revenue grew 42 percent year over year and earnings per share grew 32 percent. Advertising revenue was up 42 percent to $13.04 billion while revenue from payments and other fees was up 23 percent to $193 million.
Facebook said that 91 percent of its advertising came by way of mobile ads, up from 87 percent in the same quarter last year.
It has been a rocky few months for Facebook, which came under fire for exposing user data to analytics firm Cambridge Analytica. Since then, CEO Mark Zuckerberg has faced heat over how the company protects user privacy and monitors content on its platform, including testifying before Congress for two days in April.
Key to analyzing the company’s health is its active user metrics. It reported that during the second quarter, monthly active users came in at 2.23 billion, slightly below the 2.25 billion expected by analysts. Daily active users also were light at 1.47 billion compared with expectations of 1.49 billion.
Shares of Facebook are up about 24 percent year over year, but Wall Street was not impressed with the second-quarter report Wednesday, and the stock was off 17 percent in after-hours trading. Shares of Twitter and Snapchat fell in sympathy as well after the closing bell.
Facebook said it ended the quarter with 30,275 employees, 47 percent more than it had at the same time last year.
The company reported earnings from its Menlo Park headquarters at the same time its content executives were presenting their vision for video on the platform during the Television Critics Association’s summer press tour in Beverly Hills.
Facebook’s Watch video tab is nearly a year old and still finding its footing as a platform for original video programming. After a year of experimenting with what content works on the platform, the company has begun to roll out its first slate of news programming and has lined up a number of high-profile scripted projects, including Queen America starring Catherine Zeta-Jones.
“We’re seeing some real traction with the original programming,” Zuckerberg said Wednesday, and chief operating officer Sheryl Sandberg added that about one-quarter of the world’s population will watch some sort of video on their mobile device this year.
Zuckerberg said Facebook has been cracking down on “fake news” by removing all monetary incentive and using artificial intelligence to flag “bad content,” including content used to spread terrorism.
Political ads will be clearly labeled with information as to who is paying for them, he said, and there will be an archive associated with them so that users can research the sort of ads the groups have been buying for up to seven years.
He also revealed for the first time how many people use at least one of Facebook’s apps, including Messenger, WhatsApp and Instagram, and that number is 2.5 billion monthly.
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