Facebook Grows Revenue, Users Despite Data Scandal

Mark Zuckerberg testimony Getty - H

The social network now has 2.2 billion monthly active users, up 13 percent since the same period last year.

Facebook is giving the first glimpse of how its business is faring in the wake of the Cambridge Analytica data scandal, reporting that it has continued to grow its number of users despite the #DeleteFacebook movement that began over concerns about privacy.

The social networking giant on Wednesday reported that it grew its monthly active users to 2.2 billion as of March, up 13 percent from the same period last year. Daily active users grew 13 percent to 1.45 billion on strong growth in Asia-Pacific. Facebook also reversed a decline in DAUs in the U.S., adding 1 million new users during the quarter.

Meanwhile, the company generated $12 billion in revenue during the first quarter of 2018, up 37 percent year-over-year. It earned $1.69 per share. Wall Street was looking for revenue of $11.4 billion and earnings of $1.35 per share. 

Two weeks before the end of Facebook's first, a series of reports revealed that the company had exposed the private information of millions of its users to a data analytics firm, Cambridge Analytica, that had ties to Donald Trump's presidential campaign. The company was using the information about Facebook users to sway voter sentiment through targeted Facebook posts and campaign ads. In the weeks following the disclosure, Facebook has faced increased scrutiny about how it handles sensitive user information. CEO Mark Zuckerberg spent two days testifying before Congress about Facebook's practices and the potential for regulation. 

A number of Facebook users began to protest the service, tweeting that they were joining the #DeleteFacebook movement. Among the most high-profile #DeleteFacebook supporters are actor Jim Carrey and entrepreneur Elon Musk, who did away with the Facebook pages for his companies Tesla and SpaceX

Because the Cambridge Analytica reports were not published until near the end of Facebook's first quarter, the results reported Wednesday will only show a partial picture of how privacy concerns will impact its business in the long term. But the daily active users metric does indicate that Facebook did not see a material change in user behavior. "Despite facing important challenges, our community and business are off to a strong start in 2018," Zuckerberg said in a statement. "We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities and bring the world closer together." 

Facebook did not share an update on how much time its users are spending on the platform. During a call with investors, CFO Dave Wehner noted that because Facebook is prioritizing connections over consumption, "we're seeing a decrease in certain types of time spent" including passive video viewing. 

But while passive video may be declining, Facebook is investing to grow its Watch tab, where Zuckerberg said Wednesday that the company is focusing more on interactivity. "For Watch, the big thing that we're trying to do is help create new ways that people can connect," he said, noting the communal viewing feature called Watch Party. "We're trying to make a different experience than what you might do on YouTube or these other services."

Facebook shares closed the day flat at $159.69. They were trading up nearly 5 percent after-hours on the Nasdaq