Facebook User Growth Stalls

Mark Zuckerberg testimony Getty - H

The social network ended the third quarter with 2.27 billion monthly active users, up slightly from the 2.23 billion it had last quarter.

As problems persist for Facebook over its handling of user data, the social networking giant revealed that user growth continued to slow during its third-quarter earnings report on Monday. 

Facebook had 2.27 billion monthly active users (MAUs) during the quarter, up 10 percent year-over-year but only up slightly from the 2.23 billion it reported at the end of the second quarter. In the U.S., Facebook added just 1 million MAUs. Meanwhile, it lost 1 million MAUs in the Europe. Most of the company's growth came from Asia-Pacific and the rest of the world. 

Daily active users, meanwhile, reached 1.49 billion during the quarter — the result of stagnant growth in the U.S. and a decline in Europe but growth in the other regions.  

On the financial side, Facebook brought in revenue of $13.7 billion, up 33 percent from the same period last year, and earnings of $1.76 per share. Wall Street was expecting revenue of $13.77 billion and earnings of $1.46 per share. 

Facebook shares dropped on the report, trading down more than 2 percent after-hours on the Nasdaq and then quickly recovered, trading up more than 2 percent just minutes later. The stock continued to ping pong during executives' quarterly calls with investors and was up around 3 percent once the call ended. 

At the end of the quarter, Facebook revealed that a security breach, the largest in its history, had exposed the personal information of millions of its users. (After initially reporting that the data from 50 million users was exposed, the company later revised that number to 30 million.) 

The breach came after a tough few months for the company following the disclosure that analytics firm Cambridge Analytica had accessed the data of as many as 87 million Facebook users. Since then, CEO Mark Zuckerberg made the trek to Washington, D.C., to testify before Congress about Facebook's data protection policies, and several senior level executives have left their roles at the company. 

Zuckerberg addressed Facebook's challenging spot, noting on the call, "It's been an important year. It's been a tough year." The more candid Zuckerberg provided a greater level of detail about the business than he has in the past, noting that he expects 2019 to be "another year of significant investment." 

On the topic of specific products, he explained that Stories was slow to grow on the platform but that "it's now growing quickly." And Watch, the company's year-old streaming video platform, he described as being "well behind YouTube" even though it has grown three-fold in recent months. He continued, noting that he wants to make sure that the viewing experience is "people centric," explaining that Facebook had to rate limit the growth of Watch in the early days because "people really want to watch a lot of video" but that was cutting into social interactions among users. He also said that the company feels it is in a better position to allow people to consume in a way that won't hurt the interactivity that is core to Facebook. 

Facebook shares closed the day up more than 2 percent to $146.22.