Facebook Reports Strong Q1 Growth Despite Record $3 Billion FTC Fine Accrual
Facebook grows its user base to 2.38 billion monthly active users and beats revenue expectations, even as it sets aside $3 billion for a potential FTC privacy fine.
Facebook delivers a strong Q1 2019 earnings report with 2.38 billion monthly active users and $15.08 billion in revenue, beating analyst estimates of $14.98 billion. The social media giant's share price jumps 8.3 percent in after-hours trading, showing that Wall Street absorbs the news positively despite lingering privacy concerns. Daily active users also climb to 1.56 billion, proving that user engagement continues to rise steadily.
The company reports a significant drop in earnings per share to $0.85, but this decrease stems entirely from a $3 billion accrual set aside for a potential FTC privacy fine. Without this massive legal expense, Facebook's adjusted EPS reaches an impressive $1.89, easily surpassing the estimated $1.63. The FTC negotiations relate to a 2011 agreement regarding user data practices, and the final penalty ranges anywhere from $3 billion to $5 billion.
Even with this looming penalty, Facebook maintains robust financial health with $45.2 billion in cash and securities available to cover the fine and fund acquisitions. The company aggressively expands its workforce by 36 percent year-over-year to 37,773 employees, primarily to bolster its security and safety teams. While net profit falls to $2.429 billion from nearly $5 billion a year ago, Facebook still secures a healthy 22 percent operating margin.