Facebook posts $3 bn profit in Q1

And in 2017 it is making it easier for the 1.2 billion people that use Messenger every month to find businesses within Messenger.

“The revenue growth in the quarter is all the more remarkable considering the concerns that came to light late a year ago around measurement issues”, said Brian Wieser of the Pivotal Research Group.

Analysts on average had expected total ad revenue of $7.68bn, according to FactSet. However, its share price slipped in after-hours trading on concerns about whether new ad formats will be able to replace the booming growth it has experienced with its news feed ads.

When we turn to Average Revenue Per User, we see that ARPU fell on a sequential basis.

Facebook said quarterly profit rose 76.6 per cent year-over year to $US3.06 billion ($A4.12 billion) and total revenue went up 49 per cent to $US8.03 billion. The drop in payment revenue is in line with management commentary and is expected to shrink further in quarters ahead. Operating expenses as a percentage of revenue were 41%, reflecting R&D growth associated with higher headcount and the buildout of new products.

Facebook is the last of the top five US tech companies to report quarterly earnings. With a quarter of the world’s population now registered on Facebook, the company faces the unusual problem of running out of people to pitch itself to.

GAAP expenses are projected to increase in a band of 40-50%, while capex is expected to be $7-$7.5 billion. This should help the company continue to make investments into newer areas such as its internet.org venture, virtual reality, augmented reality and artificial intelligence.

We remain positive on Facebook as it works on becoming a tech powerhouse. Facebook is growing at an incredible pace, the question is can it continue to grow at its current pace?

The social network has today announced that it will hire 3000 additional content moderators in a bid to counter the backlash against its sensitive and distressing content appearing on the platform and the unease that it is largely handled by an algorithm.

If successful, these “ad breaks” will help Facebook convince publishers to create longer videos without the platform paying them outright, executives said. Chatbots and “conversational commerce” are likely to be the strategies for Messenger and WhatsApp.

The leading social network made a profit of $3.06 billion. However, with the user base already at sky-high levels, a relative slowdown is imminent. ARPU in North America grew at an impressive 37% y-o-y to over $17 per quarter, driving the company-wide ARPU up by 28% to $4.23 per quarter. However, we estimate that a 10% repatriation tax on overseas cash, which is also a part of the USA government’s early tax plans, would essentially negate any tax advantages from a lower ongoing USA corporate rate.

It is also widely known that information users provide about relationships, location, age, numbers of Facebook “friends”, and the manner and frequency with which they log on to Facebook is sold to the social platform’s advertisers.