META Meta Platforms Inc

By Deepa Seetharaman 

Maybe everyone isn't so mad at Facebook Inc. after all.

In its first earnings report since the site began racing to address privacy concerns and Chief Executive Mark Zuckerberg squared off with angry lawmakers, Facebook posted rising revenue and profit that highlighted the company's central place in the digital economy.

The social-media giant has weathered one crisis after another in the 17 months since the 2016 presidential election but its business -- at least for now -- has remained healthy.

Facebook reported a quarterly per-share profit of $1.69, up from $1.04 a year earlier, while revenue rose nearly 50% to $11.97 billion. Net income rose 63% to nearly $5 billion, compared with $3.06 billion a year ago.

Analysts expected Facebook to report a per-share profit of $1.35 and quarterly revenue of $11.41 billion, according to data compiled by Thomson Reuters.

Facebook added about 70 million monthly users during the first three months of the year bringing its overall user base to 2.2 billion, up from 2.13 billion at the end of 2017.

The Menlo Park, Calif., firm also said it would buy back an additional $9 billion in shares, adding to the $6 billion previously authorized.

In after-hours trading Wednesday, Facebook shares rose about 7% to $171.00.

Facebook's earnings report marks the first snapshot of how the company's ties to political-data firm Cambridge Analytica are affecting the Silicon Valley giant's business.

Cambridge Analytica aided the Trump campaign in 2016 and allegedly bought data about tens of millions of Facebook users from an outside developer. The incident, disclosed in mid-March, highlighted Facebook's at times lax oversight of how outside developers handled user data they extracted from the platform. It also sparked widespread anger toward the site and a #deletefacebook campaign. Cambridge Analytica has denied wrongdoing.

Much of the fallout from the incident happened after the quarter ended in March and isn't fully reflected in Wednesday's report. Still, the results underscore Facebook's continued ability to generate cash during one of the toughest periods in the company's 14-year history.

Major advertisers "were very aware of the controversies swirling and wanted to know more about what other brands were doing," said Andy Taylor, associate director of research at data marketing firm Merkle. "But really, in terms of making moves, advertisers are more in a wait-and-see mode."

Mr. Taylor added that most advertisers generally remain happy with Facebook's products.

Facebook's struggles haven't affected advertisers like last year's controversy surrounding Alphabet Inc.'s YouTube and its placement of ads adjacent to videos with objectionable content, Mr. Taylor said.

"This situation isn't as controversial as [a brand's ad] popping up against a racially charged video," he said. "In most cases, that's very damning for a brand, whereas that same reaction hasn't happened with Facebook."

Mr. Zuckerberg appeared twice in front of U.S. lawmakers this month in hearings centered on the Cambridge Analytica episode, and Facebook has redoubled efforts to stamp out abuse. Still, most analysts and investors believe additional regulation is inevitable, although it isn't clear what form it will take or what impact it would have on Facebook's bottom line.

Mr. Zuckerberg told lawmakers this month that he was open to some forms of regulation but added that too many rules could impede American tech companies from competing head-to-head with Chinese rivals.

The uproar over Cambridge Analytica is the latest episode to spark widespread questions over Facebook's imprint on society. The period since the 2016 presidential election has been tumultuous, with users, advertisers and lawmakers questioning whether the company sacrificed security and privacy in pursuit of relentless growth.

Since reaching an all-time high in early February, Facebook shares had fallen more than 18% before the earnings release.

Earlier this week, Facebook's biggest rival in the online-ad space, Google parent Alphabet, reported a profit for the first three months of the year that topped expectations, but investors grappling with the company's higher expenses sent the shares down 4.8%, the stock's worst session in more than two months.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

April 25, 2018 18:03 ET (22:03 GMT)

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