In the first quarter of 2017, Facebook significantly outperformed analysts' expectations in terms of both earnings and earnings, and the stock traded more than 5% on Wednesday after-hours.
Net sales for the quarter increased 49% to $ 11.9 billion, while EPS was $ 1.69, well above the $ 1.35 forecast. And it has been announced that it has significantly increased its share repurchases by $ 9 billion.
The results are some much-needed good news for the Californian firm, which has been in harm-control mode for weeks, struggling to stem the effects of the Cambridge Analytica scandal and reassure users.
"At first glance, the impact of data / privacy issues seems to be minimal, with above-average financial results," Baird Equity Research analyst Colin Sebastian wrote in a research note. "In the earnings release, CEO Mark Zuckerberg reaffirmed the assumption of wider social responsibility, but gave no indication that recent headlines have influenced user engagement."
Here are the key figures compared to what Wall Street expects:
- Revenue: $ 11.97 billion, 49% more than last year (Wall Street Expects $ 11.4 Billion)
- EPS (GAAP): $ 1.69. (Wall Street expects $ 1.35)
- Daily active users: 1.45 billion (equivalent to expectations, an increase of 13% over the previous year)
- Monthly active users: 2.2 Billion, plus 13% year-on-year (compared to expected 2.19 billion)
- Operating Income: 5.45 billion dollars (Wall Street expects 4.64 billion dollars)
The Operating margin was 46% in the fourth quarter, down from a seasonal high in the fourth quarter of 2017, but down 41% in Q1 2017. The $ 9 billion share repurchase is already authorized in addition to the $ 6 billion.
"Damage from Cambridge appears to be contained"
Also, the company's North American active users are back on track for growth, having dropped to 185 million for the first time in the fourth quarter of 2017. Short-term concerns that users are the social network could give up.
The Facebook stock was struck by the Cambridge Analytica scandal, falling nearly 18% from its pre-crisis high of $ 185 at the end of March. It has since recovered a bit and was before the profit release at around $ 160.
However, the company is not yet off the hook: the scandal hit the end of the quarter only in mid-March, and it will take some time for the impact to be felt.
"At first glance, we would say relief from the Q1 results and show that Cambridge's damage so far is low, although it will take 3-6 months for this storm to end," Daniel Ives , Head of technology research at GBH Insights, wrote in a research note.
"In short, overall, this should be another step in the right direction for Facebook, after months of dealing with these unprecedented data concerns following the Cambridge debacle, with worries about regulatory headwinds and damage to the company's advertising footprint a black cloud left over the stock. "