Facebook beats profit estimates in Q1

Facebook on Wednesday blew past Wall Street profit estimates in the first quarter and set aside three billion U.S. dollars to cover a settlement with U.S. regulators, calming investors who had worried about the outcome of a months-long federal probe.

Shares of the world's biggest online social network jumped by more than 10 percent to 200.50 U.S. dollars in after-hours trade. They have now regained much of the ground lost last year amid slowing growth and costs associated with the company's privacy scandals.

The settlement accrual, which Facebook set at three billion U.S. dollars but said could rise as high as five billion U.S. dollars, cut the company's net income in the first quarter to 2.43 billion U.S. dollars, or 85 cents per share.

Excluding the charge, Facebook would have earned 1.89U.S. dollars a share, up from 1.69 U.S. dollars in the year-ago quarter and easily beating analysts' average estimate of 1.63 U.S. dollars per share, according to IBES data from Refinitiv.

Total first-quarter revenue rose by 26 percent to 15.1 billion U.S. dollars from 12.0 billion U.S. dollars last year, again beating analysts' average estimate of 15.0 billion U.S. dollars.

This is a strong report suggesting that advertisers still see value in Facebook's platform, as they did before the controversies and scandals erupted, said Haris Anwar, senior analyst at financial markets platform Investing.com.

Monthly and daily users of the main Facebook app were both up eight percent compared to last year, to 2.4 billion and 1.6 billion, respectively, in line with forecasts.

Total expenses in the first quarter were 11.8 billion U.S. dollars, including the settlement accrual, up 80 percent compared with a year ago as the company hired content moderators and invested in new security controls to make its social networks safer.

Executives said in a conference call with investors that they expected expenses to grow by 47 to 55 percent this year, updating their earlier forecast of an increase of 40 to 50 percent.

The first-quarter operating margin fell to 22 percent from 46 percent a year ago, but would have been a comfortable 42 percent without the one-time expense.

(CGTN)