After last quarter's blowout performance, Facebook, Inc.'s (NASDAQ: FB) third-quarter financial release came against the backdrop of company executives' testimony in Congressional hearings about Russian-bought political ads during the U.S. election. The controversy didn't seem to have any impact on current results, but the company announced plans to increase its safety and security spending to address this and other issues, which will affect coming quarters.
For the just completed quarter, Facebook produced revenue of $10.33 billion, a 47% year-over-year increase, and exceeding analysts' consensus estimates of $9.8 billion. This was the first time the company exceeded $10 billion in revenue in a quarter. Net income grew a whopping 79% over the prior-year quarter, producing diluted earnings per share of $1.59, up 77% year over year and eclipsing the $1.28 analysts expected.
Mobile advertising revenue grew to $8.9 billion, up 57% year over year, and now represents 88% of the total, up from 84% in the prior-year period. The average price per ad was up 35%, while ad impressions grew 10% over the prior-year quarter. Average revenue per user worldwide grew to $5.07, up 26% over the same quarter last year.
Facebook CEO Mark Zuckerberg forecast increased spending to deal with the Russian ad scandal. Image source: Facebook.
If you build it, they will come
The number of monthly active users on the social-media site hit 2.07 billion, a 16% increase over the prior-year quarter, while daily visitors to the platform jumped to 1.37 billion, also up 16% year over year. Instagram hit a milestone during the quarter, passing 500 million daily active users. Stories on Instagram and Status on WhatsApp have each seen users exceed 300 million each day.
Facebook also revealed that in less than a year since it launched Workplace, more than 30,000 companies are using its internal business communication tool, which recently included Wal-Mart, the largest employer in the United States.
Next year will see significant investments
Facebook executives outlined several areas where they will be spending aggressively in the coming year.
The biggest revelation was that Facebook would double the ranks of its safety and security staff to 20,000 over the coming year. In a prepared statement, CEO Mark Zuckerberg said: "Some of this is focused on finding bad actors and bad behavior. Some is focused on removing false news, hate speech, bullying, and other problematic content that we don't want in our community."
Facebook also plans to spend heavily on video content for its recently launched Watch feature, which the company describes as "a new platform for shows on Facebook." Sheryl Sandberg, the company's chief operating officer, pointed out that "video is exploding, and mobile video advertising is a big opportunity."