Facebook warns again on ad growth, shares dip from high

Facebook added 80 million users in the first quarter, giving the service a total of 1.94 billion who frequent it at least once a month and a big boost in its ambitions to soak up billions more users around the globe.

Total revenue grew by 49 per cent year-over-year to $8 billion and advertising revenue was up 51 per cent to $7.9 billion.

Net income attributable to Facebook shareholders rose to $3.06bn, or $1.04 per share, in the first quarter from $1.73bn, or 60 cents per share, a year earlier.

Cost and expenses elevated 40% to $4.7 billion, due to increase in workforce and marketing expenses. FB says that capital expenditures for the first quarter of 2017 were $1.27 billion.

On the earnings call, CEO Mark Zuckerberg said AI tools will get better over time, but it will take a "period of years" to reach the quality level that Facebook wants. We are continuing to build tools to support a strong global community.

Meanwhile, the number of people using Facebook monthly was up 17% to 1.94-billion, according to the earnings report.

Interestingly, in January 2017, Instagram had only 150 million daily active users, which means that it had witnessed a 33 percent increase in its daily user base from January to April.

The main Facebook app, Messenger, Instagram, WhatsApp, and some of Facebook's other digital offerings now sport features that were at least partially inspired by Snapchat, and many of them have been well-received by consumers so far.

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Wehner added that Facebook has already seen deceleration USA and Canadian markets. On Wednesday, Mr. Wehner reiterated his warning from past year that Facebook's ad revenue growth will "come down meaningfully over the course of 2017".

Facebook is the last of the top five US tech companies to report quarterly earnings. The company reported GAAP earnings of $1.04 per share, beating street estimates by a big margin of 18 cents.

Facebook has a 10-year master plan in place to hit Augmented Reality mark and Zuckerberg used the F8 keynote address platform for the goal as well.

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

Facebook Chief Operating Officer Sheryl Sandberg said during a conference call in February that the company was diversifying revenue by expanding its base of advertisers across geographic regions and industries.

Facebook is now facing a number of challenges. For now, core newsfeed and video ads are driving revenue growth, but Facebook's Messenger and augmented reality offerings will provide the longer term growth. Even though Facebook continued to warn of a deceleration in ad load, analysts were nearly euphoric about Facebook's growth prospects, pointing to a successful transition to video and revenue possibilities with Instagram.

Facebook's long-term outlook looks strong on the back of strong monetization opportunities on its platforms across geographies as well as inroads into newer areas such as VR.


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