Mark Zuckerberg testified in front of his third committee in three weeks, this one made up of powerful figures that could substantively affect the future of his company and his place in it—a.k.a. Facebook investors.
Advertising Revenue Grows Like Clockwork
The company reported a 50 percent year-over-year increase in advertising revenue in Q1 2018, reaching $11.8 billion. Facebook’s revenue growth has been steady over the last three years, and this quarter is no exception.
Daily and monthly active users likewise increased at a steady clip, hitting 1.45 billion and 2.20 billion, respectively. Both of these figures mark 13 percent year-over-year growth.
This steady growth comes despite Facebook’s heavy tweaking its advertising policies at a steady clip this year, first banning cryptocurrency ads in March, then requiring political advertisers to disclose their funding sources just this week.
Even so, Mark Zuckerberg and Sheryl Sandberg warned that, due to the platform’s increasing ubiquity, investors should expect Facebook’s advertising revenue growth rate to flatten in coming quarters.
Total ad impressions across Facebook’s products, which include Instagram and WhatsApp, increased by 8 percent, and price per impression increased by 39 percent. Mobile continues to dominate Facebook’s advertising space, with its mobile advertisers making up 91 percent of its total advertising revenue.
Several callers expressed concerns about Facebook’s heavy focus on advertising as its primary revenue source, which both Zuckerberg and Sandberg shrugged off. The company stated it does not have any plans to monetize its marketplace or payment functions outside of ads.
“Advertising-supported businesses like Facebook equalize access and opportunity,” Sandberg declared instead of commenting on if the company has plans to create an ad-free subscription model.
Keeping A Brave Face On GDPR
The subject of GDPR came up frequently, though Mark Zuckerberg and Sheryl Sandberg expressed little concern that the landmark data privacy law would affect their bottom line. Because GDPR affects all platforms and advertisers equally, Facebook does not expect to lose much business even if advertisers become less able to target their advertisements. In essence, Facebook’s position on the effect of GDPR on advertising ROI is, “It’s not our problem.”
The company did caution that it expected new user growth in Europe to flatten or possibly shrink, though were quick to express that they were both not particularly worried and that they could not provide hard predictions as to its total effect.
Facebook has been busy moving as many of its users as possible outside of the EU’s jurisdiction (most of Facebook’s user data is stored in Ireland, a prevalent tech tax haven), but still promised to make all EU-mandated privacy tools available to all its users.
Investment In Privacy, Security
Zuckerberg’s concerns over the social good of Facebook figured heavily into the earnings call.
“We are taking a broader view of our responsibility and investing to make sure our services are used for good,” the Facebook CEO opened the call with. “But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.”
In light of the Cambridge Analytica scandal and his recent testimonies in front of Congress, Zuckerberg announced plans to invest heavily in both research and staff to better protect privacy and safety on the platform, such as doubling its human moderation staff to 20,000 by the end of the year.
He also expressed high hopes for the ways that Facebook can better society in the future, again emphasizing his plans to optimize the platform for “connections” over “time spent.”