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Facebook founder Mark Zuckerberg. (Reuters)
Facebook founder Mark Zuckerberg. (Reuters)

Facebook beats Q3 estimates, grows user base amid regulatory scrutiny

Third-quarter net income rises 19% to $6.09 billion, or $2.12 a share, Facebook saysFacebook’s gains come even as the platform and its founder Mark Zuckerberg face criticism from regulators

SAN FRANCISCO : Facebook Inc. delivered better-than-projected third-quarter sales and steady user growth, proving that its business can endure increasing regulatory scrutiny and criticism over its immense reach and influence.

The social-media giant’s monthly global user base grew by 35 million—including 3 million new users in the lucrative North American market, which had looked like it reached a plateau in recent years. Facebook added as many new users in the US and Canada last quarter as it did the previous five quarters combined.

“We are building products that people want to use all over the world," Facebook chief operating officer Sheryl Sandberg said in an interview with Bloomberg Television late Wednesday following the company’s earnings report. “Importantly, the Facebook core app is growing, including in the United States."

That user growth came even as regulators and lawmakers began to step up probes into the world’s largest social network, including antitrust investigations by the US Federal Trade Commission, the Department of Justice and a broad group of US state attorneys general. The inquiries haven’t scared off advertisers either, and third-quarter sales rose 29% to $17.7 billion, the company’s highest ever for any single quarter.

On an earnings call with analysts, Facebook executives pointed to ads in Stories, where posts disappear after 24 hours, as a key growth area. They also mentioned ads in the Explore section of its Instagram photo-sharing app, where users go to discover posts from people they don’t follow. Research firm EMarketer estimates Instagram will generate more than $15 billion in ad revenue this year, up from $9.1 billion in 2018, though Facebook doesn’t break out results from that business.

Sandberg reiterated what she has said in past quarters: While Stories ads are popular and growing, they still aren’t as expensive as some other kinds of Facebook ads. “Stories still don’t monetize at the same rate as News Feed right now," Sandberg said. Finance chief Dave Wehner said that in the short term, that probably won’t change. He said that Stories revenue will increase because of more ad impressions, not necessarily higher prices. Instagram is also rolling out a shopping feature, and Sandberg said there’s a nascent commerce effort across all of Facebook’s properties.

Facebook shares rose 5.3% in early trading after closing at $188.25 in New York on Wednesday. The stock is up 44% this year.

Third-quarter net income rose 19% to $6.09 billion, or $2.12 a share, Facebook said in a statement. That beat predictions for $1.91 in per-share profit. Monthly average users at the Facebook app reached 2.45 billion, matching estimates.

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