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#DeleteFacebook Didn’t Happen: Facebook Grows Users in Q1, Beats Earnings Estimates

Facebook’s users aren’t abandoning the company after all — or at least they weren’t during the first three months of this year. The company was able to grow its number of daily active users to an average of 1.45 billion in March, when news of the Cambridge Analytica data scandal first broke. That’s up from 1.40 billion daily active users on average in December.

Notably, its number of daily active users in the U.S. and Canada also grew to 185 million, after it had slightly declined to 184 million in December.

CEO Mark Zuckerberg seemed to acknowledge the fact that Facebook usage wasn’t affected by the backlash in a statement included in its Q1 earnings release. “Despite facing important challenges, our community and business are off to a strong start in 2018,” he said, but also cautioned: “We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.”

Facebook had 2.20 billion monthly active users at the end of March, up from 2.13 billion at the end of December, and significantly higher than the 1.94 billion it ended Q1 of 2017 with.

The company revealed these numbers as part of its Q1 2018 earnings release, which also showed it once again surpassing the expectations of analysts.

Facebook generated $11.97 billion in revenue during the first quarter of 2018, compared to $8.03 billion during the same quarter in 2017. The company’s net income for the quarter was $4.99 billion, compared to $3.06 billion in Q1 of 2017. Diluted earnings per share came in at $1.69, compared to $1.04 the year before.

Analysts had expected $11.41 billion in revenue, and earnings of $1.36 per share. Investors reacted to the news by sending Facebook’s stock up close to 5 percent in after-hours trading.

One minor sore spot in Wednesday’s release: The company’s non-advertising revenue, which includes the sale of Oculus Rift headsets, declined year-over-year, from $175 million to $171 million. These numbers could get a significant lift in the coming quarters, as the company is set to release it Oculus Go headset soon. “We’ve some big moments for virtual reality coming up, and I’m excited to Oculus Go into people’s hands soon,” Zuckerberg said during the company’s earnings call.

Both Zuckerberg and Facebook COO Sheryl Sandberg used that call to once again return to privacy concerns, with Zuckerberg reiterating once again the company’s commitment to hire additional content reviewers.

However, the two executives also struck a slightly different tone during their remarks, defending Facebook’s continued growth as well as its business model. “We’re proud of the ads model,” Sandberg said, arguing that free, ad-supported services helped to bridge the digital divide.

Facebook CFO David Wehner cautioned investors that revenue per user in Europe could be flat or even slightly down as a result of Europe’s new GDPR privacy legislation, which is set to take effect next month. Wehner also said that Facebook won’t be alone with this. “GDPR is affecting the entire advertising industry.”

Zuckerberg picked up on remarks he made three months ago about optimizing for sharing and not passive time spent, and said that passive video viewing is down as a result to those changes. The company didn’t provide an update on time spent on the platform this time around, but Zuckerberg said this focus on active interaction was also a key to the company’s Watch video product.

“We are trying to make it a different experience from what you can get on YouTube,” he said about Watch, adding: “A bunch of the content that has come onto Watch is good and is working.” However, Zuckerberg also cautioned that it was “still pretty early overall” for Facebook Watch.

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