Facebook Inc said that new rules and product changes aimed at protecting users’ privacy would slow its revenue growth into next year and significantly raise expenses, taking the shine off quarterly revenue results that beat expectations.
The outlook laid out on Wednesday was the latest twist in a day of contrasting news for the world’s largest social media company. Facebook earlier agreed to pay $5bn to settle a United States Federal Trade Commission (FTC) data privacy probe but then disclosed that the regulator was now investigating it for anti-competitive behavior.
The settlement, which legislators and privacy experts criticised as a “slap on the wrist” for a company whose revenues last year topped $55bn, suggested that Facebook had moved past a major regulatory challenge that has dogged it over the last year.
But Facebook’s chief financial officer, Dave Wehner, warned that operational changes required by the settlement would be costly. In addition, he said, revenue will be hurt by new limits on usage of consumer data being set by governments around the world and by tech companies on whose systems Facebook relies. He did not elaborate.
The guidance demonstrates the lasting effects of Facebook’s failure over the last decade to adequately secure some users’ personal information and inform users how its business partners were accessing the data.
Still, Facebook said the second-straight quarter of above-expectations revenue showed that its namesake app is producing growth even as users gravitate towards newer, more private features whose popularity has outstripped their usage among advertisers.
Second-quarter revenue rose to $16.9bn from $13.2bn a year ago, beating analysts’ average estimate of $16.5bn, according to IBES data from Refinitiv.
Shares of Facebook, which also owns WhatsApp and Instagram, rose 0.87 percent after-hours to $206.44 after whipsawing amid the results and guidance. The shares have recouped most of the losses sparked a year ago on concerns of slowing usage and the costs of improving privacy.
For the quarter, Facebook reported 2.7 billion monthly users and 2.1 billion daily users across Facebook, Messenger, Instagram and WhatsApp, both figures about the same as last quarter.
“News regarding FTC and data privacy, along with antitrust investigations and additional headline risks likely to continue to hang over the stock, but it looks like the platform still remains a very popular destination for the users,” Morningstar analyst Ali Mogharabi said in an email to Reuters.