Facebook reels from slowest-ever growth as privacy woes gnaw at long-term profits

The numbers were accompanied by a grim outlook for future growth / Facebook

Facebook's prodigious growth has experienced its slowest quarter since the platform went public, with the social network losing users in Europe and missing analysts' revenue projections amid the Cambridge Analytica scandal and the implementation of GDPR.

Facebook's total ad revenue for Q2 amounted to $13.23bn, and while the figure was up 42% year-on-year, it fell short of Wall Street expectations.

The numbers were accompanied by a grim outlook from the company's chief financial officer David Wehner who said Facebook's data privacy scandals, coupled with other "headwinds" would continue to impact growth for the rest of 2018.

Numbers at a glance

  • Q2 revenue: $13.23bn, up 42% YOY
  • Monthly active users: 2.23bn. up 11% YOY
  • Daily active users: 1.4bn, up 11% YOY
  • New users in Q2: 22m daily active users, flat growth in US and Canada, down 3m in Europe
  • Revenue per user: $5.97 worldwide
  • Profit: $5.1bn, up 31% YOY

“We expect our revenue growth rates to decline by high-single-digit percentages from prior quarters sequentially in both Q3 and Q4,” he said.

Wehner also cautioned that Facebook's significant long-term investments in safety and security were "in the billions of dollars per-year" and were likely to eat into the firm's bottom for the coming year.

He continued: "Those will have a negative impact on margins. We think that's the right thing to do for the business in terms of ensuring the community's safety and security and the durability of the franchise. So those are important investments from an ROI perspective, but they don't have, obviously, immediate translation into revenue dollars."

As well as investing in privacy centres, previous reports indicate that Facebook has spent at least $30m in the US on TV commercials to assure users it's fixing issues like "spam, clickbait, fake news and data misuse".

GDPR woes

Investors were watching closely to see the a post-Cambridge Analytica #DeletFacebook campaign had impacted user count, but across the board Facebook's daily active users actually rose to 1.47 billion, up 11% year-on-year though still below the 1.48 billion predicted.

However, the company faced trouble growing its user count in its two biggest markets, Europe and the US. The number of North American users remained flat on the previous quarter at 185 million, but in Europe Facebook lost some 3 million daily users - a decline Facebook chief executive Mark Zuckerberg attributed to GDPR.

Chief operating officer Sheryl Sandberg said the sweeping EU regulations, which Facebook 'relocated' 1.5 billion users out of reach of, hadn't had a negative impact on ad revenue yet but that she was aware it wasn't "fully rolled out" during Q2.

"As we look further out, we recognise that there's still risk, and we're going to watch closely," she added.

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