Facebook, the social network was pleased with its financial results for the second quarter, despite increasing regulatory pressure.
Most importantly, in my opinion, the scandals around the company not reduce its audience to maintain a high growth rate of revenue and profit. Regulatory pressure in the form of fines and the increase in the cost of security can be overcome for a profitable business of Facebook with a net profit margin of over 35%. The outer film does not have a significant impact on long-term growth potential, while keeping the loyalty of the users of the network.
The number of active daily users of Facebook in the reporting quarter rose 8%, to 1.59 billion, which allows investors easy to relate to the risks of enhanced oversight. Moreover, the current amount of the fine, as it was known in advance, limited to $5 billion, so the risks of uncertainty pending payments are not carried. In the first quarter, the company reserved $3 billion of costs. In the second they increased by another $2 billion, which led to lower net profit in the reporting period by 49%, to $2.6 billion excluding one-time expenses profit showed an increase of 7%.
Revenue grew by 28%, to $16.9 billion, were better than investors ‘ expectations. Its growth rate is even accelerated in comparison with the first quarter, which was 26%. Nevertheless, in the future still most likely the slowdown, which is confirmed by the forecast of the company. In addition to naturally high base effect for this there are a number of reasons. First, it is possible more regulation, especially in Europe. Second, a potential tighter control of operating systems from Apple and Google. Thirdly, the path of Facebook for maximum protection of user data.
Facebook is going to introduce the option to clear the history of actions for users, which can complicate the targeting of advertising and to put pressure on the dynamics of revenue in the corresponding segment. In this regard, at the end of this year revenue growth may not exceed 25% vs 37% in 2018. Other sources of income, including the development of e-Commerce services in Instagram or payment services, messengers, is still far from full implementation. To reach stable levels of revenue for them, you will need more than a year.
Report Facebook once again proved that the business model of the company is sufficiently resistant to shocks thanks to the popularity of social network users, allowing you to maintain solid revenue growth. However, companies should actively develop new monetization tools, since revenues from advertising will increase more slowly.
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