Amid fallout from the Facebook Papers showing that the social media giant sometimes ignored the adverse effects of its platform on users, the company on Monday reported sharply higher quarterly profits, buoyed by strong advertising revenue.
Facebook said its net income grew 17% between July and September to $9.2 billion, up from $7.8 billion, a year earlier. Revenue rose 35% to $29 billion, beating analyst expectations of $24.5 billion. Facebook shares added 1% on Wall Street Monday and rose another 1% to $332.43 in after-hours trading.
The company already predicted uncertainty for 2021 back in January, saying its revenue in the latter half of the year could face significant pressure. Because revenue grew so quickly in the second half of 2020, Facebook said at the time that it could have trouble keeping up that pace. But as the company’s stock price shows, investors were not surprised by Monday’s results.
At the same time, Facebook said it continued to face “headwinds” from Apple, whose newest operating system requires apps to get permission from users in order to track them. Facebook has fought the changes, claiming that they would cause small businesses to lose a majority of their revenue.
So far, the change hasn’t had a significant effect on Facebook, although its most profitable users — those in the U.S., Canada and Europe — became slightly less so. The company’s average revenue per user dropped by about 65 cents in North America, to $52.34 per user, and by about 70 cents in Europe, to $16.50.
Facebook is reportedly considering a rebranding, according to a report from The Verge, but the company has declined to comment on what it called “rumors and speculation.”
The company also said it will break out Facebook Reality Labs as a separate segment beginning in the fourth quarter. This segment will include its products on augmented and virtual reality and related hardware, software and content. Facebook expects to spend roughly $100 billion on the segment this fiscal year, it said.
CBS News’ Irina Ivanova contributed reporting.
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