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Facebook Trades Higher After Hours on Q1 Earnings

Company takes a one-time charge of $3 billion against an FTC inquiry into violation of an agreement promising to protect user privacy?.

Facebook FB reported 26% revenue growth year-over-year in the first quarter of 2019, to $15.077 billion, slightly beating estimates by Refinitiv, according to CNBC. Net income was $2.429 billion, or $0.85 per share.

The numbers include a $3 billion one-time charge as a contingency against an ongoing inquiry by the Federal Trade Commission (FTC) to determine whether or not Facebook violated 2011 agreement promising to protect user privacy. Without the charge, Facebook would have reported EPS of $1.89, ahead of estimates of $1.62 according to the Associated Press.

The stock, which closed at $182.58 in regular trading, was as high as $193.00 after hours.

In its press release, the company stated (emphasis ours):

In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection
with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and
other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is
$3.0 billion to $5.0 billion.
The matter remains unresolved, and there can be no assurance as to the timing or the terms of
any final outcome.

Other highlights

  • Daily active users (DAUs) – DAUs were 1.56 billion on average for March 2019, an increase of 8% year-overyear.
  • Monthly active users (MAUs) – MAUs were 2.38 billion as of March 31, 2019, an increase of 8% year-over-year.
  • Mobile advertising revenue – Mobile advertising revenue represented approximately 93% of advertising revenue
    for the first quarter of 2019, up from approximately 91% of advertising revenue in the first quarter of 2018.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $3.96 billion
    for the first quarter of 2019.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities
    were $45.24 billion at the end of the first quarter of 2019.
  • Headcount – Headcount was 37,773 as of March 31, 2019, an increase of 36% year-over-year.