Facebook’s first quarter earnings beat triggers stock rally

Social media firm Facebook (FB), which is embroiled in a protracted data breach scandal, posted a marked growth in first-quarter earnings as strong advertising revenues pushed up the top line by about 50%. Soon after the announcement, Facebook’s shares spiked more than 5% during extended trading on Wednesday, after ending the regular session flat.

Earnings of the Menlo Park, California-based firm surged 63% annually to $5 billion or $1.69 per share from $3.1 billion or $1.04 per share a year earlier. Driving the growth, revenues advanced 49% to $12 billion. Both revenues and profit exceeded market expectations.

The number of daily active users increased 13% to 1.45 billion at the end of the recent quarter. There were around 2.2 billion monthly active users as of March 31, up 13% compared to last year. Mobile advertising revenue accounted for 91% of the total revenue, compared to 85% last year, reflecting the increasing penetration of smartphones.

“Despite facing important challenges, our community and business are off to a strong start in 2018.  We are taking a broader view of our responsibility and investing to make sure our services are used for good,” said Facebook CEO Mark Zuckerberg.

The largest social networking platform, which connects more than two billion people across the world, is passing through one of the worst phases in its history, facing multiple lawsuits for alleged misuse of user information. The scandal involving data mining firm Cambridge Analytica, which allegedly used data procured from Facebook for various commercial purposes, can have far-reaching consequences for the company.

The number of daily active users increased 13% to 1.45 billion at the end of the recent quarter

Facebook recently overhauled its News Feed service following allegations that Russian agents propagated fake news on its platform to influence American voters during the presidential election. Going forward, the company will have to take substantive measures to sustain user base by plugging the holes in its data management system.

In the fourth quarter of 2017, the number of active users declined for the first time in the U.S., and there was a drop in the average time users’ spent online after the company tightened its policy on certain services, especially viral videos.

Facebook shares had jumped to a record high in February, before suffering a significant fall last month amidst the controversies.