Published on 12:00 AM, November 03, 2017

Facebook profits leap on booming ad revenue

Facebook on Wednesday reported that profits leapt on booming revenue from online ads in the third quarter, topping investor forecasts and buoying shares already at record highs.

The leading social network said it made a profit of $4.7 billion in the quarter that ended on September 30, a jump of 79 percent from the same period a year earlier.

Chief executive Mark Zuckerberg used the update to address criticism of Facebook for allowing disinformation and manipulation during the 2016 US presidential election, hours after the company's top lawyer faced a grilling at a Washington congressional hearing.

"Our community continues to grow and our business is doing well," Zuckerberg said.

"But none of that matters if our services are used in ways that don't bring people closer together. We're serious about preventing abuse on our platforms. We're investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits."

Facebook shares that ended the day up 1.4 percent to $182.66 but retreating in after-market trades to $179.25.

Investor enthusiasm may have been tempered by rising costs at the California-based internet giant and executives stressing the company is firmly in "investment mode" while predicting ad growth will slow.

"They made a ton of money but the Russia investigation is clearly putting a cloud over everything for the moment," said independent analyst Rob Enderle.

"Sometimes it just takes a trigger event to cause a bunch of people to take their profit and go someplace else, especially if they have decided this is as good as it is going to get at Facebook for a while."

The analyst added that some investors might be worried that the probed into Russia meddling with US politics will result in regulation on social networks that might hurt profitability.

Expenses rose to $5.2 billion from $3.9 billion in the same quarter last year, and headcount at the company was up 47 percent to 23,165 employees.

"We will continue to invest aggressively in the many opportunities we see ahead," Facebook chief financial officer David Wehner said during an earnings call with analysts.

Zuckerberg outlined investment priorities that included video content, which he described as the biggest trend at Facebook.

The number of monthly active users at the social network continued to grow, reaching 2.07 billion, an increase of 16 percent from the same time last year.

Advertising served up on smartphones or tablets accounted for about 88 percent of revenue taken in from marketing messages in the quarter, Facebook reported.