Facebook forecasts fall in growth as adverts hit peak

Slower growth is despite better than expected third quarter earnings

Facebook has warned growth will slow over the next quarter as the company seeks to re-evaluate its advertising strategies and increase investment in other areas.

The forecast sent shares falling by 7% on Wednesday, despite almost tripling its profits for the third-quarter ending at $7.01 billion net income.

The social media giant saw advertising revenue increase 59% year-over-year, generating $2.38 billion, 84% of which was delivered by mobile ads.

However growth would "meaningfully slow" due to limitations on the number of adverts the company is able to display without affecting user experience, chief financial officer David Wehner warned during a call to analysts, recorded by Reuters.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

To increase revenue in other areas Facebook would need to invest heavily in 2017, according to Wehner.

"Adding top engineering talent remains one of our key investment priorities as we continue to execute on our three, five and 10-year roadmaps. In addition, we expect to grow capital expenditures substantially," said Wehner.

Facebook has already seen gains in its strategy for creating more video content, across both Facebook and Instagram, with plans to expand this to company's other apps. This will also involve investing heavily in infrastructure to make it easier to deliver video content to users.

"We had another good quarter," said Mark Zuckerberg, in an earnings statement. "We're making progress putting video first across our apps and executing our 10 year technology roadmap."

"We're prioritising putting video first across our family of apps and taking steps to make it even easier for people to express themselves in richer ways," added Zuckerberg in the analyst call.

A number of key revenue sources for Facebook remain relatively untapped. Their messaging service WhatsApp boasts more than 1 billion users but generates very little revenue for the firm. Facebook's drive into VR has also yet to take off, with disappointing sales of the Oculus Rift headset.

Advertisement - Article continues below

Facebook will also be looking to tap into a growing user base in the Asia-Pacific region, where the service still has a relatively small uptake, according to Wehner.

Featured Resources

What you need to know about migrating to SAP S/4HANA

Factors to assess how and when to begin migration

Download now

Your enterprise cloud solutions guide

Infrastructure designed to meet your company's IT needs for next-generation cloud applications

Download now

Testing for compliance just became easier

How you can use technology to ensure compliance in your organisation

Download now

Best practices for implementing security awareness training

How to develop a security awareness programme that will actually change behaviour

Download now
Advertisement

Recommended

Visit/policy-legislation/32857/irish-data-protection-commission-facebook-whatsapp-instagram-merge
Policy & legislation

Irish Data Protection Commission has questions for Facebook

29 Jan 2019
Visit/security/internet-security/354484/facebook-exec-calls-cambridge-analytica-scandal-a-non-event
internet security

Facebook exec calls Cambridge Analytica scandal a "non event"

8 Jan 2020
Visit/hardware/mobile/354392/facebook-apps-dominated-this-decades-mobile-market
Mobile

Facebook apps dominated this decade's mobile market

18 Dec 2019
Visit/digital-currency/34762/china-prepares-to-launch-the-first-domestic-cryptocurrency
digital currency

China prepares to launch the first domestic cryptocurrency

6 Nov 2019

Most Popular

Visit/policy-legislation/data-governance/354496/brexit-security-talks-under-threat-after-uk-accused-of
data governance

Brexit security talks under threat after UK accused of illegally copying Schengen data

10 Jan 2020
Visit/security/cyber-security/354468/if-not-passwords-then-what
cyber security

If not passwords then what?

8 Jan 2020
Visit/policy-legislation/31772/gdpr-and-brexit-how-will-one-affect-the-other
Policy & legislation

GDPR and Brexit: How will one affect the other?

9 Jan 2020
Visit/web-browser/30394/what-is-http-error-503-and-how-do-you-fix-it
web browser

What is HTTP error 503 and how do you fix it?

7 Jan 2020