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Facebook’s long list of scandals has only grown longer this year. Those troubles finally hit the social network where it matters: earnings.
The social network said Wednesday in its first-quarter earnings report that it incurred $3 billion in expenses related to an ongoing investigation by the US Federal Trade Commission. The investigation is about Facebook’s privacy practices and whether the company violated a legal agreement it had with the US government to keep user data private.
The FTC started investigating Facebook after revelations surfaced that UK consultancy Cambridge Analytica harvested the data of up to 87 million users without their permission.
The legal costs hit Facebook’s first-quarter earnings, which were 85 cents per share. Analysts surveyed by Thomson Reuters expected the company to earn $1.61 per share. Without the expenses, Facebook would’ve earned $1.89 per share.
The company said it estimates the fine could be between $3 billion to $5 billion.
Facebook’s scandals aren’t scaring away advertisers and users. The company posted a better-than-expected $15.08 billion in revenue in the first quarter. Analysts surveyed by Thomson Reuters had forecast $14.98 billion.
The number of people who log in to Facebook every month increased by 8%, to 2.38 billion, compared with the same period last year.
“We had a good quarter and our business and community continue to grow,” said Facebook CEO and co-founder Mark Zuckerberg. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”
Facebook’s shares increased by more than 5%, to $192.60 per share, in after-hours trading.
Analysts said they weren’t surprised by Facebook’s strong business results.
“Advertisers continue to be stuck on Facebook, despite its many challenges,” eMarketer analyst Debra Aho Williamson said in a statement. “What they care most about is its vast user base and its targeting capabilities, and both are continuing to provide strong performance for them.”
But the expected FTC fine isn’t something advertisers should completely ignore, and it could affect how they can use the social network in the future, she said.
The company is holding a conference call about the earnings report at 2 p.m. PT.
Originally published April 24, 1:15 p.m. PT
Updates, 1:38 p.m.: Adds more details; 1:45 p.m.: Includes analyst comment.