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Facebook revenues, profits and users up in first quarter

Despite a strong first quarter, investors are nervous about the future profitability and growth of Facebook as it indicates it is starting to hit advertising revenue limits

Facebook has reported revenue of $8bn for the first quarter of 2017, an increase of 49% compared with the same period a year ago.

Profits were up 76% to $3.1bn and the average number of monthly users was 1.94 billion, representing a 17% increase year on year. Daily average users were reported to be 1.28 billion on average for March 2017, an 18% increase.

“We had a good start to 2017,” said Mark Zuckerberg, Facebook founder and CEO. “We are continuing to build tools to support a strong global community.”

Mobile advertising revenue, considered by many as a key indicator of Facebook’s profitability, represented about 85% of advertising revenue for the first quarter of 2017, up from about 82% of advertising revenue in the first quarter of 2016.

Overall advertising revenue for the quarter was up 51% year on year to $7.9bn, but chief financial officer David Wehner warned that Facebook was hitting a limit on the number of ads it could carry.

Facebook shares dipped 2.4% in after-hours trading from a record high of $153.60 as investors showed some nervousness about future earnings, reports The Guardian.

Analysts say Facebook needs to reduce its reliance on advertising and start showing it can make money from other products, such as Facebook video, Instagram, WhatsApp, Facebook Messenger and virtual reality.

Some analysts ascribed the share price fall in part to Facebook’s spending. Capital expenditures for the first quarter of 2017 were $1.27bn and the company said expenses would continue at a high level, growing by 40-50% in 2017.

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The number of employees was 18,770 as of 31 March 2017, a rise of 38% year on year, and on 3 May 2017, Zuckerberg announced that the company was to employ an extra 3,000 content moderators.

He also pledged to invest in more tools to help remove objectionable content more quickly in the wake of a series of murders, rapes and assaults being streamed on Facebook by users.

“Over the next year, we’ll be adding 3,000 people to our community operations team around the world – on top of the 4,500 we have today – to review the millions of reports we get every week, and improve the process for doing it quickly,” Zuckerberg said in an earnings call with analysts.

“If we’re going to build a safe community, we need to respond quickly. We’re working to make these videos easier to report, so we can take the right action sooner – whether that’s responding quickly when someone needs help or taking a post down.”

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