Facebook published its first quarter financial results on Wednesday, notifying investors that it accrued a $3 billion legal expense in Q1 2019 related to an ongoing US Federal Trade Commission (FTC) investigation. The FTC probe is ongoing and could cost Facebook anywhere between $3 billion and $5 billion, the company said.
The social media giant reported diluted earnings per share of 85 cents on revenue of $15.08 billion, up 26 percent from last year.
Analysts were expecting non-GAAP earnings of $1.63 per share on revenue of $14.97 billion.
Without the huge legal expenses related to the FTC probe, Facebook said its EPS would have been $1.89.
Since last year, following the Cambridge Analytica scandal, the FTC has been probing whether Facebook violated a 2011 privacy consent decree that obligated the company to take steps to protect its users' privacy. The consent decree followed a prior FTC investigation that found Facebook mishandled user data. Earlier this year, the Washington Post first reported that Facebook was negotiating a record, multi-billion dollar fine with the FTC to settle the current probe.
"The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome," Facebook said in its Q1 report.
In a statement, CEO Mark Zuckerberg struck a positive note about the quarter.
"We had a good quarter and our business and community continue to grow," he said. "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."
In a conference call Wednesday, Zuckerberg said that he doesn't expect the new privacy-focused platform to be a "real contributor to the business" in the next year or two. However, it will be a major focus for the company for the next five years or longer, he said.
"Parts of this, we already have a strong foundation on where WhatsApp and Messenger are strong around the world," he said. "But a lot of the most important countries for this -- like I've mentioned in the United States and Japan -- we are not the leading private communication service today. So there, the most important thing that we need to do is get the basics right and make sure that we are providing, hands down, without any question in anyone's mind, the clear best service in those areas."
In the meantime, the company continues to grow its ad sales at a healthy clip. Q1 ad revenue amounted to $14.9 billion, up 26 percent from last year. Mobile ad revenue came to $13.9 billion, up 30 percent. Mobile ad revenue represented about 93 percent of total ad revenue, up from 91 percent in Q1 2018.
Daily active users (DAUs) were 1.56 billion on average for March 2019, up 8 percent year-over-year. Monthly active users (MAUs) were 2.38 billion as of March 31, 2019, up 8 percent year-over-year. As many as 66 percent of Facebook's monthly active users visit Facebook every day, the company said.
Last quarter, Facebook announced it would phase out usage metrics for its individual apps -- Facebook, Instagram, Messenger and WhatsApp -- and instead report the company's "overall family metrics." The change corresponded to a slowdown in the growth of Facebook's flagship app in key markets, though Instagram usage continued to grow at a robust pace.
Around 2.7 billion people use Facebook, WhatsApp, Instagram, or Messenger each month, the company said Wednesday. On average, more than 2.1 billion people use one of Facebook's services every day.