Facebook Inc. said third-quarter profit jumped 79% on its continued dominance in online advertising, though the social media giant's aggressive pursuit of growth drew scrutiny Wednesday from lawmakers investigating alleged Russian propagandists' activity on Facebook.
The company reported a third-quarter profit of $1.59 a share, compared with the $1.28 projected by analysts polled by Thomson Reuters, and up from 90 cents per share a year ago. The company also generated $10.33 billion in revenue, more than the $9.8 billion analysts predicted and up from $7.01 billion in the prior year's quarter.
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The earnings report came as the social-media company's general counsel, Colin Stretch, faced tough questions on Capitol Hill over alleged Russian manipulation of Facebook at the time of the U.S. election. During the hearings, which took place Tuesday and Wednesday, lawmakers grilled Mr. Stretch and executives from Twitter Inc. and Alphabet Inc.'s Google over their ad-targeting capabilities and content policies.
Facebook has responded to the crisis by promising to hire workers, which some analysts say could significantly boost the company's costs at a time when the company is already pursuing a costly drive into video.
"We're investing so much in security that it will impact our profitability. Protecting our community is more important than maximizing our profits," Chief Executive Mark Zuckerberg said in the company's earnings release.
The firestorm hasn't hurt Facebook's popularity. The company grew its monthly active user base 16% to 2.07 billion.
Facebook shares were up 0.9% in after-hours trading. The stock price is up more than 59% this year through Wednesday's close.
The grilling by lawmakers raises the specter of regulation and added scrutiny, which could slow Facebook's growth and ability to rapidly develop new products. The crisis has also put Facebook in the awkward position of playing down the effectiveness of the Russian ads while touting the strength of its ad-targeting and reach to legitimate advertisers.
Since the 2016 U.S. presidential election, Facebook has faced immense criticism for allowing misinformation, propaganda and violent videos to spread on its service as its growing power shapes political discourse around the world.
Facebook reinvigorated the debate two months ago after it disclosed that Russian-linked Facebook accounts bought thousands of ads that sought to inflame social and political tensions before and after election. This week, the company said 146 million people saw at least one post from Russian-linked accounts on Facebook and its photo-sharing service Instagram from early 2015 to mid-2017.
The company has allocated a budget of as much as $1 billion to cultivate original shows for its platform, The Wall Street Journal has reported.
On Tuesday, Mr. Stretch said Facebook plans to double the number of employees working on safety and security to 20,000 by the end of 2018. In October, Facebook said it would hire 1,000 new workers to review ads and ensure they comply with its policies. That's in addition to the 3,000 content reviewers that Facebook previously promised to hire after a rash of violent videos on the site.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
November 01, 2017 16:53 ET (20:53 GMT)