(Reuters)

Facebook Inc beat Wall Street expectations for both quarterly revenue and profit today (April 28) but warned that growth later this year could “significantly” decline as new Apple Inc privacy policies will make it more difficult to target ads.

The world’s largest social network, whose shares rose 6.5 per cent in extended trading, has blasted Apple over its requirement that iPhone app developers begin asking users’ permission to collect certain data for ads. Facebook says the change would harm its business and hurt small companies that rely on personalised advertising.

At the same time, it has built shopping and e-commerce features within Facebook and Instagram, which are expected to bring additional revenue to the company and make its ad inventory more valuable.

FACEBOOK AD REVENUE DRIVEN BY 30% RISE IN PRICE PER AD

Total revenue, which primarily consists of ad sales, rose 48 per cent to US$26.17 billion in the first quarter ended March 31, beating analysts’ average estimate of US$23.67 billion, according to IBES data from Refinitiv.

Facebook said ad revenue growth was driven by a 30 per cent year-over-year rise in the average price per ad for the first quarter and a 12 per cent increase in the number of ads delivered.

The digital advertising industry took a hit at the start of the COVID-19 pandemic in early 2020, but quickly boomed as businesses rushed online to reach customers and ramp up e-commerce sales, defying expectations of many ad analysts and industry observers.

“Despite several headwinds – such as ongoing antitrust scrutiny, lingering privacy concerns, as well as looming changes which could negatively impact its advertising business – Facebook delivered another blockbuster quarter,” said Jesse Cohen, senior analyst at Investing.com. “As Snap and Google previously demonstrated with their strong results, digital advertising spending is coming back, fast.”

Facebook Chief Executive Officer Mark Zuckerberg discussed the company’s focus on three main areas in a call with analysts on Wednesday: augmented and virtual reality, e-commerce and how content creators can earn money on Facebook’s platforms. Facebook recently teased a slew of new features to help creators connect with brands and make money directly from fans.

Monthly active users on Facebook rose 10 per cent to 2.85 billion, matching analyst expectations.

Net income for the first quarter came in at US$9.5 billion, or US$3.30 per share, compared with US$4.9 billion, or US$1.71 per share, a year earlier. Analysts had expected a profit of US$2.37 per share.

Facebook said its total expenses for the year would be in the range of US$70 billion to US$73 billion, as it invests in consumer hardware products like Oculus virtual reality headsets and infrastructure.