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Facebook sees slowest growth in 2 years (but user base soars)

Facebook has seen its slowest growth in quarterly revenue in two years as higher spending on research and development ate into profits.

The social network’s results for January to March showed continued progress in key areas but profits fell 20% as it spent big on development.

Facebook has warned of heavy investments in 2015 as it steps up efforts to expand a collection of products that include messaging service WhatsApp, photo-sharing service Instagram and virtual reality headset maker Oculus Rift.

As a result, Facebook’s operating expenses rose 83 percent in the first quarter as R&D costs jumped 133 percent and marketing and sales spending nearly doubled.

However, Facebook said monthly active users grew 13 percent over a year ago to 1.44 billion, with 87 percent of them accessing its service on smartphones and other mobile devices.
The company offered assurances that it has a handle on spending, saying it now expects expenses to increase by about 55 percent to 65 percent this year, a slight decrease at the top end from its previous forecast of 55 percent to 70 percent.

It said foreign exchange rates due to the strong U.S. dollar would likely cut revenue in the current quarter by more than the 10 percent it saw in the last quarter.

Facebook showed it had made further strides in mobile advertising to capture that shift in consumer behaviour, with 69% of its advertising revenue now coming from mobile ads.

Staff costs also rose – with the company’s recruitment soaring 48% on the same period last year to pass the 10,000 mark.

Facebook, which bought the popular photo-sharing app Instagram and the messaging service WhatsApp, has been coming out with its own stand-alone mobile apps to capture more of the time people spend on phones.

Besides its Messenger app, Facebook’s home-grown efforts have had limited success.
On Wednesday, the company introduced Hello, a voice-calling app designed for Android phones.

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