Facebook reported near-record revenue and quarterly profits of $9.2 billion Monday as the social media company faced scrutiny over how it polices its platform for misinformation and other banned material.
The company's latest quarterly earnings report came on the day that it faced a deluge of news stories based on thousands of internal documents obtained by news organizations, including NBC News. The documents, originating with former Facebook product manager and whistleblower Frances Haugen, provided the deepest look yet at the internal workings of the company and revealed employee dissent over the platform's policies.
Facebook CEO Mark Zuckerberg addressed the scrutiny on a conference call with Wall Street analysts.
"My view is that what we're seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company," he said.
The company's financial numbers, though, haven't reflected the media investigations. And Zuckerberg announced a few tweaks to Facebook's strategy, including more spending on virtual and augmented reality and a greater focus on attracting young adult users.
Facebook said in a securities filing that it had $29 billion in revenue for the three months ending Sept. 30. That was a 38 percent increase from revenue a year earlier and nearly matched the revenue from the quarter ending June 30, but revenue fell short of analysts’ estimates for the quarter, CNBC reported.
Its quarterly profit grew 17 percent from a year earlier.
The price of Facebook stock rose about 3.8 percent in after-hours trading to about $341 per share following the earnings report, though that is below its September highs of around $380 per share.
In order to keep up with competitors and continue growing, Zuckerberg said that Facebook would retool to try to recapture interest among young adults. He singled out TikTok as an app that has hurt Facebook's market share, and he said reaching young adults would be Facebook's "North Star" rather than optimizing for older users.
"This shift will take years, not months," Zuckerberg said on the conference call. Facebook already has a TikTok competitor named Reels.
The company's revenue and profits have continued to rise despite numerous challenges. Beyond the spread of misinformation and questions about whether Facebook is too big, the company has warned that its revenue could be hurt by privacy changes that Apple is making — and that have hurt revenue for social media competitor Snapchat.
"Facebook is dealing with the biggest deluge of negative press it has ever faced, and there is certainly more to come," said Debra Aho Williamson, principal analyst at research firm eMarketer. "But for now, the revenue picture for Facebook looks as good as can be expected," she said.
In a nod to Facebook's future strategy, the company said in its securities filing that it was going to spend more on augmented and virtual reality and break it out as a separate segment in its financial reporting.
"We are dedicating significant resources toward our augmented and virtual reality products and services, which are an important part of our work to develop the next generation of online social experiences," the company said.
Facebook said it would call the new reporting segment Facebook Reality Labs.
“We expect our investment in Facebook Reality Labs to reduce our overall operating profit in 2021 by approximately $10 billion," the company said. "We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years."
Zuckerberg has for years talked about expanding the popularity of augmented and virtual reality. In 2017, he set a goal of 1 billion users, a number that has not come about.