Facebook's revenues soared in the first quarter of 2018, dispelling fears that the Cambridge Analytica data scandal had irreparably damaged the brand.

The backlash spawned a hashtag but failed to put a dent in revenue as Facebook cashed in on the demand for its controversial targetted-advertising.

© Flickr/JD Lasica
© Flickr/JD Lasica

Wall Street analysts had predicted that Facebook's revenue would grow to $11.41 billion (£8.2 billion) and stock to $1.35 (£0.97) per share, but the figures surpassed their forecasts.

Revenue had reached $11.97 billion (£8.6 billion) for the quarter, while stock had hit $1.69 (£1.21) per share.

The results exceeded expectations thanks partly to a polished performance from Facebook CEO Mark Zuckerberg in his testimony to Congress, but largely due to the continued success of the social network's advertising business model.

How Facebook thrived after the fallout

Zuckerberg was called to testify before Congress in April to explain how Cambridge Analytica had received data from up to 87 million Facebook users.

The 33-year-old impressed more than his interrogators during the hearing and left to find shares in his company up almost 3 percent since he entered Capitol Hill.

His testimony may have contributed to the earnings, but the revenues are primarily growing due to the price of placing ads and the value of Facebook's targetted advertising.

The resulting increase in advertising revenue of almost 50 percent is thank to Facebook's massive user base and strong support from Instagram, says Yuval Ben-Itzhak, the CEO of social media marketing platform Socialbakers.

"Despite what some might call a rocky start to 2018, we see no trend that brands are moving away from investing their ad dollars in the Facebook platform," he said.

"With its 2.2 billion monthly active users, Facebook is still the place to be for marketers and media publishers. 

"Over the last year, we have seen Instagram emerging as an advertising powerhouse creating significant revenue for Facebook. Social performance data shows that Instagram is the most powerful platform for brands. With some uncertainty around Facebook’s future earnings, Instagram's importance this quarter and in the future cannot be underestimated."

Ben-Itzhak added that ad spend had been trending steadily upwards over 2017, and that Facebook only experienced a small hiccup the day the Cambridge Analytica story broke, before returning to return to "business as usual" a few days after.

"This is a typical pattern, as can be seen after a big data breach as a result of cybercrime," he said.

"All in all, we can say that there is a big gap between media reporting on the #DeleteFacebook movement and reality when it comes to brands, who seem to be as active as ever."

Cautious optimism

The earnings will have been greeted with relief at Facebook HQ, but they are still down on the figures that the company had reported before the data leak scandal broke.

Martin Garner, VP Internet of CCS Insight, said that Facebook still needed to build trust if it is to maximise future profits.

"Facebook has done a bad job with its PR when it comes to handling the recent scandals," he said.

"Although Facebook has now started to implement changes to improve users' privacy, it also appears to be making moves to ensure that as few users as possible fall into the grasps of the tough new European privacy regime known as GDPR. Contradictions like these do not build confidence and trust.

"Facebook has a real issue to address next week with its F8 developer conference, which is normally a platform for a number of product announcements. We suspect the agenda has seen a lot of last minute changes to address the recent privacy and election scandals head on, in order to help maintain developer confidence and momentum."

"It's a hugely challenging time for Facebook because the threat of future regulation in a number of countries raises many unknowns for the company and its developers. Somehow Facebook must ensure that those scandals do not swamp the company."