Zuckerberg says security hiring efforts ‘will significantly impact our profitability going forward’
The Russian rubles spent in an effort to tilt the 2016 U.S. election could cost Facebook Inc. a big chunk of its profits.
Amid a congressional inquiry into Russia-backed election activity on Facebook’s platform, the social networking company announced Thursday more than $10 billion in quarterly revenue, nearly half of that counting as net profit. Chief Executive Mark Zuckerberg said that fat margin won’t last for long, though, as the company doubles down on its safety and security strategy and increases the number of employees working on the issue to 20,000.
“I am dead serious about this, and the reason I’m talking about this on our earnings call is that I’ve directed our teams to invest so much in security on top of the other investments we’re making that it will significantly impact our profitability going forward,” Zuckerberg said.
Investors sent Facebook FB, -1.12% stock higher after seeing the big earnings beat, but shares eventually dipped about 2% in late trading after Zuckerberg and other executives laid out their plans to spend massive amounts in the coming years to combat outside influences and grow the business.
Facebook executives gave specific numbers on the call, saying that its full-year capital expenditures would roughly double to $14 billion in 2018, up from $7 billion this year. Chief Financial Officer David Wehner said that Facebook’s focus on security, its video platform—which is essentially a competitor to Alphabet Inc.’s GOOGL, +0.92% GOOG, +0.87% YouTube—and long-run bets such as Oculus virtual reality hardware and machine learning will contribute to reducing its operating margins.
To do so, Wehner said, “we expect to make substantial investments in our infrastructure to support growth and improve our products.”
The cost of Zuckerberg’s security push will be spread across a number of line items on its budget, namely research and development, general administration and expenses, as well as the advertising sales and marketing line item, Wehner said.