Facebook chief executive Mark Zuckerberg took the opportunity during Wednesday's earnings call with analysts to lay out an ambitious new vision for his company's relationship with its critics.
"My goal for this next decade isn't to be liked, but to be understood. In order to be trusted, people need to know what you stand for," he said.
But for analysts, the founder's new objective could not distract from hints of a paradigm shift in the company's earnings: the last quarter marked the social media network's weakest growth in the seven years since it went public, as the company begins to mature and races to find new revenue streams.
"That was so depressing," said Richard Greenfield, an analyst at LightShed, following the call.
"There is obviously no new near-term growth accelerant, and the company is still spending very aggressively given the need to be very self-aware vis-à-vis the election and fixing a past lack of controls," he added. "Where is the next big [growth] catalyst coming from?"
Taking its latest quarterly earnings in isolation, Facebook posted bumper results: record revenues of US$21.1 billion ($32.5b) and record net income of US$7.3b, both of which topped Wall Street forecasts.
But investors were spooked when the pace of revenue growth, while high at 25 per cent, slowed compared with previous quarters and failed to achieve as strong an analyst beat as some had anticipated.
'The market can only be so big'
On the news of slowed growth, Facebook shares fell 7 per cent in after-hours trading to US$207.70, abruptly halting a rally this year that had seen the company join Silicon Valley rivals Apple and Alphabet in reaching all-time stock price highs.
David Wehner, Facebook's chief financial officer, said he expected the growth rate to decelerate further in the forthcoming quarter, citing, among other things, "the maturity of our business".
For some analysts, the slowdown is a natural transition by Facebook to a "new normal". The heady 70 per cent growth rates of its start-up years are no longer sustainable for a company with 2.9 billion users across its so-called "family of apps", which also includes Instagram and WhatsApp.
"It's suggesting saturation, it has to decelerate," said Brian Wieser, global head of business intelligence at advertising media company GroupM. "The market can only be so big."
Brent Thill, an analyst at Jefferies, said: "It's the law of large numbers rather than any major fundamental disappointment. Investors simply wanted more upside."
But others were more unnerved by executives' suggestion that new privacy regulation is making it more difficult for Facebook to target advertising, particularly at a time when the company faces further scrutiny from global watchdogs over its data security and competitive practices.
Meanwhile, costs are soaring, up 34 per cent to US$12.2b in the quarter — including a US$550 million settlement for a biometric privacy class action lawsuit brought by users in Illinois, in what is thought to be the largest all-cash privacy class action settlement to date.
The case, which Facebook agreed to settle on Wednesday, alleges that the company violated the law when it used facial recognition technology to gather and store users' pictures without their permission, in order to help with the automatic "tagging" of people in photos.
All this comes before the group has fully implemented a new privacy programme to better protect user data, as part of its US$5b settlement with the Federal Trade Commission following the Cambridge Analytica scandal. Indeed, Facebook revealed it now had 1,000 engineers working on privacy initiatives, such as the rollout this week of the so-called "off-Facebook activity" tool that grants users more control over how Facebook and other third parties use their data.
The slowing of Facebook's growth was most pronounced in developed markets, particularly the US and Canada: sales growth stood at 22 per cent year-on-year, the slowest rate to date in that region, while average revenue per user rose 19 per cent year on year, versus a 30 per cent growth rate in the same quarter the previous year.
The search for fresh revenue
The question for Facebook is whether it can easily offset this by growing elsewhere, such as in less developed markets — a prospect that has been met with scepticism by analysts.
"Can [average revenue per user] in other markets match the US? That ignores that other economies have differing intensities of advertising in terms of the structures of their economies, and that advertising can only grow so quickly," Wieser said.
Instead, the company may have to focus on developing additional revenue streams. On the earnings call, Zuckerberg outlined his vision for enabling more commerce on the platform, by allowing direct shopping online on Instagram and payments via WhatsApp.
Despite having highlighted both of these goals on an earnings call a year ago, the former is still in pilot phase, while the latter has yet to be rolled out in any region. However, Zuckerberg said the company was working on bringing peer-to-peer WhatsApp payments to India, Mexico, Brazil and Indonesia in coming months.
He also gave prominence to his hope that Facebook will develop "the next computing platform", highlighting plans to develop more augmented and virtual reality capabilities and outlining a futuristic world in which people "hologram into work".
Some analysts are bullish that the company has huge monetisation potential in the future. Youssef Squali, analyst at SunTrust Robinson Humphrey, said: "We believe Facebook has several initiatives under way that are showing seeds of promise."
While these are "under- or un-monetised today", they could "lead to material revenue opportunities in the next few years", he said. In fact, the company has "kept a strong product cadence", he added, pointing to the recent launches of Facebook's dating service and news platform as examples.
But others — including executives themselves — warn that the impact of these efforts, while potentially huge, could be a long time coming.
"Instagram Checkout is the thing I see as most exciting," said Greenfield. "[But] it's moving slower than we or investors would have hoped for . . . There's no obvious next big thing."
Written by: Hannah Murphy
© Financial Times