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Research and development investment sees Facebook growth slow down

Facebook revealed its slowest growth in quarterly revenue in two years, as increased research and development ate into profits.

However, this will come to little surprise for many spectators as the global powerhouse did previously stated that 2015 would see Facebook focusing on investing in its service range. For example, the company are looking to grow products including virtual reality headset maker Oculus Rift, messaging service WhatsApp and photo-sharing service Instagram.

Consequently, Facebook’s operating expenses increased by 83% for Q1, with marketing and sales spending almost doubling and R&D costs soaring 133%.

However, Facebook said monthly active users grew 13% over a year ago to 1.44bn, with 87% of them accessing its service on smartphones and other mobile devices.

Nevertheless, Facebook said revenue rose to $3.54bn up from $2.50bn, with revenue from advertising up 46% from last year to $3.32bn.

Analysts averagely expected a profit of 40 cents per share and revenue of $3.56bn although the quarter still showed strength as Facebook continues to grow its global presence.

Ben Schachter, Macquarie Research analyst ,said: “It’s a generally solid quarter. The trends are all going in the right direction. The cost rise is one thing that can derail this story.

“The question is, can they keep costs under control and what will be the new revenue streams around video, Instagram and virtual reality around Oculus?”