Facebook has grappled with months of scrutiny over Russian misuse of the platform in the 2016 USA presidential campaign and the harvesting of its users' data through the political consulting firm Cambridge Analytica.
Facebook's daily active users didn't grow at all in the United States, its most lucrative ad market, and the social network actually lost 3 million DAUs in Europe as a result of new privacy regulations.
Shares tumbled 20 percent subsequent to the company reporting its second-quarter earnings - after the market closed.
On a call with analysts Facebook CEO Mark Zuckerberg reiterated that the company making significant investment in security upgrades to its products will affect its profitability and that "we're starting to see that this quarter".
Still, the results suggest that Facebook may have weathered the scandal without major harm to its business, even if its public image has taken a hit.
Facebook's earnings of $1.74 per share bested the $1.71 expected by analysts polled by FactSet.
The Palo Alto, Calif., company reported revenue of $13.23 billion, up 42 percent year over year - but just short of analysts' expectations of $13.3 billion. Analysts projected $13.3 billion.
Expenses are expected to grow 50 per cent to 60 per cent compared with a year ago as the company invests in security, marketing and content acquisition, he said.More news: Demi Lovato's Rep Speaks Out, Heroin Reports Refuted
Facebook Inc. on Wednesday warned revenue growth would slow in the second half of the year and said that expenses would grow faster than revenue next year, sending shares down as much as 22 per cent over concerns about the impact of privacy issues on the social media company's business.
The number of monthly users - a key indicator of Facebook's popularity - rose slightly, to 2.23 billion from 2.2 billion last quarter.
Monthly active users were still up by 11% year over year to 2.23 billion, as were daily active users, at 1.47 billion. The social network still holds one of the world's most valuable sets of data on what people are interested in, and makes that audience easily available to advertisers.
"We also believe "considerable strength" from the Instagram side of the house has neutralized any soft spots on the core Facebook platform in our opinion". Facebook's stock continued to nosedive during the call with investors, who pressed the company on its slowing growth and future ad revenue.More news: Trump's national security adviser echoes warning to Iran
"They're talking about currency headwinds, but more we think it's due to slower user growth given GDPR and more focus on privacy", Morningstar analyst Ali Mogharabi said.
Facebook's revenue grew at its slowest pace in nearly three years.
"So far, there has been no evidence that shows that controversies, such as the spread of fake news, Russian interference in the USA elections, and the Cambridge Analytica scandal, have prompted advertisers to divert ad dollars", says Haris Anwar, senior analyst at Investing.com. So far, WhatsApp doesn't show ads, and its founders Jan Koum and Brian Acton left Facebook amid disagreements over advertising and other issues. The company said headcount was 30,275 as of June 30 - an increase of 47 per cent year over year.More news: Toronto police delving into life of gunman in mass shooting