Facebook revenue growth slows, costs weigh on profit

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(Reuters) – Facebook Inc posted its slowest growth in quarterly revenue in two years and higher spending and development ate into profits.

Shares of the world’ largest social network fell 2.4 percent in after-market trading Wednesday.

Facebook has warned of heavy investments in 2015 as steps up efforts to expand a collection of products that include messaging service , photo-sharing service Instagram and virtual reality headset maker Oculus Rift.

As a result, Facebook’ operating expenses rose 83 percent in the first quarter as R&D costs jumped 133 percent and marketing and sales spending nearly doubled.

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

a generally solid quarter. The trends are all going in the right direction. The cost rise is thing that can derail this story,” said Macquarie analyst Ben Schachter.

“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?” he said.

Facebook’s net income attributable to stockholders fell to $509 million, or 18 cents per share, in the three ended March 31, from $639 million, or 25 cents per share, a year earlier.

Excluding items, the company earned 42 cents per share.

Facebook said revenue rose to $3.54 billion from $2.50 billion. Revenue from advertising $3.32 billion, up 46 percent from a year earlier.

Analysts on average had expected a of 40 cents per share and revenue of $3.56 billion.