Daily Tech Snippet: Thursday, April 23

• Facebook reports strong earnings: revenue up 42% Y/Y to $3.54B, ad sales up 46%; DAU of 936M up 17% Y/Y; stock down 4% on topline miss driven by FX: Sales rose 42 percent to $3.54 billion, when they could have risen 49 percent without the currency effects, Facebook said Wednesday in a statement. Advertising sales gained 46 percent to $3.32 billion from a year earlier, and would have increased 55 percent excluding currency fluctuations, Facebook said. Ad sales make up about 94 percent of the company’s annual revenue. Facebook said its main application has 1.44 billion monthly active users, compared with 1.39 billion in the fourth quarter and analysts’ estimates of 1.43 billion. About 73 percent of ad revenue came from mobile phones, an increase from about 59 percent a year earlier, the company reported. more people are visiting Facebook daily, with the company reporting daily active users of 936 million on average in March, an increase of 17 percent from a year earlier. Facebook’s sales failed to meet analysts’ estimates for the first time since April 2012, and shares declined as much as 4.3 percent in extended trading after closing at $84.63. The stock has increased 8.5 percent so far this year, compared with a 2.4 percent rise in the S&P 500 Index. Shift to Mobile Accelerates: Facebook is now so thoroughly a mobile service that its original website may soon become a footnote in the company’s financial statements. The world’s largest social network reported on Wednesday that almost three-quarters of its advertising revenue and most of its 1.44 billion users came from cellphones and other mobile devices in the first quarter of the year. And Facebook is beginning to make a similar transition from text to video, with its users already watching four billion videos a day, an average of four per person (although the view may be more like a glance, since Facebook considers three seconds long enough to count). Usage in Asia continues to grow: In Asia, the headline number is that Facebook has now grown to 471 million monthly active users (MAUs) in Q1 2015, up from 390 million MAUs the same period the year earlier. That’s out of a global total of 1.44 billion MAUs in the newest figures.

• As Amazon parties on, some large fund managers take their leave: For many years, investors have been very tolerant as Amazon.com has sacrificed profits for rapid growth in sales and as it built new businesses. That patience may finally be wearing thin. The average large-cap fund that holds Amazon has 1.4 percent of its assets in the stock, down 23 percent from this time last year, according to the latest available Lipper data. There are 116 funds with more than $1 billion under management that have either reduced or sold all of their holdings in the Internet retailer over the past 12 months. They include such well-known names as Fidelity Contrafund, Washington Mutual Investors Fund, Touchstone Sands Select Growth fund and the T. Rowe Price Growth fund. Some investors and analysts said that such a drop in fund ownership - in a period when Amazon's shares have been climbing - suggests that large-cap managers increasingly see the company as over-valued, particularly at a time when it is spending tons of cash branching off into everything from selling its own smartphone to producing a Woody Allen TV series. What strikes some investors as different this time around is the widening divergence between Amazon's valuation and that of its large technology peers like Apple Inc and Google Inc, both of which are growing at similar rates. Amazon trades at 16.2 times its book value. Apple, by comparison, trades at 6.5 times its book value, according to Thomson Reuters data. Google, another company which has expanded beyond its core business into lines as far afield as driverless cars, is valued at 3.4 times its book value. The others made big profits last year while Amazon was unprofitable. While Google has posted more than $68 billion in profits before taxes between 2010-2014, Amazon has netted just $2.6 billion over the same time frame, according to Thomson Reuters data. The cashflow is a better gauge of how the company is doing, according to Robert S. Peck, an analyst at SunTrust Robinson Humphrey, who downgraded the company to "neutral" on March 9 because he views the shares as overvalued. He estimates its free cash flow from operations will climb to $8.9 billion this fiscal year from $3.4 billion in 2010, yet nearly all of that additional cash is being used to expand into businesses like grocery delivery or web services.

• Ebay earnings: revenue up 4% Y/Y to $4.45B; marketplace revenue shrinks first time since 2009, but PayPal growth compensates. Stock up 6%. EBay on Wednesday reported earnings of $626 million for the quarter that ended March 31, swinging back to profitability after a $2.32 billion loss in the same period a year ago that included a hefty one-time tax charge. Excluding the charge, the company’s income grew 4.8 percent from a year ago. Revenue rose 4 percent, to $4.45 billion, surpassing estimates of $4.42 billion. The results illustrate a divergence in eBay’s two businesses. Sales in the company’s marketplace business fell 4 percent to $2.07 billion from a year ago, a lackluster showing that continued the trend of declining e-commerce growth over the past four quarters. It is the unit’s first year-over-year revenue drop since 2009. In contrast, the company’s PayPal electronic payments unit posted revenue of $2.1 billion, up 14 percent from $1.85 billion a year ago. It was the first time PayPal’s sales exceeded that of the marketplace business. With the separation, the company is also cutting 2,400 positions, or 7 percent of its global work force. EBay has also said it would explore a sale or a possible initial public offering of eBay Enterprise, the warehouse and logistics unit for third-party sellers. A split may leave the marketplace business particularly vulnerable. For months, executives have pointed to problems with Google’s search algorithms and fallout from a huge security breach as reasons for weak e-commerce momentum. The company is in the process of updating its systems to improve search results both on eBay and in outside search engines, Mr. Donahoe said, a process that could take more than a few quarters. Analysts are eager to see positive results. PayPal is still growing, fueled by high-performing assets like Braintree and Venmo, which are mobile-focused payments divisions that eBay acquired in recent years. Venmo, Mr. Donahoe has said, is enormously popular with young audiences. Braintree is angling to reinvent PayPal’s payments business to be easier to use on mobile devices. But there is wariness that such growth will not come soon enough, especially as large companies like Apple, as well as payments start-ups like Stripe and Adyen, gain market share.

• Algorithms to find online trolls - trolls focus on a small number of stories and attract the most responses: Scientists have figured out how to tell when someone is an online troll: Spotting an online troll is pretty easy for your average Internet user: They're the jerk hijacking otherwise earnest online conversations for their own amusement, often with the help of straw man arguments and profanities. And a lot of online moderation schemes today rely on a large-scale version of this individual model: There are literally people whose job is reviewing posts that users marked as abusive or otherwise in violation of a site's commenting guidelines. But there could be a better way. What if there was software that could predict if a user was going to be a troll before their behavior could tear online communities apart? That's one of the questions that a study submitted this month to the 9th International Conference on Web and Social Media by researchers at Stanford and Cornell universities hopes to answer. The researchers -- Justin Cheng, Cristian Danescu-Niculescu-Mizil and Jure Leskovec -- waded through 18 months of user activity in the comment sections of CNN.com, conservative political news site Breitbart.com, and gaming site IGN.com looking for antisocial activity. Using data provided by commenting platform Disqus, they were eventually able to identify what they called "future banned users" -- commenters who were later blocked from the site for bad behavior. Those users, they found, tended to focus their comments on a small number of stories and were more likely to post things otherwise irrelevant to the overall conversation. Trolls' behavior also tended to get worse over time, according to the researchers -- and they were generally successful at getting a rise out of those in an online community. "They receive more replies than average users, suggesting that they might be successful in luring others into fruitless, time-consuming discussions," the researchers said. Some platforms are looking at ways to limit the impact of disruptive users without actually banning them. Twitter, for instance, said this week that it is testing out a product that flags potentially abusive tweets based on a "wide range of signals," such as account age and similarities to previous messages that staff deemed abusive, and then limits their reach. But regardless of how sites approach it, online harassment is a serious problem: Some 40 percent of adult Internet users have experienced it, according to a Pew Research Center study last year. And controlling the bad actors responsible behind some of the most aggressive behavior is a struggle for many online sites, including Facebook and Twitter.

• Start-Up Blends Old-Fashioned Matchmaking and Algorithms: Dating Ring uses an algorithm to generate potential matches and then a matchmaker combs through those to hand-select dates. The company’s hybrid model represents the tip of a backlash against mobile dating apps like Tinder, where matches are based almost solely on appearance. Mark Brooks, an Internet dating analyst and consultant, said although there is still plenty of interest in online dating, “People also want relationships that begin based on more than your gut reaction to a photo,” he said. “This model is very new, this merging of Internet dating and matchmakers.” Several new start-ups, like SparkStarter, Hinge and Coffee Meets Bagel, don’t use matchmakers per se but do use connections — friends and friends of friends on Facebook — to humanize the process and move beyond algorithmic matching. Dave Evans, the founder of Digicraft, an online dating consultancy, said, “The whole industry now is built on smoke, mirrors and a lot of marketing. We’re at the point where I don’t care how old you are, what you find interesting, even where you live. I’m just going to swipe left or right based on how you look.” Melissa Brady, a 37-year-old Dating Ring client in White Plains, N.Y., loves the idea of a matchmaker being involved. “It makes me more excited to go on the date, because I have more hope for it,” she said. Ms. Brady has used other dating sites, including OKCupid and Coffee Meets Bagel, but found those dates less well-suited to her. A key part of Dating Ring’s model is user feedback — given to the matchmaker after every date — which is then used to keep improving a dater’s experience. The matchmakers are all women who work at least 10 hours a week and want a flexible schedule. The company has begun operating in New York, San Francisco, Los Angeles and Boston. Dating Ring charges $240 for three months with one introduction each week; anyone can become a member of the database free and be eligible for matches with paying clients. The company’s V.I.P. service includes a one-hour, in-person consultation and multiple Skype feedback sessions in a package tailored to the client. The average price for a V.I.P. package is $3,500 and for that, a client gets five dates in five months. Ms. Kay and Ms. Tessler have also begun setting up speed-dating events for members in New York and San Francisco. “They sold out within two days,” Ms. Kay said. Revenue now averages about $35,000 a month but growth fluctuates, Ms. Kay said. “Some months it’s 50 percent and other months it’s 5 percent,” she says. “Right now, we’re pretty much breaking even.” The company received a $100,000 initial investment from Y Combinator and raised an additional $255,000 from angels.