Connect with us
Facebook earnings Facebook earnings

Companies

Facebook: Slowest User Growth but Beats Earnings Expectations

 3 min read / 

Facebook’s fourth-quarter results, published on Wednesday morning ET, show that even though the company experienced its slowest user growth on record, the company still exceeded earning estimations.

Although the social-media company had beaten expectations for fourth quarterly earnings, it was also the lowest quarter-to-quarter percentage growth in the company’s history. There was an 18% increase in users for Q4, down from the 3.8% increase in the Q3, bringing the total number to 1.4bn.

Facebook reported a revenue of $12.97bn, with adjusted earnings per share (EPS) at $2.21. Following recent changes to the US company tax code, Facebook is expected to pay a bill on its overseas earnings, which converts into a $0.77 drop in EPS. Wall Street had estimated that without the tax bill the company would have made a revenue of $12.55bn which translates to $1.95 EPS without the tax bill and $1.44 with it.

The company had a 700,000 decline in active users in North America but experienced a surge in usage in the Asia-Pacific region with daily active users increasing from 476m to 499m. Its monthly user count is now 2.13bn, up 3.39% from 2.06m in Q3. User count growth in Q3 was 3.19%.

Facebook also reported that the number of users who came back daily was at 66%.

This follows a decision to show fewer viral videos on the platform which has reportedly meant time spent on Facebook has been reduced by 50m hours a day, a 5% decrease on the total time. Mark Zuckerberg, the founder of Facebook, said the direction of the company was changing so as to prioritise the health and happiness of its users over engagement.

He also acknowledged that Facebook had a responsibility to understand how the platform is used so as “to amplify the good and prevent the harm”. On Tuesday, Rob Leathern, the Product Management Director for Facebook Business announced the platform would ban all advertisements for cryptocurrency and ICOs, claiming that many were fraudulent.

In the companies earnings call, Zuckerberg said:

“The world feels anxious and divided and that played out on Facebook. We’ve seen abuse on our platform, including interference from nation states, the spread of news that is false, sensational and polarizing, and debate about the utility of social media. We have a responsibility to fully understand how our services are used and to do everything we can to amplify the good and prevent the harm. This is my personal challenge for 2018.

“One of the most important things we can do is make sure our services aren’t just fun to use, but also good for people’s well being and for society overall. So far this year, we’ve already announced a couple of important updates. The first is prioritizing meaningful social interactions over passive consumption of content. Research shows that strengthening our relationships improves our well being. When we use social media to connect with people that correlate to the long-term measures of well being that you’d expect like happiness and health.”

The messaging service, Whatsapp, also reported that it had 1.5bn users monthly.

On NASDAQ, Facebook shares fell from $188.60 to $186.58 but increased back to $186.89 by the end of trading.

Sign up to Mogul News.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend