Facebook Q4 Earnings beat estimates with $8.81B revenue (FB 21-Month Chart)

Photo: CNET

WSJ — Facebook Inc. on Wednesday recorded a 51% jump in fourth-quarter revenue, reflecting the still-vibrant mobile advertising business that has driven the social-media giant’s growth over the last four years.

The company said its revenue rose more than expected to $8.81 billion. Analysts had expected revenue of $8.51 billion, according to Thomson Reuters.

Facebook’s quarterly profit leaped to $3.57 billion from $1.56 billion a year earlier. The company reported earnings per share of $1.21, up from 54 cents a year earlier. On an adjusted basis, earnings were $1.41 a share, compared with 79 cents a year earlier and the $1.31 a share expected by analysts.

Shares of Facebook, which have climbed 16% so far this year through Wednesday’s close, rose 3% to $137.25 in after-hours trading.

FB 21-Month Chart:

Facebook said its monthly active users totaled 1.86 billion as of the end of the quarter, up 17% from a year earlier.

Facebook has said it expected both higher spending and slower revenue growth this year. Over the past few years, Facebook has relied on mobile ads to drive its growth. In the fourth quarter, mobile ad revenue accounted for 84% of its advertising revenue.

In November, it projected that growth in ad revenue would drop “meaningfully” in 2017 as it stops increasing the number of ads users see in their news feeds. It also outlined hiring engineers as a priority for the company, as it pursues a variety of projects in video, messaging and virtual reality.

That ramps up pressure on Facebook to find new revenue drivers such as video ads, which typically command a premium over the text-and-image ads seen in the news feed. For now, social media accounts for 6.5% of advertisers’ budgets in the U.S., compared with the more than one-third captured by television, according to SunTrust analyst Rodney Hull.

Facebook is also moving beyond its feed and increasingly tapping its “family” of apps — including the photo-sharing app Instagram and its two messaging apps, WhatsApp and Facebook Messenger — for top-line growth. JMP Securities analyst Ron Josey estimates that Instagram garnered $856 million in revenue in the fourth quarter.

The fourth quarter capped a tumultuous year for the social-media company. After the U.S. presidential election, Facebook defended itself against claims that its platform fueled misinformation and division. It’s unclear how large of a role fake news played in the U.S. presidential race. Even so, Facebook responded to enormous public pressure to address the problem through partnerships with third-party fact-checkers who can flag blatantly false stories to be demoted in the news feed and an overhaul of trending topics to fight fake news.