Facebook Posts Blowout Q4 Earnings Behind Huge Mobile User Growth

Social network’s daily mobile users have grown 23 percent year-over-year

Last Updated: February 1, 2017 @ 1:10 PM

Facebook continues to earn plenty of likes from its investors, as the social network and increasingly important news portal blew past expectations once again with strong fourth-quarter earnings.

After the close of markets Wednesday, the social network reported revenue of $8.8 billion and earnings of $1.41 a share. That showed healthy growth from its performance in the corresponding period last year, when Facebook took in $5.8 billion in revenue and earnings of 79 cents a share. Analysts had expected revenue of $8.5 billion and earnings of $1.31 a share on average. Facebook has now topped earnings estimates by at least 10 cents a share for its last five quarters.

“Our mission to connect the world is more important now than ever,” Mark Zuckerberg, Facebook founder and CEO, said in a statement. “Our business did well in 2016, but we have a lot of work ahead to help bring people together.”

Facebook also continued to grow its mobile user base. Total daily active users climbed 18 percent year-over-year to 1.23 billion, and mobile daily active users jumped 23 percent to 1.15 billion.

Less than an hour before Facebook reported earnings, the company lost a lawsuit pertaining to its Oculus virtual reality company, in which a jury ordered the company to pay $500 million in damages to Dallas software firm ZeniMax. Investors took that news in stride, as Facebook’s stock barely dipped and finished the day up 2 percent, before surging again after-hours as investors processed the strong earnings report.

Facebook will hold a conference call to discuss the earnings at 5 p.m. PT.

On that call, Facebook is likely to shed more light on how the social network is dealing with some of the fraudulent news stories that trended on Facebook during the last election year, which could create issues with advertising partners. Facebook, where 62 percent of Americans get news at least occasionally, has implied a little bit of culpability through a new fact-checking protocol and its hiring of experienced journalist Campbell Brown to work with media organizations.

And after CFO David Wehner warned investors on Facebook’s last earnings call its rapid revenue growth rate is likely to slow down as it comes up against a limit of how many ads it can cram in each user’s news feed, Wall Street will be looking for updates on new ad products, such as  Facebook’s recent decision to allow mid-roll ads in videos posted by publishers, which would play after a video is viewed for at least 20 seconds. That ought to help publishers make more money off Facebook traffic — which many have complained about — as well as entice legitimate news sources to post more of their content on the social network.

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