Facebook’s Posts Better-Than-Expected Q4 Earnings

Advertising revenue in the fourth quarter rose 57%, to $5.64 billion, beating analysts' average expectation of $5.15 billion.
Katie Kuehner-HebertJanuary 28, 2016
Facebook’s Posts Better-Than-Expected Q4 Earnings

Facebook posted better-than-expected earnings and revenue for the fourth quarter due to higher numbers of monthly active users and higher advertising revenues.

The Menlo Park, Calif.-based company on Wednesday said that net income rose 46% from a year ago, to 79 cents per share, and that revenue rose nearly 52%, to $5.84 billion. Analysts on average had expected Facebook to report fourth-quarter earnings of about 68 cents a share on $5.37 billion in revenue, according to Thomson Reuters.

For all of 2015, revenue rose 44%, to $17.93 billion.

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“2015 was a great year for Facebook,” the company’s founder and chief executive Mark Zuckerberg said in a press release. “Our community continued to grow and our business is thriving.”

Shares in the company jumped more than 12% in after-hours trading, according to CNBC.

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“It’s doom and gloom all around us and these guys are just killing it,” Kevin Landis, CEO and chief investment officer at Firsthand Capital Management, told CNBC’s Closing Bell. “One of the really impressive things about this is: Look at all the other companies in this space, and there’s train wreck out there.”

Facebook said that total monthly active users rose to at about 1.59 billion by the end of the quarter, higher than the average analyst estimate of about 1.58 billion. Total MAUs on mobile rose to 1.44 billion, higher than the average analyst estimate of 1.43 billion, according to StreetAccount.

On the company’s earnings call, Zuckerberg said users watch 100 million hours of video daily on the platform, and that the company is “exploring ways to give people a dedicated place on Facebook for when they just want to watch videos.” CNBC speculated that he was potentially hinting at a competitor for Alphabet’s YouTube.

Advertising revenue in the fourth quarter rose 57%, to $5.64 billion, beating analysts’ average expectation of $5.15 billion. Roughly 80% of that came from mobile advertising revenue, up from 69% of advertising revenue in the fourth quarter of 2014.

For the fourth quarter, Facebook saw average revenue per user of about $3.73, while Wall Street had only expected $3.43, according to StreetAccount.

Facebook chief financial officer David Wehner said on the earnings call that that the strengthening U.S. dollar had an unfavorable impact on the company’s financials. Total revenue would have been about $320 million higher had exchange rates remained constant.

Facebook expects “to continue to face foreign exchange headwinds, especially early in the year, as we will be lapping periods where the dollar was relatively weaker than it is today,” Wehner said.

The executives also expressed optimism about the company’s growth of its WhatsApp and Instagram services, as well as its Oculus virtual reality platform.

“It’s going to be gaming — for the beginning,” Zuckerberg said. “That’s the initial market. … But the reason why we’re interested in this, as the social company, is that we think this is going to be a new way that people interact.”

“We’re very excited about that: That’s going to be a big area of investment for us, and is ultimately, I think, going to change the way that we communicate, and live and work — in addition to how we play games,” he said.