Mark Zuckerberg may have been feeling vindicated on Wednesday.
After what’s been a horrible year for his company’s reputation, Facebook surprised Wall Street by posting record profits for its fourth quarter, and revenues that beat expectations.
The company reported earnings per share of $2.38, up from the $1.44 it reported a year earlier and also ahead of forecasts for $2.17. Net earnings for the quarter totalled $6.9 billion.
The company’s shares were up more than 8% to $162.3 in after-hours trading in New York, which will come as some relief to investors—Facebook’s stock has declined by roughly 30% in the past six months.
“We’ve fundamentally changed how we run this company,” Zuckerberg said on an earnings call, adding that Facebook had invested “billions of dollars in security.”
Wednesday’s results were in strong contrast to the flurry of criticism levelled at the company recently around its privacy practices, including from tech giant Apple. This week the iPhone maker blocked Facebook from distributing internal iOS apps that its staff used for testing new services, a major shot across the bow in what’s becoming a tense battle over privacy standards.
But none of that seems to matter to Wall Street right now. Not only is Facebook’s bottom line rising, its user base is still growing too, countering much of the recent discourse about an exodus of users from the platform.
The company said Wednesday that 2.32 billion people were active each month across its platforms, including WhatsApp and Instagram, versus 2.27 billion the previous quarter.
The number of people using Facebook daily was up 9% from last year to 1.52 billion, led by growth in India, Indonesia and the Philippines, the company’s chief financial officer David Wehner said on an earnings call on Wednesday.
Wehner also sought to downplay the impact of critical press articles over the past year on Facebook’s business and growth. “I’d let the numbers stand for themselves,’ he said. “We are growing in all regions.”
Zuckerberg said that the Stories feature on Facebook and Instagram would be where some of the greatest potential lay for generating more advertising dollars, by also using artificial intelligence-powered software to target Facebook users more accurately. “Stories on FB is growing quickly,” he said, though he also admitted, “We started a bit later and execution wasn’t as great as it needed to be.”
Wehner evaded a question on the earnings call about how much time people spent on Facebook versus Instagram, sidestepping concerns that its flagship network is falling out of favor.
“The daily active user trends that we’re giving do paint the picture, which is stability in the developed markets and growth for Facebook Blue in developing markets,” Wehner said. “Time spent is not our focus, and our focus is meaningful social interactions. Daily active user trends tell the story broadly.”
Advertisers, however, tend to spend more money on targeting users in developed markets, so even while signups to Facebook are growing in developing markets and even in the U.S., there may still be some concerns about return on investment if users in North America and Europe are spending only fleeting moments on the site. For now though, investors seem pleased enough with the growth numbers and the revenue beat.
–Parmy Olson Forbes Staff