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Facebook earnings skyrocket beyond estimates in fourth quarter



Facebook earnings skyrocket beyond estimates in fourth quarter

Facebook earnings skyrocket beyond estimates in fourth quarter

On Wednesday, Facebook reported its fourth-quarter earnings, which beat analysts’ estimates, sending shares up more than 2% in after-hours trading. The company reported that revenue in the fourth quarter, ending December 31, rose 51% to $8.81 billion, from $5.84 billion in the same period in 2015, topping the $8.51 billion expected on average among analysts polled by Yahoo Finance.

The gains were a record for Facebook and represent its seventh straight quarterly revenue beat, buoyed by mobile video ads sales, including those on Instagram. Mobile ad revenue represented about 84% of total ad sales in the latest quarter, flat from the prior quarter and up from 80% in the same period a year earlier. According to forecasting firm eMarketer, Facebook’s global ad revenue is expected to total $33.76 billion in 2017, which will make Facebook the largest ad seller after Google GOOGL -0.62%.

The social media giant posted a profit of $3.57 billion, or $1.21 a share, up 128% from a year-earlier profit of $1.56 billion, or 54 cents a share. Apart from certain expenses, Facebook said it would have earned $4.15 billion, or $1.41 a share, topping forecasts of $1.31 per share on that basis. Facebook reported that fourth-quarter expenses grew 29% from the same period a year earlier to $4.24 billion. The company warned when it reported third quarter earnings that expenses in 2017 will increase “meaningfully” and that “ad load,” the volume of ads the company can show users, will become a less significant revenue growth factor into this year.

In a telephone interview with FORBES, Facebook COO Sheryl Sandberg commented, “We had a very strong quarter topping off a strong year. Businesses are making shifts to mobile, and they’re doing it on Facebook and Instagram. It explains a lot of our current growth and future opportunity.”

“We will continue to invest in helping businesses reach consumers with the right message at the right time,” she said. “We had a good year for product and product innovation,” Sandberg said. “Instagram Stories is a standout example.” Sandberg also said that in the fourth quarter, Facebook added more users than in any in the company’s history.

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

Facebook rose nearly 3% to $133.24 during regular trading on Wednesday. The stock is up about 16% this year as of Wednesday’s close.


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