Facebook Hits a Grand Slam With 4Q Earnings

FACEBOOK

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Shares of Facebook (NASDAQ:FB) closed the regular session on Wednesday down 2.92 percent at $53.53, but is up big this morning over 15 percent in morning trading after reporting fourth-quarter and full-year results that beat analyst expectations.

Revenue increased 63 percent on the year in the fourth-quarter to $2.59 billion, beating the mean analyst estimate of $2.33 billion. GAAP income from operations increased 116.6 percent to $1.13 billion, while adjusted (non-GAAP) income from operations increased 98 percent to $1.46 billion. GAAP operating margins increased 11 percentage points to 44 percent, while non-GAAP operating margins increased 10 percentage points to 56 percent. GAAP net income increased more than 700 percent to $523 million while non-GAAP net income increased 83 percent to $780 million. GAAP earnings increased 566 percent to 20 cents per share, while adjusted earnings increased 82 percent to 31 cents per share, beating the mean analyst estimate of 27 cents. Founder and CEO Mark Zuckerburg appropriately summed up the situation, commenting in the earnings report that, “It was a great end to the year for Facebook.”

Overall revenue from advertising increased 76 percent on the year in the fourth-quarter to $2.34 billion, accounting for just over 90 percent of total revenues. Mobile advertising revenue accounted for 53 percent of total ad revenue, a share that is up from 23 percent in the year-ago quarter.

Facebook daily active users (or, DAUs) increased 22.5 percent on the year to 757 million, with the highest growth in Asia (+5.8 percent to 200 million). Monthly active users (or, MAUs) increased 16.3 percent on the year to 1.23 billion, with the highest growth once again in Asia (+4.8 percent to 368 million). Total mobile DAUs increased 48.67 percent on the year to 556 million, or about 45 percent of total MAUs.

Facebook’s fourth-quarter earnings demonstrate that the company has successfully executed on its strategy to monetize mobile use. Mobile MAUs grew by 39 percent on the year in the fourth-quarter to 945 million, while mobile only MAUs grew by 88.5 percent to 296 million. Mobile-only users are still just a fraction of total users, but the demographic is growing rapidly. It is more likely in fast-growing emerging markets like Asia that Facebook adopters will access the site primarily on a mobile device.

For the full year, Facebook revenue increased nearly 55 percent to $7.87 billion, beating the mean analyst estimate of $7.64 billion. Adjusted earnings increased 66 percent to 88 cents per share, beating the mean analyst estimate of 84 cents per share.

Looking ahead, analysts are expecting first-quarter revenue to grow 46.7 percent on the year to $2.14 billion, and adjusted earnings to increased 83.34 percent to 22 cents per share.

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