Despite worries about Russia and that passive News Feed scrolling hurts us, Facebook beat expectations again in its Q4 2017 earnings report. Facebook now has 1.4 billion daily users, up 2.18% compared to growing 3.8% to 1.37 billion users in Q3. That’s a sizeable slow down, and the lowest quarter-over-quarter percentage daily user growth ever reported by the company.
That could be because CEO Mark Zuckerberg says Facebook made changes including showing fewer viral videos “that reduced time spent on Facebook by roughly 50 million hours every day.” That equates to 2.14 minutes per daily user per day.
Facebook reached $12.97 billion in revenue with $2.21 adjusted GAAP earnings per share if you don’t count a massive tax it had to pay on overseas cash that translated into a $0.77 reduction in EPS. Without that tax, it beat Wall Street’s estimates of $12.55 billion in revenue and $1.95 EPS, but with it reported $1.44 EPS.
Facebook’s monthly user count is now at 2.13 billion, up 3.39% from 2.06 billion in Q3 compared to 3.19% growth that quarter, so the monthly user growth sped up even as daily user growth slowed. Yet Facebook’s stickiness, or the percentage of monthly users that come back daily, held strong at 66% where it’s been since 2015. That shows people are still avidly returning to the site even if they spend less time there.
Average revenue per user climbed to $6.18, up 27% from a year ago. Average revenue was up 47% year-over-year, even though Facebook has been warning investors that it’s running out of space in the News Feed to put ads. Facebook raked in a record $4.26 billion in profit, down from $4.7 billion the previous quarter due to that big tax. Facebook’s share price was down a steep 4% in after-hours trading.
Overall, the results show how divorced Facebook’s user behavior is from the day-to-day news coverage blasting it for allowing Russian interference in US elections and for making us unhealthy zombie browsers. ComScore and Nielsen claim time spent on Facebook per U.S. user is declining, and that showed up in the daily user count growth, but Facebook seems to be making up for that in international monthly user growth and squeezing more dollars out of each ad.
With the Snapchat threat largely neutralized via Instagram, Facebook’s biggest enemy is itself. Now it has to work to preemptively disarm any future privacy crises or other scandals, and co-opt the “Time Well Spent” rallying call before it becomes a “Time to leave Facebook” movement.