Facebook Q4 Beats Expectations, But Growth Slows

After-hours trading saw Facebook stock rise 1.15 percent as the company announced Q4 earnings that beat analysts’ estimates for revenue, ads, monthly and daily users and engagement.

Despite beating out most estimates, Facebook’s rate of growth has continued to slow for the most part as the company struggles to acquire users and grow revenue streams with the same vigor as in years past.

Facebook brought in $8.81 billion in revenue and $1.41 earnings per share in Q4, beating out analyst estimates of $8.51 billion and $1.31 EPS. As predicted by analysts, Facebook’s rate of revenue and user growth has slowed once more in Q4 — revenue was up 51 percent year on year compared to 56 percent in Q3 and 59 percent in Q2. All told, Facebook saw $27.6 billion in total revenue for 2016.

Mobile remained at 84 percent of Facebook’s total ad revenue in Q4, though, this time around, it accounted for $7.25 billion. And even as the number of desktop users fell in Q4, desktop ad revenue was still up 22 percent.

Facebook’s user numbers also beat out estimates, with total monthly users hitting 1.86 billion in the quarter, up 3.91 percent, or 70 million, from Q3, beating expectations going into the quarter at 1.84 billion. Monthly mobile users grew to 1.74 billion, up from 1.66 billion in Q3. And mobile-only users hit 1.149 billion.

While Facebook’s stickiness remained at 66 percent in Q4, the same as last quarter, growth in the U.S. and Canada has started to slow considerably against other world regions. Despite the slump in those North American markets, Facebook’s engagement and ad targeting endeavors are boosting revenues on a per-unit basis. In the U.S. and Canada, Facebook hit $19.81 average revenue per user (ARPU), up 44 percent from $13.70 last year. ARPU hit $4.83 globally, up 29.5 percent from last year.

Daily active users hit 1.23 billion worldwide, up 18 percent year on year and beating out 17 percent growth from last quarter. This indicates that, despite the overall growth slowdown, Facebook’s push to introduce live videos and news content continues to draw more of its users into daily sessions.

“I see video as a mega-trend on the same order as mobile,” said CEO Mark Zuckerberg during the earnings call. “We’re going to continue to put video first across our family of apps and make it easier for people to capture and share video in new ways.”

Along with continuing investments in original video content, the company just debuted a new recommended and popular video tab for U.S. users, with plans to roll it out to more countries soon, Zuckerberg said. He also hinted at upcoming experiments with Live 360 video and audio-only live streaming.

And, of course, Facebook also has Instagram, Messenger and WhatsApp to play around with.

Instagram had 600 million monthly active users as of December and 400 million daily actives, while Instagram Stories — Facebook’s direct attack on Snapchat — reached 150 million daily actives five months after its launch. WhatsApp hit 1.2 billion monthly actives, and Zuckerberg said some 50 billion messages are sent each day on the app. Messenger got a lot of love from users as it rolled out group video chatting for up to 50 people and games. Messenger’s video chat function saw 400 million monthly users in Q4.

But even with all of this growth in its main app and other social media projects, there was one continued, relatively weaker spot.

Payments revenue was down once again, hitting just $180 million in Q4 and down some 12 percent over last year. But that’s only part of the story. In Q4 2015, payments comprised some 3.49 percent of Facebook’s total revenue. This past quarter, it was just over 2 percent.