Facebook Revenues Soar As Its Nears 2 Billion Users

Guy Verhofstadt

Facebook's latest earnings report has managed to outperform both last year's results and the expectations of analysts as the company closes in on two billion monthly users.

For the quarter ending December 2016, the company reported a profit of $3.57bn (£2.82bn), more than double the $1.56bn reported a year ago.

Facebook pocketed US$27.6 billion in total revenue in 2016 on the back of its booming advertising business, up 54 per cent from the year earlier. Facebook reported 84 percent of its total ad revenue came from mobile. And 1.74 billion of Facebook's 1.86 billion monthly active users were on mobile devices for at least some of their visits. That said, Facebook's user growth is slowing down in the US and Canada as the company only added 2 million daily and monthly users in their fourth quarter.

Facebook stock price jumped 2.9 percent to $137.07 in after-hours trading following the release of the earnings report, after finishing the day at $133.23 per share. Observers should recall that analysts have predicted that the social media company could rake in as much as $8.5 billion and no more.

Interestingly, Facebook sees most of its growth outside of the US these days. This brought in an operating income of $12.43bn - a 100 per cent increase from $6.23bn in 2015. Facebook has announced plans to invest in original and licensed video and to add ads in between its livestreamed content. "We've launched our new camera in Messenger and have started rolling it out in Facebook as well".

Facebook's core network contributed most of its earnings, though the company also boasts huge user numbers on messaging service WhatsApp and photo-sharing platform Instagram, where it has introduced more and more features that closely resemble those available on rival social media app Snapchat. Wehner said this will continue to be an "aggressive investment year", with expenses likely to rise by 40 percent to 50 percent and hiring to grow more than last year's 34 percent growth rate.

"I like it because I can connect with all my family overseas and it easy connected with people through your whole entire life", she said.

However, many analysts have raised concerns about Facebook's ability to meet its own targets it sets every quarter.

Capital expenditures - Capital expenditures for the full year 2016 were $4.49 billion.

For now, Facebook's ability to simultaneously grow users and revenue is impressive.