Facebook Smashes in Earnings but Reported This Change in Q4

Facebook had a solid fourth quarter that topped expectations but there was one thing that CEO Mark Zuckerberg said that stood out.

He revealed that due to change the company had made to the platform, it reduced time spent on the site by a whopping 50 million hours a day. That’s a reduction of 5%.

He wrote, “Already last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent. In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term,”

For the fourth quarter the company reported EPS of $2.21 while analysts had been expecting $1.95. Revenue was $12.97 billion while analysts waited for $12.55 billion.

The social network’s daily active users was 1.4 billion, slightly short of the 1.41 billion expected.

Monthly active users at 2.13 billion was in line with estimates.

A year ago Facebook had seen EPS of $1.41 on revenue of $8.81 billion.

The company had a charge of $2.27 billion, or 77 cents a share related to changes in the U.S. tax code in the quarter.

The stock was tumbling south until the company’s CFO restored confidence in investors and shares soared in after-hours trading.

Financial Officer David Wehner commented, “So you can think of all these … optimization efforts as part of that as being an effort to improve the yield of the impressions that we have to drive downstream business results for our advertising partners. And if we can drive those effectively, that will translate into higher effective prices for our business.”

Disclaimer: We have no position in Facebook, Inc. Common Stock (NASDAQ: FB) and have not been compensated for this article.