Facebook Profit Tops $1 Billion
January 27 2016 - 4:42PM
Dow Jones News
By Deepa Seetharaman
Facebook Inc. Wednesday posted more than $1 billion in quarterly
net income for the first time, reflecting the social network's
ability to quickly capitalize on its popularity.
Fourth-quarter revenue rose 52%, to $5.84 billion, up from $3.85
billion in the same period a year earlier, as the social network
drummed up more interest from advertisers. Costs, meanwhile, rose
21%.
Shares of the company jumped 4.3% to $98.35 in after-hours
trading.
Last year marked a big investment period for Facebook, which
hired thousands more people and poured money into projects
including its virtual-reality arm Oculus VR, artificial
intelligence and extending Internet access to remote areas. The
company pulled back spending in the second half of the year.
At the same time, Facebook expanded advertising options, such as
allowing marketers to place more ads on its photo-sharing app
Instagram. In many cases, the company has also been able to command
higher prices for those ads, especially in North America, analysts
and advertisers say. Bernstein Research analyst Carlos Kirjner
estimates that prices for ads in Facebook's main news feed in North
America rose as much as 20% last year.
Surging revenue and profit boosted Facebook shares nearly 30%
last year, briefly vaulting the 12-year-old company's market
capitalization above $300 billion before the recent market
pullback.
For the fourth quarter, Facebook reported net income of $1.56
billion, or 54 cents per share, up from $701 million, or 25 cents a
share reported a year ago.
Excluding some expenses, Facebook reported earnings of 79 cents
per share, higher than the 68 cents a share projected by Wall
Street analysts.
Analysts expect Facebook to further temper its spending in 2016.
Mr. Kirjner predicted a 32% jump in spending and a 39% rise in
revenue in the coming year.
About 1.59 billion people accessed Facebook at least once a
month in the fourth quarter, up from 1.55 billion three months
earlier.
Analysts point out that the company still has many untapped
revenue drivers at its disposal, including messaging and virtual
reality. Earlier this month, Facebook's WhatsApp messaging unit
said it would scrap its subscription fee and test ways to help
businesses to interact with users. Facebook Messenger added a
similar feature in 2015. Oculus VR plans to start shipping its $599
Rift virtual-reality headset in March.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
January 27, 2016 16:27 ET (21:27 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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