Facebook posts solid Q4 results, but shares fall in after hours

The social media giant reported earnings and revenue in line with expectations and steady growth in its number of active users.

Facebook published fourth quarter results in line with market estimates on Wednesday. Nevertheless, the social media giant's shares sank in after-hours trading. 

Diluted earnings per share for the fourth quarter were $2.56 on revenue of $21.082 billion, up 25 percent year-over-year. 

Analysts expected earnings of $2.53 on revenue of $20.89 billion. 

For the full year, Facebook's EPS came to $6.43 on revenue of $70.697 billion.

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"We had a good quarter and a strong end to the year as our community and business continue to grow," CEO Mark Zuckerberg said in a statement. "We remain focused on building services that help people stay connected to those they care about."

Facebook's daily active users were 1.66 billion on average for December 2019, an increase of 9 percent year-over-year. Its monthly active users totaled 2.5 billion as of December 31, 2019, an increase of 8 percent year-over-year.

The number of people active daily on at least one of Facebook's products -- including Facebook, Instagram, Messenger and WhatsApp -- was 2.26 billion on average for December 2019, an increase of 11 percent year-over-year. Monthly active people for Facebook products was 2.89 billion as of December 31, 2019, an increase of 9 percent year-over-year.

Turning to revenue outlook, Facebook expects its year-over-year total revenue growth rate in Q1 to decelerate by a low to mid single-digit percentage point as compared to the Q4 growth rate. This deceleration is expected due to the maturity of the business, said Facebook CFO David Wehner, as well as the increasing impact of global privacy regulations and headwinds related to ad targeting.

On Wednesday's conference call, Zuckerberg noted that Facebook now has more than 1,000 engineers working on privacy projects. A day earlier, Facebook released its Off-Facebook Activity (OFA) tools, which allow users to learn more about what data Facebook and its partners collect about them. As Steven J. Vaughan-Nichols notes for ZDNet, Facebook and other companies are now required to disclose this kind of information under the California Consumer Privacy Act, a law inspired by privacy violations from Facebook and other tech companies. 

"It's going to take time but over the next decade, I want us to build a reputation around privacy that's as strong as our reputation around building good, stable services," Zuckerberg said on the call.