Facebook FY numbers - slower growth

Facebook had a stellar 2017 year when it comes to earnings as they have managed to beat expectations relentlessly without fail. Here's is what the Zuck had to say about the year:

"2017 was a strong year for Facebook, but it was also a hard one," He went on to say: "In 2018, we're focused on making sure Facebook isn't just fun to use, but also good for people's well-being and for society. We're doing this by encouraging meaningful connections between people rather than passive consumption of content. 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."

We saw the shares go down around 5% when the news above was made public, but the shares then recovered sharply to be up around 2% during the earnings call when management gave more information on how they are going to make the platform more meaningful to the users.

Now lets take a look at their final quarter and full year numbers:

- Revenues: grew by 47% for the quarter to $12.97 billion bringing the total revenue for the year to $40.65 billion.
- Net Income: grew by 20% for the quarter to $4.27 billion bringing total net income for the year to $15.9 billion.
- Monthly Active Users: 2.13 Billion, up from 2.07 Billion last quarter.
- Daily Active Users: 1.40 Billion, up from 1.37 Billion last quarter.

However, the reduction in Facebook's net income fell $3.19 billion from Q3 to Q4 due to a once off charge tied to changes in the US tax system. This comes as no surprise at all as we have seen other companies reporting similar tax charges.

You will find more infographics at Statista

We like the fact that Facebook is going back to first principles by revamping the News Feed and prioritising posts from friends and family over advertised viral videos/content from publishers with an agenda. This will help avoid hurtful content that goes viral from time to time and dilutes the user experience. Most importantly, it'll help curb the invisible hands that have been swaying election results all over the world by perpetuating fake news on the platform. This move could see Facebook's advertising revenues grow slower in the interim, but it'll boost the company's growth long-term, as advertisers/brands will trust the platform more, and engagement will be more meaningful for users.

We are not really worried about the slowing user growth on Facebook itself. Instagram is becoming more relevant; since it introduced Stories, which was the feature Snapchat was created around (RIP Snap). Engagement keeps increasing and advertisers are recognising this, joining in on the action. Corporate accounts are growing by high double digits per month, especially those which trade directly to consumers. They do product deals with influencers to promote their product, a strategy that has helped the likes of Adidas flourish in recent times.

For the first time, Facebook admits to dragging its feet in response to the Russian hacking reports. This is wonderful news as it is what ultimately led the company to revamp its news feed to prioritise friends and family. This is reassuring to the people of the U.S.A and the rest of the world; that this will never happen again as they're finally regulating themselves as the media company that they are! We think this will help ease the regulatory scrutiny and management can focus more of their time exploring other growth avenues.

Let's not forget the fact that this machine still has more relationships than Islam, Capitalism, and Communism. These relationships are proving to be more and more meaningful as they're not going to be spammed with viral videos and unnecessary content that's targeted to change the way they perceive certain political candidates for example. With WhatsApp now being Facebook's second-biggest property followed by Messenger and Instagram, we think the company is finally doing the right thing in society and as a result we hold and buy more!