Facebook Inc offered reassurances to investors on Wednesday that its digital ad business would remain highly profitable, despite a dip in usage on the social media network and an overhaul of its flagship News Feed.
The company said in an earnings report that quarterly revenue jumped 47 per cent from a year earlier, and executives said on a conference call that they saw more chances to make money even if people spend less time on Facebook, reports Reuters.
Analysts had wondered about the resilience of the world’s largest social media network, which is making changes to its products to deter foreign influence campaigns like ones that it says Russia has carried out and to stem the spread of sensationalism.
Facebook added to jitters after the bell on Wednesday when, in its earnings report, it said that at the end of last year time spent by users had fallen by about 50 million hours a day. Shares fell more than 4 per cent in after-hours trading.
Shortly afterward, though, Facebook executives expressed optimism on the call with analysts, saying the changes they were making in response to criticism would be healthy for the business in the long term and might not even hurt much in the short term.
“I want to be clear: The most important driver of our business has never been time spent by itself. It’s the quality of the conversations and connections,” Chief Executive Mark Zuckerberg said on the call.
The upbeat forecast led to a rebound in shares, which in late after-hours trading were up 1.4 per cent at $189.50.
Facebook said that time spent was falling at the end of last year by about 50 million hours a day due to changes that it said reduced viral videos, even before the company announced a series of changes to the News Feed that may further reduce user engagement.
Facebook’s 1.40 billion daily active users was up 14 per cent from a year earlier, but below analysts’ estimate of 1.41 billion for the fourth quarter, according to financial data and analytics firm FactSet.
The number of daily users in the United States and Canada fell for the first time in Facebook’s history, dipping in the company’s home market by 700,000 from a quarter earlier to 184 million. Wehner said the number would “fluctuate” in the future.
Total revenue, though, showed little impact, rising 47 percent to $12.97 billion and beating analysts’ estimate of $12.55 billion, according to Thomson Reuters I/B/E/S.