Facebook Tops Q4 Estimates on Strong

Social giant grew to 1.39 billion average monthly active users worldwide at end of 2014

Facebook, the biggest social network on the planet, keeps getting bigger — and its users are more mobile and consume more video than ever.

The company posted revenue of $3.85 billion for the fourth quarter of 2014, up 49% year over year and beating analyst expectations, as the social giant grew to 1.39 billion average monthly active users worldwide (up 13%) at the end of last year and boosted mobile advertising dollars.

Facebook also topped Wall Street forecasts with adjusted earnings of 54¢ per share for the last three months of 2014, up 69% year over year. Analysts had expected the company to post $3.77 billion in revenue and adjusted EPS of 48¢.

Underscoring Facebook’s focus on video, chairman-CEO Mark Zuckerberg said on a call with analysts that the service at the end of 2014 delivered an average of 3 billion video views per day — up from 1 billion daily over the summer of 2014. Execs clarified that the 3 billion daily number includes only video uploaded natively to Facebook; it’s worth noting that the tally includes autoplay videos that users do not click on.

Facebook is exploring the possibility of adding premium video to the service, akin to its deal with the NFL to deliver video clips sponsored by Verizon Wireless, COO Sheryl Sandberg said on the call. But “what really matters is that consumers are using video on Facebook,” she said. “I don’t think it matters as much what the content is…. We’re already seeing pretty explosive growth without that kind of premium content in the system in large numbers, and so we’ll continue to figure (that) out.”

According to Sandberg, more than 50% of U.S. daily active users now watch at least one video per day on the site and 65% of video views occur on mobile devices.

Mobile advertising revenue represented 69% of the company’s $3.59 billion in total ad revenue for Q4 2014, up from 53% in the year-prior quarter. Facebook’s mobile monthly average users were 1.19 billion as of December 2014, up 26% year over year.

“We got a lot done in 2014. Our community continues to grow, and we’re making progress towards connecting the world,” Zuckerberg said in announcing the results.

User growth in North America was lower than Facebook’s overall numbers. For the U.S. and Canada, monthly average users totaled 208 million in Q4, up 3.5% year over year.

Meanwhile, Facebook’s costs soared 87% in the December quarter, to $2.72 billion. CFO Dave Wehner, on the earnings call, said the increase was primarily the result of stock-based compensation related to its acquisition of messaging startup WhatsApp, in a deal worth $19 billion. Also last year, Facebook bought virtual-reality company Oculus VR for $2 billion.

In 2014 Facebook held 7.8% share of the estimated $146 billion in worldwide digital ad revenue, while leader Google accounted for 31.1% of the market, according to research firm eMarketer.

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