Photo Credit: Esther Vargas/Flickr.com

Facebook (Nasdaq: FB) is the undisputed king of social media. But it had a rough end to the year due to the uproar about fake news. The company was accused of spreading hoax news that was a big catalyst in getting Donald Trump elected as the US President despite all odds. Facebook may still not have figured out how to stop the fake news, but it definitely knows how to run a successful business and literally mint money!

Facebook’s Financials

Facebook’s Q3 revenues grew 53% over the year to $8.81 billion, ahead of the market’s estimates of $8.52 billion. EPS of $1.41 was also significantly ahead of the Street’s projections of $1.31 for the quarter. Facebook does not expect growth to remain at these levels in the current year. It warned investors of slowdown in advertising revenues and an increase in operating expenses between 47%-57% during the year. The decline in revenues is expected to come due to the ad load limits i.e. the total number of ads that Facebook can display to each user. The increased spending will be driven by investment in resources to support its other growth engines like video.

By segment, advertising revenues grew 53% to $8.63 billion and payments and other fees revenues fell 12% to $0.18 billion. Within the quarter, mobile advertising revenues accounted for 84% of the company’s advertising revenues, compared with 80% share a year ago.

Among operating metrics, Daily active users (DAUs) grew 18% to 1.23 billion with mobile DAUs growing 23% to 1.15 billion for December. Monthly active users (MAUs) grew 17% to 1.86 billion and mobile MAUs grew 21% to 1.74 billion.

For the year, total revenues increased 54% to $27.64 billion and diluted EPS grew 171% to $3.49.

Facebook’s Video Focus

After successfully implementing the mobile advertising strategy, Facebook is now focusing on its video advertising business. Earlier, the market was speculating that Facebook would enter long-form video with a service that could compete with Netflix. But during the results announcement, Facebook dispelled such suggestions. Instead, it is going to compete with Alphabet’s YouTube.