Facebook reassures investors, forecasts higher ad sales despite usage dip

WASHINGTON: 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% 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.

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% 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 higher by 1.4% at US$189.50 (RM737 billion).

Total revenue rose 47% to US$12.97 billion (RM50.45 billion) and beating analysts’ estimate of US$12.55 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to Facebook shareholders rose to US$4.27 billion, or US$1.44 per share, in the fourth quarter ended Dec 31 from US$3.56 billion, or US$1.21 per share, a year earlier.

Excluding a tax provision, the company earned US$2.21 per share, topping analysts’ estimates of US$1.95, according to Thomson Reuters I/B/E/S. Facebook said it increased its provision for 2017 income taxes by US$2.27 billion, citing US tax changes. – Reuters