Date
10 December 2018
Facebook's 1.4 billion daily active users reduced the time they spent on the platform by about 50 million hours a day, or nearly two minutes for each user, in the fourth quarter. Photo: AFP
Facebook's 1.4 billion daily active users reduced the time they spent on the platform by about 50 million hours a day, or nearly two minutes for each user, in the fourth quarter. Photo: AFP

Facebook profit up 61% but users spend less time amid changes

Facebook said its earnings, excluding a US$3.19 billion tax charge, soared 61 percent in the fourth quarter, powered by its digital advertising business, the Wall Street Journal reports.

However, users were spending less time on the platform as it tries to address critics’ claims that the social network has harmful effects, the newspaper said.

The last quarter represented the heaviest spending period for advertisers, but income was shaved by a US$2.27 billion charge resulting from the recently enacted US tax reform legislation. 

Chief executive Mark Zuckerberg has implemented changes to its News Feed, where users send, receive and share content, and as a result, users reduced the time they spent on the platform by about 50 million hours a day during the period, the newspaper said.

That translates to about two minutes a day for each user.

Facebook’s daily active users rose to 1.4 billion, up from 1.37 billion in the third quarter.

Shares were up 1 percent at US$188.64 after the results were reported following the market’s close, Reuters said.

Company officials sought to reassure investors about the financial consequences of the changes.

Chief operating officer Sheryl Sandberg told analysts on a conference call that the recent changes to stem the spread of disinformation and sensational media on the platform could be good for the advertising business.

“The impact it has on monetization is certainly not clearly negative,” Sandberg said.

Chief financial officer David Wehner, on the other hand, said the average price per ad increased 43 percent during the three-month period.

“They said average revenue per ad was up a lot, that quality of ads has improved, and that the engagement declines were not meaningful,” Reuters quoted Wedbush analyst Michael Pachter as saying.

“In other words, better quality engagement and better ability to target ads. The street probably likes that,” he said.

Operating profit for the quarter was US$7.35 billion. Total revenue rose 47 percent to US$12.97 billion, with full-year revenue also up 47 percent at US$$40.65 billion.

Total advertising revenue was US$12.78 billion, compared with analysts’ estimate of US$12.30 billion, according to Thomson Reuters I/B/E/S.

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RC/CG

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