Facebook capped its most tumultuous and scandal-ridden year with… the highest revenue it’s ever posted in a single quarter.
Analysts were expecting strong results, but the blockbuster earnings the social media giant reported for the fourth quarter of 2018 are a jarring reminder of the company’s ability to seemingly repel any controversy. Facebook’s stock price rallied on the news, although it is still well below its 2018 high.
The company beat analyst expectations of $16.4 billion in revenue, posting $16.9 billion. Users continued to log on, with the company saying that over 2.7 billion people using Facebook, Instagram, WhatsApp, or Messenger. It added users in its most profitable markets, where much of the backlash to the scandals had erupted.
In the last quarter of 2018, amid a slew of other scandals, Facebook faced backlash for the findings of two investigations from The New York Times, the first revealing that the company’s leadership was sluggish to react to the news that Russian operatives tried to interfere with the US elections through its platforms, and that it hired a controversial Republican opposition research firm to undermine its critics. The other, which built on previous reporting, disclosed that the company had data-sharing agreements with third-party developers without users’ knowledge.
A UK parliamentary committee also released a trove of documents that showed that when sharing user information with outside parties, the company favored some partners, while shutting out competitors.
Despite these and other revelations about the company’s shady practices, Facebook continued to add monthly users, slightly beating analyst expectations—2.32 billion people checked Facebook at least once a month versus the 2.31 billion analysts had expected. Crucially, the company added 1 million daily active users in the US and Canada, its most lucrative market. The average revenue per user in the region was $34.86 this quarter, a massive 30% jump over the same period in 2017. It added both monthly and daily users in Europe, despite a 2018 slowdown caused by the region’s new privacy regulations.
The fourth quarter is usually the strongest for companies in the advertising business, since it includes the lucrative holiday season, but Facebook blasted past last year’s fourth quarter, adding nearly $4 billion in revenue year-over-year.
The earnings results show that the company is still an advertiser darling, and it seems that their love will only continue to grow. Facebook still has a lot of possibility for monetization, analysts say.
Facebook does not break out its revenue by product, but in the run-up to the earnings, analysts were particularly optimistic about the potential of Instagram Stories as a revenue driver for Facebook. According to Deutsche Bank analysts, who obtained a memo from one of Facebook’s marketing partners, advertisers increased their Stories budget by 124% percent over the past year.
Then there’s the barely tapped area of ads in Facebook’s messaging services, which could be even greater if the company integrates the three apps—Instagram, Messenger, WhatsApp—as it is apparently planning.
As of now, however, it doesn’t seem that there is much to dissuade users, or investors, from staying on the Facebook bandwagon, despite what surveys have suggested.