(Reuters) – Facebook Inc on Wednesday reported its slowest quarterly revenue growth in more than six years as a public company but easily beat Wall Street’s profit estimates, soothing investor concerns that rising costs would blunt growth.
Shares of the world’s biggest online social network rose nearly 9 percent to $163.30 after the bell. They closed up 4.3 percent in regular trading.
Net income rose to $6.88 billion, or $2.38 per share, in the fourth quarter, up from $4.27 billion, or $1.44 per share, a year earlier. Analysts on average had expected earnings of $2.19 per share, according to IBES data from Refinitiv.
Total fourth-quarter revenue rose 30 percent to $16.9 billion from $12.97 billion, compared to analysts’ average estimate of $16.4 billion.
“The worst is over for this social media giant,” said Haris Anwar, an analyst at Investing.com: “Its ad business and user engagement haven’t been affected despite all the negative blows of the past year.”
Facebook has pledged to focus on the privacy and security of the world’s largest social network after a series of scandals over improperly shared user data and propaganda hurt its image and made it the target of political scrutiny across the globe.
The company’s shares have lost a third of their value since July, when it first warned about slowing growth in revenue and operating margin. The share price remains near its lowest point in two years.
“We’ve fundamentally changed how we run our company to focus on the biggest social issues, and we’re investing more to build new and inspiring ways for people to connect,” Mark Zuckerberg, Facebook’s founder and chief executive, said in a statement.
Previously, Facebook’s weakest quarterly sales growth as a publicly traded company, 32.2 percent, came in each of its first two reporting quarters in 2012.
Total expenses in the fourth quarter surged to $9.1 billion, up 62 percent compared with a year ago. The operating margin fell to 46 percent in the fourth quarter from 57 percent a year ago.
Despite its privacy issues, Facebook managed to gain some new users, particularly in India, Indonesia and the Philippines. Facebook said more than 2.7 billion users interact with at least one of its apps each month, up from 2.6 billion last quarter.
Monthly and daily users of the main Facebook app compared to last quarter were up 2.2 percent to 2.32 billion and 2.0 percent 1.52 billion, respectively.
Estimates were for 2.3 billion monthly users and 1.5 billion daily users, according to Refinitiv averages.
Facebook shares continue to trade at a discount to peers. Shares entering Wednesday of No. 1 online ad seller Alphabet Inc , for instance, were priced at 22.4 times expected earnings over the next 12 months, compared to 19.3 times for Facebook.
Reporting by Munsif Vengattil in Bengaluru and Katie Paul and Paresh Dave in San Francisco; Editing by Arun Koyyur and Bill Rigby
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