Facebook Revenue Soars As Time Spent on Platform Plummets

Mark Zuckerberg -Annual Allen & Company Sun Valley Conference -Getty-H 2017
Drew Angerer/Getty Images

CEO Mark Zuckerberg said in a statement that people are spending 50 million hours less per day on the platform.

Facebook CEO Mark Zuckerberg has made it his 2018 goal to fix the issues that have plagued the 14-year-old social media giant over the last several months. But those problems don't appear to have hit Facebook's balance sheet just yet. 

The company on Wednesday reported that it grew its revenue by 47 percent to nearly $13 billion during the fourth quarter. It brought in profits of $1.44 per share.   

Wall Street was expecting Facebook to report revenue of $12.5 billion and profit of $1.94 per share.

Meanwhile, Facebook's audience continues to grow, but growth is slowing. It has 1.4 billion daily active users, up 14 percent year-over-year, and 2.13 billion monthly active users, also up 14 percent year-over-year.

International adoption continues to spur much of Facebook's growth. In the U.S. and Canada, Facebook actually lost 1 million DAUs during the fourth quarter. 

Zuckerberg called 2017 "a strong year for Facebook" but acknowledged that "it was also a hard one." 

He continued, "In 2018, we're focused on making sure Facebook isn't just fun to use, but also good for people's well-being and for society." 

Among the changes that Zuckerberg has made in the first month of 2018 are prioritizing posts from family and friends in News Feeds and boosting local news content. But such decisions come at a cost. Zuckerberg disclosed on Wednesday that changes made last quarter, including cutting back back on viral videos, reduced time spent on the platform by "roughly 50 million hours every day." That's the equivalent of around 2 minutes per daily active user. 

On a call with investors, Zuckerberg argued that ultimately more engaged users (even though who spend less time on the platform) will be better for Facebook's business in the long term. When scrolling through the News Feed, he explained, "if you just come across a viral video, you're just going to skip over it if you see an ad." 

These changes might seem counter to the Watch video tab that Facebook spent the better part of 2017 building. But Zuckerberg said that he views it at a different ecosystem that can sustain more passive viewing than the News Feed ecosystem. He said he's optimistic that "Watch will be a use for video that helps bring people closer together."

Facebook's stock closed the day down less than one percent, or 23 cents, to $186.89. It was down more than 4 percent, or over $8, during after hours trading but leveled off during the investor call.