Facebook CEO Mark Zuckerberg said that the recent changes to the social media platform reduced the time people spent on Facebook by roughly 50 million hours every day.
"2017 was a strong year for Facebook, but it was also a hard one. 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. We're doing this by encouraging meaningful connections between people rather than passive consumption of content," said Zuckerberg while presenting Facebook's Q4 earnings on Wednesday. "Already last quarter, we made changes to show fewer viral videos to make sure people's time is well spent.
In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day. By focusing on meaningful connections, our community and business will be stronger over the long term," he added.Zuckerberg's comments shortly after he announced major changes to News Feed algorithms to bring focus back on content shared by friends and families, rather than the posts from businesses.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, sayi ghe changes they were making in response to criticishn
would be healthy for the business in the long term andmight 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 up 1.4% at $189.50. Facebook management "acknowledged things that maybe most investors weren't thinking about before - the reduction of users and usage - but at the same time they pointed to a lot of positive trends on their other platforms," Pivotal Research Group analyst Brian Wies said.
Although Facebook usage is down, he said, 11 "One shouldn't be reflectively negative on this." Chief Operating Officer Sheryl Sandberg told analysts
that recent changes to reduce disinformation on Facebook could create "more monetization
opportunities." Facebook said that time spent was falling at the end of last year by about 50 million hours a day due to changes that it said reduced viral videos, even before the
company announced a series of changes to the News Feed that may further reduce user engagement.
Zuckerberg said she was optimistic about potential revenue from ads on "stories" on Facebook and Instagram, while Chief Financial Officer David Wehnersaid the average price per ad increased 43% in quarter. "They said average revenue per ad was up a lot, that quality of ads has improved, and that the engagement declines were not meaningful," Wedbush analyst Michael Pachter said. "In other words, better quality engagement and better ability to target ads. The street probably likes that," he said. Facebook said that time spent was falling at the end of last year by about 50 million hours a day due to changes that it said reduced viral videos, even before the company announced a series of changes to the News Feed that may further reduce user engagement.
Facebook's 1.40 billion daily active users was up 14% from a year earlier, but below analysts' estimate of 1.41 billion for the fourth quarter, according to financial data and analytics firm FactSet. The number of daily users in the United States and
Canada fell for the first time in Facebook's history, dipping in the company's home market by 700,000 from a quarter earlier to 184 million. Wehner said the number would"fluctuate" in the future.
Total revenue, though, showed little impact, rising 47% to $12.97 billion and beating analysts' estimate of $12.55 billion, according to Thomson Reuters I/B/E/S. Wehner reiterated Facebook's earlier guidance on expenses, telling analysts on the call that expenses wouldlikely grow 45% to 60% during 2018. The spending spree includes thousands of new workers to review content posted by users. The overhaul of Facebooks New Feed was prompted in part by its disclosure last year that Russian agents used Facebook to try to sway American voters from 2015 to 2017, an allegation that Moscow denies. Facebook said 126 million Americans may have seen Russian-backed
political ads and posts.
In the fourth quarter, net income attributable to Facebook shareholders rose to $4.27 billion, or $1.44 per share, in the fourth quarter ended Dec. 31 from $3.56 billion, or $1.21 per share, a year earlier. Excluding a tax provision, the company earned $2.21 per share, topping analysts estimates of $1.95, according to Thomson Reuters I/B/E/S. Facebook said it increased its provision for 2017 income taxes by $2.27 billion, citing U.S. tax changes. Facebook said that time spent was falling at the end of last year by about 50 million hours a day due to changes that it said reduced viral videos, even before the company announced a series of changes to the News Feed that may further reduce user engagement.
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