Facebook Inc (FB) Overrun Market Expectations Again With Splendid Fourth Quarter 2014 Financial Results, Heightened Expenses Drag Share Prices

The world’s biggest social networking company, Facebook Inc (NASDAQ:FB), once again exceeded the market expectations with its fourth quarter 2014 and fiscal 2014 financial results. The tech company reported 58 percent growth in its annual revenue in 2014 but heightened expenses kept share prices doodling after the announcement.

Facebook reported 1.39 billion monthly active users at the end of December 2014, which is just shy of the population of China. The social network company achieved 49 percent growth in its quarterly revenue at $3.85 billion as compared to the previous year quarter. At the same time, the annual revenue of Facebook Inc (NASDAQ:FB) jumped 58 percent reaching $12.47 billion for fiscal 2014.

Mark Zuckerberg, CEO of Facebook, said, “We got a lot done in 2014. Our community continues to grow and we’re making progress towards connecting the world.”

Facebook (FB)

One of the most important things to consider is that mobile advertising revenue accounted for 69 percent of overall advertising revenue. However, the operating expenses of the social network company reached overwhelmingly higher levels with GAAP costs and expenses of $2.72 billion, which was 87 percent higher than previous year quarter.

Ben Schachter, Macquarie Research, said that the operating costs are “ramping up faster than we would have liked.” Facebook Inc (NASDAQ:FB) crossed market’s expectations of quarterly revenue of $3.77 billion and unlike the analysts’ expectations of earnings at 49 cents per share, the company reported earnings of 54 cents per quarter. Net GAAP income for the fourth quarter was $701 million exceeding the previous year quarter income by 34 percent.

The social media company spent $517 million in capital expenditures in the quarter. The GAAP operating margin of Facebook Inc (NASDAQ:FB) fell 15 percent to reach 29 percent in the quarter as compared to the previous year quarter. The overall operating margins were higher for 2014 at 40 percent as compared to 36 percent in 2013.

This article has been written by Prakash Pandey.

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