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Wall Street Decides It Likes Facebook, Anyway (For Now!)

First look at Facebook Q4 earnings: Revenue of $1.59 billion and earnings of 17 cents per share.

The Street was expecting around $1.52 billion and 15 cents a share. Shares immediately headed down, so presumably investors wanted a bigger beat. They’ve dipped as low as 7 percent. And now, about 25 minutes after the release hit, they’re bouncing around in the negative 4 percent to 5 percent range. (Update: And now they’re back! Maybe the Facebook IR team has magical powers.)

FB Q4 results

Per usual, not a lot of detail in the press release (full text below), aside from user numbers and a few quick details. The only financial one of note: Mobile accounted for 23 percent of ad revenue, up from approximately 14 percent in Q3. Would have been nice to hear about Facebook Exchange, Sponsored Stories and other elements of the business, but we’ll assume that will come up in the call.

Overall ad revenue of $1.33 billion was up 41 percent year over year; Facebook says that if you factor out currency effects, it would be up 43 percent.

Facebook had 1.06 billion active users at the end of December, which means they generated $1.54 in revenue apiece in the last 3 months of 2012. A year ago that number was $1.38.

There don’t seem to be any particular red flags here; Facebook is growing revenue, and it’s growing mobile revenue, and expenses seem in line. So if you sold today, my best guess is that you wanted to see much more growth.

Maybe Mark Zuckerberg and/or Sheryl Sandberg can win you over during the earnings call. Check back at 5 pm ET, when my colleague Mike Isaac will be covering it live.

Here’s a handy guide from Citi analyst Neil Doshi that should (maybe?) provide some insight into the way investors will react to the numbers (click to enlarge):

Citi Facebook Q4 cheat sheet

Facebook Reports Fourth Quarter and Full Year 2012 Results

MENLO PARK, Calif. – Jan. 30, 2013 – Facebook, Inc. (NASDAQ: FB) today reported financial results for the fourth quarter and full year ended December 31, 2012.

“In 2012, we connected over a billion people and became a mobile company,” said Mark Zuckerberg, Facebook founder and CEO. “We enter 2013 with good momentum and will continue to invest to achieve our mission and become a stronger, more valuable company.”

Fourth Quarter and Full Year 2012 Financial Summary

Fourth Quarter 2012 Operational Highlights

Monthly active users (MAUs) were 1.06 billion as of December 31, 2012, an increase of 25% year-over-year
Daily active users (DAUs) were 618 million on average for December 2012, an increase of 28% year-over-year
Mobile MAUs were 680 million as of December 31, 2012, an increase of 57% year-over-year
Mobile DAUs exceeded web DAUs for the first time in the fourth quarter of 2012

Recent Business Highlights

Mobile revenue represented approximately 23% of advertising revenue for the fourth quarter of 2012, up from approximately 14% of advertising revenue in the third quarter of 2012
Facebook launched Graph Search Beta, a structured search tool that enables users for the first time to find people, places, photos and other content that has been shared on Facebook
Launched Facebook for Android 2.0, completely rebuilt to deliver improved stability and faster performance and opened Facebook Messenger to anyone with a telephone number

Fourth Quarter 2012 Financial Highlights

Revenue – Revenue for the fourth quarter totaled $1.585 billion, an increase of 40%, compared with $1.13 billion in the fourth quarter of 2011.
Revenue from advertising was $1.33 billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%.
Payments and other fees revenue for the fourth quarter was $256 million. As planned, in the fourth quarter of 2012 the company recognized revenue from four months of Payments transactions for accounting reasons detailed in our Form 10-Q filed on October 24, 2012. Adjusting for the $66 million of revenue in the extra month of December, Payments and other fees revenue would have been essentially flat year-over-year.

Costs and expenses – Fourth quarter costs and expenses were $1.06 billion, an increase of 82% from the fourth quarter of 2011. Excluding share-based compensation and related payroll tax expenses, non-GAAP costs and expenses were $849 million, an increase of 67%.

Income from operations – For the fourth quarter, GAAP income from operations was $523 million, compared to income from operations of $548 million for the fourth quarter of 2011. Excluding share-based compensation and related payroll tax expenses, non-GAAP income from operations for the fourth quarter was $736 million, compared to $624 million for the fourth quarter of 2011.

Operating margin – GAAP operating margin was 33% for the fourth quarter, compared to 48% for the fourth quarter of 2011. Excluding share-based compensation and related payroll tax expenses, non-GAAP operating margin was 46% for the fourth quarter, compared to 55% for the fourth quarter of 2011.

Income tax provision – The GAAP income tax provision for the fourth quarter was $441 million, representing an 87% effective tax rate. Excluding share-based compensation expense and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 41%.

Net income – GAAP net income for the fourth quarter was $64 million, compared to net income of $302 million for the fourth quarter of 2011. GAAP EPS for the fourth quarter was $0.03, compared to $0.14 for the same quarter in the prior year. Excluding share-based compensation and related payroll tax expenses, and income tax adjustments, non-GAAP net income for the fourth quarter was $426 million, or $0.17 per share, compared to $360 million and $0.15 per share for the same quarter in the prior year.

Capital expenditures – Purchases of property and equipment for the fourth quarter were $198 million. Additionally, $89 million of equipment was procured or financed through capital leases during the fourth quarter of 2012.

Cash and marketable securities – As of December 31, 2012, cash and marketable securities were $9.63 billion.

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