Facebook hit an unhappy milestone: Its days of double-digit user growth and 50% revenue gains are over

Mark Zuckerberg.JPGFacebook CEO Mark Zuckerberg.Reuters

  • Facebook impressed Wall Street with a solid set of fourth-quarter earnings following a troubled 12 months.
  • But take a step back, and Facebook had its slowest year of growth since its IPO in 2012.
  • The days of 50% increases in revenue and double-digit user growth look to be over.
  • Facebook knows this, and it's talking up new ad products and is going to start obfuscating user numbers.
  • Despite its difficulties, Facebook services are used by more than a third of the world's population.

Revenue up, users up, investors happy. That was the story of Facebook's fourth-quarter earnings, capping a year in which the social network has been tormented by a string of ugly scandals.

Wall Street purred at the update. Piper Jaffray called it the "antidote" to a barrage of bad news, while Barclays said it was the kind of earnings that "turns the narrative."

Facebook's resilience is remarkable. Amid the demands of the "#deletefacebook" brigade, and panic that advertisers might flee because of disasters like the Cambridge Analytica data breach, monthly active users climbed to 2.3 billion and revenues were up 37% to $55.8 billion year-on-year.

But take a step back and look at the bigger picture, and you'll see that Facebook had its slowest year of growth since its IPO in 2012. This could be a reflection of Facebook's troubles, or it could be a sign that the social network's days of rocket ship growth are now consigned to history.

Here's how Facebook's year-on-year revenue stacks up:

2018: $55.83 billion (up 37%)
2017: $40.63 billion (up 47%)
2016: $27.63 billion (up 54%)
2015: $17.93 billion (up 44%)
2014: $12.47 billion (up 58%)
2013: $7.87 billion (up 55%)

2012: $5.08 billion (up 37%)

Its 37% growth in 2018 matched 2012, a period in which Facebook was desperately trying to figure out how it was going to make money from its giant user base. That puzzle slotted into place in later years, when Facebook's sophisticated ad-targeting tools kicked into gear, but growth has slowed again since 2016.

It is a similar story for Facebook monthly active users:

2018: 2.32 billion (up 9%)
2017: 2.13 billion (up 14%)
2016: 1.86 billion (up 17%)
2015: 1.44 billion (up 21%)
2014: 1.19 billion (up 26%)
2013: 1.23 billion (up 16%)
2012: 1.06 billion (up 25%)

The days of double-digit growth look to be over. The pattern is almost identical for daily active users, which, like monthly active users, grew 9% to 1.52 billion in 2018 - the only single-digit increase since Facebook went public.

Facebook is switching focus

The rocket ship is still going, but it's slowing down.

On revenue, Facebook is trumpeting the increasing importance of Stories as a paradise for advertisers away from the Newsfeed, which is where the firm generates the vast majority of its income.

Read more: Facebook's expenses rocketed by a massive $10 billion, partly because it's costing so much to clean up its platform

During an earnings call on Wednesday, COO Sheryl Sandberg revealed that 2 million advertisers are now buying Stories ads across Facebook properties. "These green shoots bode well for long-term ad revenue growth," analysts at Morgan Stanley said in a note to clients.

Facebook is also pulling a lever on user numbers.

A little like Apple stopped reporting iPhone unit sales last quarter, Facebook will at some point stop talking about how many people use its main social network, known internally as the "blue app." Instead, Facebook will report an overall number of users for its "family" of services.

"For the time being, we will continue to disclose both sets of numbers, but over time we expect family metrics will play the primary role in how we talk about our company, and we will eventually phase out Facebook-only community metrics," said Facebook Chief Financial Officer Dave Wehner.

Right now, Facebook's total "deduplicated audience" across all of its services stands at 2.7 billion, the company announced. Facebook's growth may be slowing, but its services still sit in the pockets of more than a third of the world's population.

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