Facebook smashed analysts' earnings estimates in the first quarter of the year, shaking off "fake news" controversy and posting revenue that topped estimates.
The company added 80 million monthly users in the first few months of the year, as ad revenue popped 51 percent from a year ago.
But shares dipped in after-hours trade, as investors digested a new format for the company's earnings report. Facebook said it is no longer reporting adjusted expenses, income, tax rate, and earnings per share that are not in line with generally accepted accounting principles.
"Given that stock is an important part of our compensation structure, we believe that investors should focus on our financial performance with stock-based compensation included," chief financial officer David Wehner told analysts on a conference call on Wednesday.
- GAAP EPS: $1.04 per diluted share vs. 87 cents expected by a Thomson Reuters consensus estimate
- Revenue: $8.03 billion vs. $7.84 billion expected by a Thomson Reuters consensus estimate
- Monthly active users: 1.94 billion vs. 1.91 billion expected by StreetAccount
- Daily active users: 1.28 billion vs. 1.26 billion expected by StreetAccount
That's way up from first-quarter earnings of 60 cents per diluted share, by generally accepted accounting principles, on revenue of about $5.38 billion in the year-ago period.
While Facebook is already on to "Act Two," Wall Street looks at the bottom line
"We had a good start to 2017," Zuckerberg said in a statement with Wednesday's earnings release. "We're continuing to build tools to support a strong global community."
The social media platform makes most of its money by connecting advertisers to its massive user base. It earned $7.86 billion in advertising revenue, up 51 percent from a year ago, and higher than the $7.68 billion expected by a StreetAccount estimate. Average revenue per user was $4.23, higher than the $4.17 expected by StreetAccount.
Daily watch time of live video has quadrupled since last year, Zuckerberg told analysts on a conference call on Wednesday.
But the hot streak may not last much longer, if warnings from prior quarters are any indication.
Increasing ad load — the number of ads on the website — has been one of three main factors of Facebook's growth, along with user growth and increasing time spent on the platform, Wehner said in November. But ad load could "come down meaningfully" after mid-2017, Wehner said at that time.
And accusations of promoting fake news and extreme videos have weighed on the company.
Zuckerberg vowed on Wednesday ahead of earnings to hire thousands of workers over the next year to monitor sensitive content, after gruesome and violent acts have been streamed on Facebook Live.
Costs rose 40 percent to about $4.71 billion, up from just $3.37 billion a year ago, as headcount ballooned 38 percent from a year ago.
Facebook also has some prominent new competition from a year ago: Snap (NYSE: SNAP), which went public this spring. The company has unleashed a string of rival tools to compete with Snap's ad dollars.
New research released on Wednesday by App Annie shows that many Snap users — 35 percent — cannot be reached on Facebook on any given day. The figures are even higher — 46 percent and 58 percent, respectively — for Facebook's Instagram and Messenger.
Still, more Facebook users are accessing the site on mobile than last year. Eighty-five percent of ad revenue for the first quarter was mobile, up from 82 percent a year ago, Facebook said. Instagram stories also has 200 million daily active users, and WhatsApp Status has 175 million daily active users, Zuckerberg said.
Then there's Oculus, Facebook's virtual reality company that has shuffled its key workers amid scandals. Co-founder Palmer Luckey has left the company , and Oculus is on the hook for $500 million after losing a key lawsuit.
It's also been a year since Facebook unveiled an unusual new share structure, which would potentially allow Facebook CEO Mark Zuckerberg to sell some of his shares while still maintaining control of the company.
More From CNBC