Facebook clamped down on spending in a big way in the last three months of the year. The company's operating expenses as a percentage of revenue were down sequentially and year-on-year in all categories, as can be seen in the chart below.
The spending discipline no doubt helped Facebook deliver a big earnings upside, topping even the most bullish analyst earnings-per-share target during the fourth quarter and resulting in $1.5 billion in net income. While Facebook's total operating expenses increased to $3.28 billion in the fourth quarter, the rate of growth was significantly slower than it has been in the past.
Facebook's spending on operating expenses increased only 21% year-on-year during the final three months of the year, compared to the 68% spending increase it logged in the third quarter, and the more than 80% boost in spending that marked the first and second quarters of 2015.
What's interesting is that 2015 was supposed to be the year of investment for Facebook. The company had warned investors early on to expect a big uptick in spending, as it invested in new efforts like virtual reality and mobile messaging.
Clearly, something changed in the fourth quarter:
