Source: Facebook.

Shares of Facebook (NASDAQ:FB) were falling by nearly 2.5% on Wednesday after the close, as investors reacted with negativity to the company's earnings report for the fourth quarter of 2014. However, the numbers weren't as bad as the market reaction could indicate. Far from that, in fact. Facebook is doing better than well.

Strong sales numbers
Total sales during the quarter came in at $3.85 billion, a 49% increase versus $2.59 billion in the fourth quarter of 2013. Excluding the impact of foreign exchange rate fluctuations, revenue growth would have been 53%. The number came in above Wall Street forecasts, as analysts were expecting $3.77 billion in sales. The company's guidance was for an increase of between 40% and 47%, so revenue growth was also stronger than Facebook's own guidance.

Sales from advertising were $3.59 billion, a 53% year-over-year increase. Excluding the impact of foreign currency volatility, advertising sales grew 58% versus the same period in 2013.

Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, a big increase versus 53% of advertising revenue that came from mobile in the fourth quarter of 2013. This is a big plus in the report. Since most of the growth in the industry is coming from mobile, it's nice to see that Facebook is performing soundly in this crucial segment.

Payments and other fee revenue amounted to $257 million, a small 7% increase versus the December quarter in 2013.

Facebook has new friends
Monthly active users were 1.39 billion on average during December, a 13% year-over-year increase. This is a marginal deceleration versus a 14% increase in the third quarter of 2013, but nothing too worrisome.

Daily active users were 890 million, an 18% annual increase. In the third quarter, the company reported a 19% year-over-year increase in daily active users. Again, the deceleration in growth doesn't look like the end of the world by any means.

Users are increasingly engaging with Facebook with mobile devices. Mobile daily active users stand at 745 million, a 34% year-over-year increase, while mobile monthly active users grew 26% to 1.19 billion.

Facebook has reached tremendous scale, and it's naturally challenging for the company to sustain user growth as it expands into more unfriendly markets, such as countries with relatively low Internet penetration rates and other drawbacks. With this in mind, it should come as no big surprise to see some kind of slowdown in user growth.

In spite of these factors, growth rates remain quite impressive considering the conditions, and rising engagement levels bode well in terms of evaluating users' interest in the platform.

Solid profits
GAAP costs and expenses during the quarter were $2.72 billion, a big 87% increase from the same quarter in the prior year. Excluding amortization of intangible assets, share-based compensation, and related payroll tax expenses, non-GAAP costs and expenses were $1.63 billion in the quarter, up 50% year over year.

Management had previously warned about rising cost pressures from the WhatsApp acquisition and the impact of stock-based compensation in the fourth quarter. Still, the increase in costs during the quarter was quite substantial, showing that Facebook is actively putting its money to work on different kinds of initiatives.

GAAP operating margin was 29% of revenues, a big decline versus 44% of sales in the fourth quarter of 2013. Excluding amortization of intangible assets, share-based compensation, and related payroll tax expenses, non-GAAP operating margin was a much stronger 58% during the quarter, flat versus the same quarter in 2013.

GAAP income from operations was $1.13 billion, flat year over year. Excluding amortization of intangible assets, share-based compensation, and related payroll tax expenses, non-GAAP income from operations during the quarter was $2.22 billion, up a healthy 48%.

Adjusted earnings per share during the fourth quarter of 2014 came in at $0.54, rising 69% versus the year-ago quarter and beating analysts' expectations, as Wall Street analysts were on average expecting $0.48 per share.

Both revenues and earnings came in ahead of expectations, and Facebook is still attracting more users, even if user base growth is understandably slowing down a little bit. Even if the market doesn't seem much impressed with Facebook's latest earnings report, the company's performance during the last quarter was broadly solid.