Facebook (FB) posted solid third-quarter results across all key performance metrics: revenue growth, user growth, engagement, and monetization. Additionally, the company broadly opened up Instagram ad inventory to all marketers during the quarter, contributing to Facebook's reign as a dominant mobile advertising platform. We reiterate our wide moat rating and consider Facebook one of the highest-quality businesses in the Internet sector. Although we anticipate a modest increase to our fair value estimate, we consider the shares fairly valued and would not recommend investment at this time.
Revenue grew 41% versus the year-ago quarter (51% in constant currency) to $4.5 billion, in line with our internal estimate, driven by advertising revenue, which grew 45%. The strong performance can be attributed to yet another quarter of strong user growth (17% growth in daily active users), increasing revenue per user (24% year over year), with notable monetization improvements in the United States and Canada. Operating margins declined to 32% from 44%, but we had already factored in increased research and development expenses based on management guidance. We continue to model long-term GAAP operating margins in the mid-40s as the company's rapid revenue growth outpaces expense growth again in 2016.