Facebook has said the changes it is making to its news feed have reduced the amount of time people spend on the site and contributed to a quarterly decline in users in the US and Canada.
The firm has been pursuing the changes amid increasing scrutiny of its ad business, role in political campaigns and broader social impact.
But boss Mark Zuckerberg said the tweaks would help the firm long-term.
He called 2017 “a strong year … but … also a hard one”.
The firm’s revenue soared 47% last year to more than $40bn (£28.2bn), while profits jumped 56% to nearly $16bn.
The gains came despite an unexpected $2.3bn tax payment due to the new US tax law, which included a one-off tax on overseas profits.
The figures underscored the firm’s strong financial position, despite the criticism it is facing.
Mr Zuckerberg said the company was making changes to ensure time spent on the network was “more meaningful”.
He said the changes, which include showing fewer viral videos, had already reduced time spent on Facebook by about 5% or roughly 50 million hours a day.
Facebook also said its user growth had cooled slightly from its last update.
The firm reported an average of 1.4 billion daily active users and about 2.13 billion monthly active users in December.
Those figures were 14% higher than in December 2016, but had increased 16% year-on-year in September.
In the US and Canada, the changes resulted in an average of about 700,000 fewer people using Facebook each day.
Analysis: By Dave Lee, BBC North America technology reporter, San Francisco
There are politicians, academics and even former executives lining up to tell Facebook what’s wrong with it, but Mark Zuckerberg has only ever trusted his own data.
And so these tweaks to the News Feed, above all else, are a result of what Facebook’s engineers have seen for themselves.
Mr Zuckerberg’s (pretty convincing) argument is that by not fixing the News Feed, the long-term health of the company could be in jeopardy – not because of Russian propaganda or fake news, but because it just won’t be fun or useful to use.
The 33-year-old is again warning investors that it’s going to take time to heal the News Feed, making it a better place for you and for me – and then eventually, he hopes, advertisers and businesses.
What we need to look out for is investors’ patience with him. Over the past two years Facebook has consistently beat expectations, and it did again today, even with the caveats. Will Wall Street cut him some slack as a result?
“In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society,” he said in a statement.
“By focusing on meaningful connections, our community and business will be stronger over the long term.”
Daniel Ives, an analyst at GBH Insights, said the firm’s financial results were “robust” and described Facebook’s strategy as ‘the right medicine at the right time”.
“We believe this strategy will drive higher advertising pricing monetisation trends in the long-term for Facebook and was a move Zuckerberg & Co needed to make,” he said.
Facebook has been under pressure, as US lawmakers investigate the alleged use of the social media network for propaganda efforts.
Some have also urged the company to withdraw an app aimed at young children.
Mr Zuckerberg has previously pledged that the firm would invest more in security, among other initiatives, warning those moves could impact profitability.
Facebook shares fell by more than 4% in after-hours trade, despite strong growth.
The company reported fourth quarter revenue of nearly $13bn, up 47% from the same period in 2016. Profits were $4.3bn, up 20% year-on-year, after the tax hit.
Facebook said it expects to pay an effective tax rate of 23% in 2017, slightly higher than last year.
Though the US tax overhaul slashed the corporate rate, it also imposed a one-time mandatory tax on overseas profits.