UPDATE 1-Facebook operating margins decline as costs surge, shares fall

(Adds estimates, details on operating margin)

Jan 29 (Reuters) - Facebook Inc beat analysts' estimates for daily active users on Wednesday, but shares fell as operating margins dropped for the world's largest social network after it ramped up spending to improve content and security across its platforms.

Shares were down 5% in extended trading.

Total costs and expenses surged a higher-than-expected 34% to $12.22 billion in the fourth quarter, dragging down operating margins to 42% from 46% a year earlier.

Facebook has faced scrutiny over the past three years from regulators and users worldwide over its privacy practices and data breaches. It is also facing the heat over how its services have been allegedly used to spread misinformation.

Daily active users rose to 1.66 billion, ahead of estimates of 1.65 billion, according to IBES data from Refinitiv.

Ad sales jumped 25% to $20.74 billion in the quarter, above analysts' average estimate of $20.52 billion, according to IBES data from Refinitiv.

Net income rose to $7.35 billion, or $2.56 per share, in the three months ended Dec. 31, from $6.88 billion, or $2.38 per share, a year earlier.

Analysts had expected a profit $2.52 per share, according to IBES data from Refinitiv.

Total revenue rose 24.6% to $21.08 billion, beating estimate of $20.89 billion.

(Reporting by Munsif Vengattil in Bengaluru and Katie Paul in San Francisco; Editing by Sriraj Kalluvila)

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