Facebook’s share price rose more than 6% after close of trading on Wednesday after the company released its earnings for the first quarter, beating Wall Street’s earnings and revenue expectations.
Here’s how the social media giant performed in the quarter compared to the estimates made by Refinitiv:
- Merits: $ 3.30 per share versus a forecast of $ 2.37 per share
- Revenue: Expected $ 26.17 billion versus $ 23.67 billion
- Daily active users (DAUs): 1.88 billion versus 1.89 billion forecast by FactSet
- Monthly Active Users (MAUs): 2.85 billion versus 2.86 billion forecast by FactSet
- Average Revenue Per User (ARPU): $ 9.27 versus $ 8.40 forecast by FactSet
The company had revenue of $ 26.17 billion for the quarter, up 48% year over year. Facebook net income rose 94% from $ 4.9 billion a year ago to $ 9.5 billion.
Facebook attributed the significant increase in sales to a 30% increase in the average price per ad compared to the previous year and a 12% increase in the number of ads served.
Facebook expects revenue growth to remain stable or accelerate slightly in the second quarter compared to slower growth last year due to the pandemic. However, the company expects revenue growth to slow significantly sequentially in the third and fourth quarters compared to the rapid growth seen in those periods a year earlier as a result of the pandemic.
In addition, the company is preparing for “ad targeting headwinds” due to regulatory and platform-related challenges. Specifically, this includes Apple’s recent privacy changes in iOS 14 that may make it difficult for the company to personalize ads for iPhone and iPad users. This change in iOS 14 will affect Facebook’s ad targeting starting in the second quarter.
Mark Zuckerberg, CEO of Facebook, spoke about the company’s focus on building e-commerce capabilities as a key element in delivering a “personalized” experience for users. Zuckerberg also announced that the company now has more than 1 billion monthly active users visiting Facebook’s marketplace service, where users can buy and sell goods.
“Trade in our services has been growing for some time, but it has become much more important as the pandemic accelerated a wider shift towards online businesses,” Zuckerberg said.
Expanding payment technology, including Novi’s digital currency and digital wallet, will be key to enabling more trading on Facebook’s services, Zuckerberg said, and hopes these technologies will be rolled out soon.
“Trading on all of these platforms will be very important, and we certainly want to make payments very easy in a platform that we are building so that the economics work for developers,” said Zuckerberg.
Zuckerberg also reiterated a number of new features the company is creating for Instagram developers to make money. He said these features would encourage developers to post more content on Instagram.
“If we become the best place for creators to make a living, it means there is better content in the services and better ways to build communities and engage people,” said Zuckerberg. “And we’ll take care of that.”
Facebook’s stock rose slightly after Zuckerberg commented on these developer’s upcoming features.
According to its own information, Facebook has 3.45 billion users per month in its app family, compared with 3.30 billion in the previous quarter. This metric is used to measure the entire user base of Facebook through the main Instagram, Messenger and WhatsApp app.
In the US and Canada, Facebook’s user base was unchanged at 195 million daily active users for the second straight quarter. The user base in Europe increased from 308 million in the fourth quarter to 309 million daily active users.
Facebook “Other” revenue for the quarter was $ 732 million, up 146% year over year. This accounted for nearly 3% of Facebook sales for the quarter. This includes sales of Oculus virtual reality headsets and portal video chat devices.
The company also expects its investments to be between $ 19 billion and $ 21 billion in 2021, down from its previous estimate of $ 21 billion to $ 23 billion.