Facebook Reports Second Quarter User Growth, Sales Exceeding Expectations

Facebook (FB) reported second-quarter results that easily beat estimates, further increasing its user base and ad business even during the pandemic and as the social media giant came under increased scrutiny for its policies on surveillance of harmful content on their platforms.

Facebook shares rose 5% in recent trades to $ 246.83, as of 4:09 pm ET after the results.

Here are the main metrics for the report, compared to the consensus estimates compiled by Bloomberg:

• Income: $ 18.69 billion vs. $ 17.31 billion expected and $ 16.89 billion Y / Y

• Earnings per share: $ 1.80 vs. $ 1.39 expected and 91 cents Y / Y

• Monthly Active Users (MAU): 2.7 billion vs. 2.63 billion expected and 2.41 billion Y / Y

• Daily Active Users (DAU): 1.79 billion vs. 1.74 billion expected and 1.59 billion Y / Y

In its launch on Thursday, Facebook recently noted that it “is seeing signs of normalization in growth and user engagement as safe-haven measures in place have declined worldwide, particularly in developed markets where penetration Facebook is bigger. “

Looking ahead, as shelter-in-place restrictions continue to ease, we expect the number of Facebook DAUs and MAUs to be flat or slightly lower in most regions in the third quarter of 2020 compared to the second quarter of 2020, “Facebook said.

Facebook’s quarterly results come as the company faces mounting protest from lawmakers, companies and constituents on multiple fronts, including on antitrust concerns and Facebook’s handling of disinformation and hate speech. The latter has acquired a new urgency as the next presidential elections rapidly approach.

In the past two months, a large number of large corporations have withdrawn ads from Facebook platforms in protest of the company’s complacency by leaving hate speech and misleading posts untagged and available on its site. So far, more than 1,000 companies and organizations, including Unilever, Clorox, Coca-Cola, Conagra Brands, and Ford Motor, have participated in the boycott, which runs through July.

Still, Facebook said Thursday that in the first three weeks of July, the company’s year-over-year ad revenue growth rate was roughly in line with its year-over-year 2020 ad revenue growth rate of 10%. .

“We expect our quarter-over-quarter ad revenue growth rate for the full quarter to the third quarter of 2020 to be more or less similar to the July performance,” Facebook said in a statement.

Facebook executives met with representatives of the Anti-Defamation League and the National Association for the Advancement of People of Color (NAACP) in early July to address their concerns about Facebook’s lax policies around problematic posts, though the meeting was later described as insufficient to promote any changes to the platform.

However, the advertisers participating in the boycott represent only a fraction of the more than 7 million advertisers Facebook has worldwide, and many of them comprise small businesses that rely on the platform for direct response marketing.

Meanwhile, on Wednesday, Facebook CEO Mark Zuckerberg appeared before Congress along with CEOs of Amazon, Apple and Alphabet to address concerns about Big Techs’ competitive tactics. Zuckerberg endured a particularly pointed line of questions from Rep. Jerry Nadler (D., NY), who argued that documents obtained by the United States House Judiciary antitrust subcommittee showed that Facebook bought Instagram in 2012 to remove a threat. potential business, in an “anti-competitive acquisition that antitrust laws were meant to prevent,” Nadler said.

On a broader scale, social media advertising platforms as a whole faced a tougher business outlook during the second quarter, with the coronavirus pandemic and business disruptions that led many companies to cut marketing spending. . Earlier this month, Twitter reported a 23% drop in ad revenue due to the pandemic, while Snap’s revenue growth slowed to 17% in the second quarter, a sizable slowdown from 44% growth in the first three months of the year.

The 10% growth in Facebook advertising revenue during the second quarter represented a slowdown from the 17% increase during the first quarter of this year.

Still, many investors have viewed Internet and software names as relatively more isolated from the direct impacts of the coronavirus pandemic and related closures, with technology names that far outperform the overall market. Facebook shares have increased approximately 14% during the year to date, outpacing the 0.5% increase in the overall market.

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