(Reuters) – Facebook Inc (FB.O) beat analyst estimates for quarterly revenue on Thursday as companies used their digital advertising tools to take advantage of a surge in online traffic during the coronavirus pandemic, even as they cut marketing budgets elsewhere.
FILE PHOTO: A 3D printed Facebook logo seen on a keyboard is seen in this illustration taken on March 25, 2020. REUTERS / Dado Ruvic / Illustration / File Photo
Shares in the world’s largest social network rose 7% in extended trading.
Revenue growth was the slowest of all time as a public company, at 11%, although it exceeded analyst expectations that it would sink to 3%, according to IBES data from Refinitiv.
Ad sales, which contribute almost all of Facebook’s revenue, increased 10% to $ 18.3 billion in the second quarter. Monthly active users increased to 2.7 billion, above estimates of 2.6 billion.
Facebook projected that third-quarter ad revenue is also expected to grow faster than Wall Street estimates, despite an unprecedented ad boycott in July that attracted support from companies like Unilever (ULVR.L), Starbucks Corp (SBUX.O) and Coca-Cola Co (KO.N)
Only around 1,100 companies joined the boycott to pressure the social network to take further action against hate speech, from millions of Facebook advertisers. Although some were among the company’s largest single spenders, most of Facebook’s advertising revenue comes from small businesses.
The company’s ad sales in the first three weeks of July grew 10% year-over-year, in line with the second-quarter rate, he said. He predicted that growth in advertising revenue in the third quarter would be consistent with July’s performance.
Investors braced for difficulties in the second quarter, which was the first to reflect the full impact of virus-related crashes. Facebook said in April that it was seeing signs of sales stability in the first three weeks of the quarter after a decline in March.
Debra Aho Williamson, principal analyst at eMarketer, said she believed the Facebook Instagram unit played an “important role” in helping the company resist the effects of the pandemic.
“Facebook has successfully attracted digital native companies to its platform, especially those that market products or services that can be used or consumed by people who stay home,” he said.
“Although Facebook does not publish details on Instagram’s revenue, we believe that Instagram has quickly contributed to the company’s total revenue, and that its success is helping to propel Facebook as a whole.”
Revenue growth on Facebook, the world’s second-largest online ad seller after Alphabet Inc (GOOGL.O) Google had been cooling down even before the pandemic as its business matured, although it still reached over 20% throughout 2019.
Alphabet’s shares rose 1% after the company posted revenue and earnings that exceeded expectations but not a fantastic amount. Its quarterly sales fell for the first time in its 16 years as a public company.
Chief Executive Mark Zuckerberg said in April that Facebook would control costs this year in response to the pandemic, without “slamming on brakes” on strategic investments.
Total costs and expenses increased 4% to $ 12.7 billion in the second quarter, compared to the $ 12.5 billion that analysts had forecast.
Net income reached $ 5.2 billion, or $ 1.80 per share, in the three months ended June 30. They had been $ 2.6 billion a year earlier, reflecting a $ 2 billion charge related to Facebook’s privacy agreement with the Federal Trade Commission.
Analysts had expected a profit of $ 1.39 per share.
Reports from Katie Paul in San Francisco and Subrat Patnaik in Bangalore; Editing by Maju Samuel and Matthew Lewis
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