Facebook Posts Revenue Growth Despite Pandemic--Update
30 Luglio 2020 - 11:41PM
Dow Jones News
By Jeff Horwitz
Facebook Inc. powered through the throes of the pandemic, as the
social-media giant posted higher revenue thanks to increased
engagement from users.
The company, nonetheless, posted a significant decline in its
revenue growth rate and warned that growth will remain muted going
forward amid continued economic fallout from the pandemic, an
advertiser boycott and reduced efficacy of ad targeting.
Facebook brought in $18.7 billion in revenue in the quarter, up
from $16.9 billion a year earlier and beating analyst expectations
of $17.34 billion, according to data from FactSet. The 11% growth
is a deceleration from the average gains of nearly 25% annual
growth that the company had posted over the last four quarters.
Earnings rose to $5.18 billion, or $1.80 a share, compared with
the $3.96 billion, or $1.39 a share, expected by analysts. Facebook
shares gained more than 7% in after-hours trading.
The results once again show the resilience of Facebook's
business even as it is buffeted by one controversy after another.
Facebook chief Mark Zuckerberg was one of four major tech
executives to testify before Congress on Wednesday in a hearing
about whether their companies have accumulated too much power.
The recent quarter was the first to reflect the full weight of
the coronavirus pandemic in the U.S. that upended normal economic
activity but contributed to rising usage of Facebook's products.
Average monthly users of the Facebook platform rose to 2.7 billion,
from 2.6 billion in the first quarter. More than three billion
people now use at least one of Facebook's products on a monthly
basis.
The numbers "reflect increased engagement as people around the
world sheltered in place," the company said in announcing the
results. The company said it expected the intensity of the usage to
ease as such restrictions decline in coming quarters.
Facebook had joined other social media companies in predicting
that pandemic fallout would damp its near-term prospects. It said
that in the first weeks of the third quarter revenue has grown at a
10% clip year over year, a rate it predicted it would hold through
September. The forecast reflected uncertainty about the economy,
the current boycott and limitations on Facebook's ad targeting
business imposed by California's data privacy law, which became
enforceable at the beginning of this month. Facebook has not
traditionally offered such guidance.
The ad boycott, which was rooted in frustrations from civil
rights groups about how Facebook handles hate speech, began in July
and thus was not reflected in the second-quarter results. The
monthlong boycott is scheduled to end Friday though some
advertisers may continue to pause or reduce spending on Facebook's
platforms.
Facebook's nonadvertising business, which includes its
virtual-reality division, Oculus, as well as Portal, its home video
calling device, was an exception to the reduced growth, with sales
up 40% year over year. Advertising still accounts for 98% of
Facebook's revenue.
The company's gross margin, 32%, rose 1% from the first quarter
and was up from 27% a year ago. Mr. Zuckerberg had predicted that
the margin would drop throughout 2020 as the company used its
financial strength to invest in new products and employees.
Over the last few months, the company has rushed to release new
products in major markets, including a customizable shopping
feature aimed at small business, a video chat product called Rooms
and Instagram Reels, which copies many of the features popularized
by rival social media platform TikTok.
Mr. Zuckerberg has said that he expects the pandemic will
ultimately shift consumer behavior as they spend more of their
lives online in ways that will likely benefit Facebook in the
long-run.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com
(END) Dow Jones Newswires
July 30, 2020 17:26 ET (21:26 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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