By Jeff Horwitz 

Facebook Inc. posted diminished growth in the second quarter but revenue was still higher than expected, as the social-media giant benefited from higher engagement from users amid the pandemic.

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 sharp 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 5% in after-hours trading.

The 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.

Facebook had joined other social media companies in predicting that pandemic fallout would damp its near-term prospects, though Chief Financial Officer David Wehner said on the company's previous earnings call that the company had seen signs of stability during the first weeks of the second quarter, with gaming and e-commerce helping to fill the gap created by coronavirus-stricken industries like travel and hospitality.

The company's gross margin, 32%, rose 1% from the first quarter and was up from 27% a year ago. Chief Executive Mark Zuckerberg had predicted that the margin would drop throughout 2020 as the company used its financial strength to invest in as many as 10,000 new products and contribute to pandemic relief efforts.

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 16:47 ET (20:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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