Facebook reported third-quarter revenues up 35 percent year-on-year to USD 29.0 billion, a slowdown from the previous period in line with its warning over an increasing effect on ad revenues from Apple's changes to iOS. The company said Q4 will be impacted as well, with estimated revenues of USD 31.5-34 billion in the final quarter of the year. It also forecast a sharp rise in costs next year to support investment in its VR business and infrastructure.
Operating profit rose 30 percent to USD 10.4 billion in Q3, and the social media company's margin dropped to 36 percent from 37 percent a year ago. The net result was a profit of USD 9.2 billion, up 17 percent year-on-year, and EPS rose 19 percent to USD 3.22. Facebook spent USD 14.4 billion buying back its own shares in the quarter.
User numbers up
Facebook daily active users continued to grow, increasing 6 percent from a year earlier to 1.93 billion. Monthly active users rose at the same rate to 2.91 billion.
Across all the group's apps, including WhatsApp and Instagram, daily active users increased 11 percent year-on-year to 2.81 billion in September, and monthly active users were up 12 percent to 3.58 billion.
More spending on Facebook Reality Labs
Facebook said it will start pulling out results for Facebook Reality Labs from Q4, to underline its plans to invest heavily in the VR/AR business. Separate figures will be reported for its 'Family of Apps'.
Overall spending on Facebook Reality Labs is expected to depress operating profit by USD 10 billion in 2021, the company said. "We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years," it added. Historical figures for the business will be released prior to reporting Q4 results.
Facebook's outlook reflects the "continued headwinds" from Apple's changes to advertising on iOS 14, as well as macroeconomic and Covid-related factors. In addition, Facebook expects non-ads revenue to be down year-over-year in the fourth quarter after the strong launch of the Quest 2 headset in the period last year. Other risk fears include the ongoing uncertainty over trans-Atlantic data transfers.
Higher capex, expenses in 2022
While revenues are under pressure, expenses are expected to come in at the low end of the previous guidance, at USD 70-71 billion in the full year 2021. These are expected to shoot up to USD 91-97 billion in 2022, driven by investments in technical and product talent and infrastructure-related costs, Facebook said.
Capital expenditure is also projected to rise sharply in 2022, to USD 29-34 billion from an estimated USD 19 billion this year. The increase is driven by spending on data centres, servers, network infrastructure and office facilities.
