Facebook reported a very solid first quarter, though figures were not quite as strong as in the previous quarter, helped again by ad revenues amid the virus pandemic and the consequent trend towards online commerce. Although the company expects sequential growth rates to ease going forward, it has raised its guidance for total expenses. CEO Mark Zuckerberg said the company will continue to invest “aggressively” into novel experiences, and namely into newer areas such as augmented and virtual reality, commerce and the creator economy.
Headwinds for ads growth could come from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which should start having an impact in the second quarter. Revenue increases are expected to slow in general in the second quarter, to stable or modestly higher growth, both on a quarter-on-quarter and year-on-year basis, as the sharp rise associated with the pandemic begins to taper off. For the third and fourth quarters of this year, Facebook expects revenue growth rates to “significantly” decelerate on a sequential basis. The company also noted continuing uncertainly around the viability of transatlantic data transfers in light of recent European regulatory developments.
Still, total expenses are now forecast at USD 70-73 billion, from the previous outlook of 68-73 billion. The money will go towards investments in technical and product talent, infrastructure and consumer hardware-related costs.
Revenues for the quarter climbed 48 percent from the year before to USD 26.17 billion, with advertising revenues advancing 46 percent to 25.44 billion, still benefitting from people moving more towards online commerce amid the virus pandemic. Ad growth was driven by a 30 percent increase in the average price per ad, and a 12 percent rise in the number of ads delivered. Prices will continue to fuel increases in ad revenue this year. Total costs and expenses went 25 percent higher to USD 14.79 billion, pushing the operating profit up 93 percent to USD 11.38 billion and lifting the net profit by 94 percent to USD 9.49 billion. Diluted earnings per share rose to USD 3.30 from 1.71.
The number of daily active users went 8 percent higher year-on-year to 1.88 billion, from 1.84 billion in the fourth quarter. Monthly active users advanced 10 percent to 2.85 billion, from 2.80 billion in Q4. The 'family' of services - Facebook, Instagram, WhatsApp and Messenger - attracted around 2.72 billion per day in March, up 15 percent from the year before and compared to 2.60 billion per day in December. Per month, the number advanced to 3.45 billion, from 3.30 billion in Q4 and up 15 percent from the year earlier.
Capex for Q1 climbed to USD 4.42 billion from 4.82 billion at end December. The company’s cash position rose to USD 64.22 from 61.95 billion quarter-on-quarter. Headcount increased by 26 percent to 60,654.
