Facebook revenue rises 48%, driven by higher-priced ads
- Facebook beat on both earnings and revenue in Q1, and the stock rose as much as 6% after hours.
- The company attributed its massive revenue growth to a 30% increase in the average price per ad, as well as a 12% increase in number of ads shown.
- It also reduced its forecast for capital expenditures for the year to between $19 billion and $21 billion.
Facebook stock price was up more than 6% in after-hours trading on Wednesday after the company released its first-quarter earnings, beating Wall Street's expectations for earnings and revenue.
Here's how the social media giant fared in the quarter, relative to estimates compiled by Refinitiv:
- Earnings: $3.30 per share vs. $2.37 per share forecast
- Revenue: $26.17 billion vs. $23.67 billion expected
- Daily active users (DAUs): 1.88 billion vs. 1.89 billion forecast by FactSet
- Monthly active users (MAUs): 2.85 billion vs. 2.86 billion forecast by FactSet
- Average revenue per user (ARPU): $9.27 vs. $8.40 forecast by FactSet
The company reported revenue of $26.17 billion for the quarter, which was up 48% compared with a year prior. Facebook's net income grew 94% to $9.5 billion, from $4.9 billion a year prior.
Facebook attributed the significant increase in revenue to a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered.
Facebook said it expects its revenue growth to remain stable or accelerate modestly in the second quarter compared with slower growth a year prior due to the pandemic. The company, however, expects revenue growth in the third and fourth quarters to significantly decelerate sequentially compared with fast growth experienced during those periods a year prior as a result of the pandemic.
Additionally, the company is bracing for "ad targeting headwinds" as a result of regulatory and platform challenges. Most notably, this includes Apple's recent privacy changes in iOS 14 that may make it more difficult for the company to personalize ads for iPhone and iPad users. This iOS 14 change will begin having an impact on Facebook's ad targeting in the second quarter.
Facebook CEO Mark Zuckerberg talked about the company's focus on building e-commerce features as a key part of delivering a "personalized" experience to users. Zuckerberg also announced that the company now counts more than 1 billion monthly active users who visit Facebook's Marketplace service, where users can buy and sell goods.
"Commerce have been growing in our services for a while, but it has become a lot more important as the pandemic has accelerated a broader shift towards businesses moving online," Zuckerberg said.
Building out payment technology, including the diem digital currency and Novi digital wallet, will be key to enabling more commerce on Facebook's services, Zuckerberg said, adding that he hopes those technologies launch soon.
"Commerce across all these platforms is going to be very important, and certainly in a platform that we're building like this, we want to enable payments very easily to make it so the economics all work out for developers," Zuckerberg said.
Zuckerberg also reiterated a number of new features the company is building for Instagram creators to make money. He said those features will incentivize creators to post more content on Instagram.
"If we become the best place for creators to make a living that's going to mean that there's better content across the services and better opportunities for community building and engaging people," Zuckerberg said. "And that's what we care about."
Facebook's stock rose slightly following Zuckerberg's remarks on these upcoming creator features.
Facebook said it counts 3.45 billion monthly users across its family of apps, compared with 3.30 billion in the previous quarter. This metric is used to measure Facebook's total user base across its main app, Instagram, Messenger and WhatsApp.
In the U.S. and Canada, Facebook's user base remained flat at 195 million daily active users for the second consecutive quarter. Its user base in Europe increased to 309 million daily active users, up from 308 million in the fourth quarter.
Facebook's "Other" revenue came in at $732 million for the quarter, up 146% compared with last year. That accounted for nearly 3% of Facebook's revenue in the quarter. This includes sales of Oculus virtual reality headsets and Portal video-chatting devices.
The company also said it expects its 2021 capital expenditures to be in the range of $19 billion to $21 billion, which is down from the prior estimate of between $21 billion and $23 billion that it had provided.