Facebook Company's Stock Surge After Q2 Report Shows More Than 10% Revenue Growth Amid Pandemic

On Thursday, Facebook (FB) submitted its second-quarter earnings report which revealed that for the first time since its IPO in 2012, the company is experiencing very slow revenue growth. However, despite the setback, the company was able to record more than 10% revenue growth and also beat analyst estimates. Below is a breakdown of what Facebook recorded in its second-quarter earnings report. 

  • Earnings: $1.80 vs. $1.39 per share as estimated by Refinitv
  • Revenue: $18.7 billion vs. $17.4 billion as estimated by Refinitiv
  • Daily active users (DAUs):  1.79 billion vs. 1.7 billion as estimated by FactSet
  • Monthly active users (MAUs):  2.7 billion vs. 2.6 billion as estimated by FactSet
  • Average revenue per user (ARPU): $7.05 vs. $6.76 as estimated by FactSet.

In the report, Facebook revealed that its consumers' engagement increased tremendously. According to the company, this is as a result of the stay at home order which gave a lot of people time to engage more on social media platforms. 

"We are seeing signs of normalization in user growth and engagement as shelter-in-place measures have eased around the world, particularly in developed markets where Facebook's penetration is higher," the company said in the statement.

Aside from an increase in engagement, Facebook also recorded a good revenue per user. This shows that, when it comes to big brand advertising, the company has continued to maintain its pricing power. 

In the report, Facebook revealed that its active users from the US and Canada increased from the 195 million daily users it reported a quarter earlier to 198 million daily users.  However, Europe maintained its 305 million daily active users. There was no increase or decrease. 

Also, Facebook said the number of monthly users increased from 2.99 billion in the last quarter to 3.14 billion. This metric is used to measure the company's total user both on its other platforms like Instagram and WhatsApp.

Meanwhile, Facebook Chief Financial Officer, David Wehner said the company expects a decrease in its daily and monthly users, especially in countries that are beginning to relax the stay-at-home order and increase its business activities. 

The company's forecast that its third-quarter revenue growth would be an increase of about 10%  beating analyst estimation of 7.9%. 

Facebook said in its forecast, it also considered some of the situations the company is currently facing. These include ad boycott, economic volatility, regulation around targeting, and changes to Apple's upcoming iOS 14 operating system. According to Wehner, the new change in Apple's operating system can affect the company's targeting ability. 

In mid-June, activists urged all big companies that run their advertisements on Facebook to suspend their activities. Part of the reason for this is because Facebook was said to have been promoting hate speech and other activities. Among the companies that participated in the protest is Coca-Cola, Starbucks, and Volkswagen. Facebook revealed that in the first few weeks of July when the protest was on the rise, it was able to get a year-over-year revenue growth of 10%. 

Furthermore, Facebook made about $360 million in other revenue, which is a 40% increase when compared to its last report. The company's other revenue includes the sales of Oculus virtual reality headsets and the Portal video-chatting devices. 

Meanwhile, the company's total expenses, excluding its recent settlement of the Federal Trade Commission, increased by 24% when compared to last year's report. Though the increase in the expenses was a little bit higher than the company's first report, Wehner said the reason for this is because of the decrease in traveling and an increase in employees working from home. 

Facebook's second-quarter earnings report came a day after Mark Zuckerberg's testimony before the House Antitrust Subcommittees. Aside from Facebook CEO, other persons included in the Antitrust investigation include CEOs of Amazon, Apple, and Google. During the hearing, Mark Zuckerberg was criticized for acquiring Instagram and WhatsApp and for copying snap. 

However, after the Q2 earnings report on Thursday, Facebook company's stock increased by about 14% closing at $252 in extended trading. 

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