Facebook joined its megatech peers in Apple, Microsoft and Alphabet in reporting a surge in revenue for the June quarter, but like another big tech stock – Netflix – the social media platform is really judged on one metric alone – users.
And there it disappointed with a 7.3% growth in monthly user numbers to 2.9 billion from a year ago against the more impressive 56% surge in revenue for the quarter.
Growth from the March quarter was weak – up from 2.85 billion. That’s a rise of less than 2%.
Adding to the pressures was an unexpected note of caution from the company in its outlook as the company again forecast a slowing in revenue growth in the quarters ahead.
Facebook said it expects “year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.” That was very similar to the forecast in April.
It’s because it saw strong growth in the final two quarters of 2020. The March quarter’s 48% revenue growth rate became 56% in the three months to June because growth in the first two quarters of last year was held down by the impact of Covid.
For example, revenue growth in the June quarter of last year was only 10% while monthly user numbers of 2.70 billion rose 12% from the June, 2019 quarter, helped by users being lockdown in many countries and who took to social media to keep in touch.
At 2.9 billion for the three months, markets should have been pleased (after all it is the biggest user figure for all social media platforms and easily ahead of YouTube in second) and yet Facebook shares fell 5% in after-hours trading after rising 1.5% in regular trading. The shares were down 3.8% in early Asian dealings on Thursday
Facebook reported total revenue of $US29.08 billion, up from $US18.32 billion in the same 2020 quarter while net profit jumped 101% to $US10.39 billion from $US5.178 billion.
The company pointed to a 47% increase in average price per ad, along with a 6% increase in the number of ads it delivered in the quarter.
Both figures represented topped forecasts because of higher digital ad revenue which helped drive Alphabet and Google quarterly performances to new highs (helped by a weak comparative base in the June, 2020 quarter).
“We had a strong quarter as we continue to help businesses grow and people stay connected,” CEO Mark Zuckerberg said in the earnings statement.
Facebook said in the second quarter it had 3.51 billion monthly users across its family of apps, up from 3.45 billion in the first quarter. This metric is used to measure Facebook’s total user base across its main app, Instagram, Messenger and WhatsApp. The figure in the June, 2020 quarter was 3.14 billion.
These are impressive numbers but there is no attempt to avoid double or triple counting among total user numbers.
Facebook had cash and liquid reserves of $US64 billion at the end of June, up from $US58.2 billion a year ago.
