Facebook revenue rises 48%, driven by higher-priced ads

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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 forecastRevenue: $26.17 billion vs. $23.67 billion expectedDaily active users (DAUs): 1.88 billion vs. 1.89 billion forecast by FactSetMonthly active users (MAUs): 2.85 billion vs. 2.86 billion forecast by FactSetAverage revenue per user (ARPU): $9.27 vs. $8.40 forecast by FactSet

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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.

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