Facebook released its quarterly earnings for the first quarter, with a 17% increase in advertising revenue and a 102% increase in net income.
Facebook recorded an advertising revenue of US$17.44 billion [AU$26.7 billion], up from $14.9 billion during the same period in 2019. This increase in ad revenue comes during a period where digital ad spending across the industry was down due to the global quarantine protocols.
Measured performance and expenditure
The increase in Facebook‘s total revenue was coupled with a more measured increase in its costs and expenses during the quarter. It’s 2020 expenditures were at $11.84 billion, a measured increase from the previous year’s $11.76 billion.
Earnings per share also grew exponentially. Facebook’s price per share went up 101% from $0.85 to $1.71.
Stock prices reflected the news of the company’s positive performance report, recording a steady increase over the last few days that skyrocketed after the report was released.
Prices went up to $194 at the end of business day Wednesday, an increase of 6% from the previous day’s record.
– Revs. Beat $17.74B vs. $17.41B Est.
– EPS Misses $1.71 vs. $1.75 Est.
– Announces 2.6B monthly active users in Q1 pic.twitter.com/dDKBuoZcsh
— CNBC's Closing Bell (@CNBCClosingBell) April 29, 2020
Cautious second quarter
Facebook, however, cautioned that it was still preparing for the worst. It believes that if and when the global economic slowdown hits the company, it might hit hard.
The company’s press release says that:
“Our business has been impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook. We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the U.S. dollar.”
This didn’t stop financial institutions such as Credit Suisse and the Bank of America from endorsing the stock, according to Yahoo.
Credit Suisse attributed the company’s strong performance to its diversification. It specifically singled out the use of Instagram, along with its messaging properties, as a strong indicator of how Facebook is adapting to survive during the time of Covid-19.
Credit Suisse noted:
“Street models are too conservative and underestimate the long-term monetization potential of other billion-user properties…for faster…growth on greater efficiency on content screening/security costs.”
Increased but unearning usage
CNBC reports that Facebook has seen an increase in daily active users since shelter-at-home policies were introduced. However, it stressed that not all of its features were money-making.
Facebook also said that it is seeing a steady weakening of ad revenue, despite its first-quarter earnings from the product.
Image courtesy of Pixabay/Pexels.