Facebook ads drive Q1 bounceFacebook earnings obliterate expectations with a 48% revenue increase driven largely by ad revenue, sending stocks flying over 5% in after hours trading. That'll pay for some of Zuck's suncream.
The social media giant reported earnings per share of $3.30 on revenues of $26.17 billion, compared to expectations of $2.37 per share on $23.67 billion in revenue. Its active user count was up too, with 1.88 billion daily active users and 2.85 billion per month. Average revenue per user was $9.27, so it makes sense that revenues knocked it out the park. In fact, total revenue was up 48% from the same period the year before, while net income grew 94% to $9.5 billion: an increase that the company attributes to an increase in the average price per ad and a 12% increase in the number of ads the company delivered.
Facebook expects revenue growth to remain stable or accelerate slightly in Q2, but is predicting a slowdown in Q3 and Q4 compared to the year before, when results were boosted by the pandemic (what else was there to do during lockdown but post pictures of your lunch online?)
Its guidance had to take into account the increased ad targeting headwinds in 2021 from regulatory and platform changes, most notably the recently launched iOS 14.5 update, which the firm expects to start having an impact in the second quarter. The IOS 14.5 includes the App Tracking Transparency (ATT) framework, which is likely to have serious implications for the way mobile advertising operates and could have a major effect on Facebook advertising revenue. Watch this space.