Facebook Shares Surge After Crushing Earnings, North America Users Stagnate

Hard to see many cracks in Zuckerbergs's armor in Q1 earnings data.

Facebook crushed Q1 EPS expectations and saw the biggest Q1 revenues ever...

  • *FACEBOOK 1Q EPS $3.30, EST. $2.34
  • *FACEBOOK 1Q REV. $26.17B, EST. $23.72B

Advertising revenue rose 46% YoY to $25.44 billion (well above the $23.27 billion estimate)

Facebook’s CFO Outlook:

Ad business was “driven by a 30% year-over-year increase in the average price per ad and a 12% increase in the number of ads delivered.”

So ads were more expensive, and more of those expensive ads were delivered.

More beats...

  • Operating margin 43%, estimate 34.3% but did slow...

  • Other revenue $732 million, estimate $454.0 million

User Growth was pretty much in line with expectations:

  • *FACEBOOK 1Q DAILY ACTIVE USERS 1.88B, EST. 1.87B
  • *FACEBOOK 1Q MONTHLY ACTIVE USERS 2.85B, EST. 2.83B

We do note that US & Canada has basically stagnated for a full year now...

Facebook also reported 2.85 billion total users on its core social network. Estimates were 2.83 billion. So a beat there as well.

  • Average Family service users per day 2.72 billion, +4.6% q/q, estimate 2.63 billion

  • Average Family service users per month 3.45 billion, +4.5% q/q, estimate 3.35 billion

Of course, looking forward, all eyes are on the battle with Apple...

We expect second quarter 2021 year-over-year total revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter of 2021 as we lap slower growth related to the pandemic during the second quarter of 2020. In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to significantly decelerate sequentially as we lap periods of increasingly strong growth. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which we expect to begin having an impact in the second quarter. This is factored into our outlook.

There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments, and like companies across a wide range of industries, we are closely monitoring the potential impact on our European operations as these developments progress.

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