Its earnings season folks, and we have some relatively good news from Facebook on that. Facebook reported its earnings today, and the company has impressively beaten Wall Street expectations by a fine margin. The company made $17.7 billion in revenues in Q1 of 2020, up 18% from the $15 billion it had made in the same quarter last year. Facebook however fell short of the EPS estimates, reporting $1.71 on that metric.
Nevertheless, investors seem to have liked Facebook’s numbers, resulting in an over 10.5% hike in company’s share price in after hours trading. The share already ended on a 6% high at yesterday’s market closing.
As has been the case, almost 95% of the revenue came from advertising. The company made $17.4 billion in advertising revenues, up 17% from the $14.9 billion it had made last year in the same quarter. Capital expenditures, including principal payments on finance leases, were $3.66 billion for the first quarter of 2020.
This time however, Facebook ‘Other revenue’, though a paltry $297 million of the total, have shown significant uptick. The company recorded a strong 80% jump in these numbers, driven largely by other companies such as Oculus.
In terms of user numbers, Facebook witnessed an unprecedented growth, largely across expected lines. Monthly active users swelled to $2.6 billion, a record 11% increase when compared with previous year. DAUs were 1.73 billion on average for March 2020, an increase of 11% year-over-year.
However, all isn’t too well. Despite growing user numbers and a relatively strong Q1 financial performance, Facebook’s expectations for Q2 aren’t too high. The company is not providing any guidance but a rather “snapshot” on revenues for the coming quarter. ” After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago”, the company said in an investor release.
The advertising industry in general and digital advertising in particular, have taken a significant hit during shelter-at-home orders globally. And Facebook isn’t alien to that impact. “We experienced a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020.”, the company added.
Nevertheless, even a flat growth that Facebook has predicted, will go a long way in pacifying investors. There were expectations of a much larger doomsday scenario, but Facebook’s guidance of a flat second quarter have relieved some of that skepticism.
