It is that time of the quarter. Big tech companies are reigning stock markets with their billions in revenue, with Apple, Alphabet, Twitter and Facebook all reporting their numbers today. Facebook, Inc. on Thursday, reported its Q3 2020 financial results. The reported total revenue is $21.5 billion with a 22% YoY growth, and it has surpassed Wall Street’s estimate of $19.8 billion.
Majority of the social media giant’s revenue in Q3 2020 comes from advertising, which is $21.2 billion with a 22% YoY growth. Facebook acknowledged in their press release, that this is due to the online trends which were stirred by the pandemic, as most of the businesses were forced to shift online.
Facebook reported 1.8 billion daily active users (DAU) and 2.74 monthly active users (MAU) as of 30 Sep, 2020. The company has observed a drop in the number of active users in US and Canada compared to the previous quarter, which the company says were first elevated due to the impact of Covid-19 pandemic. “In the fourth quarter of 2020, we expect this trend to continue and that the number of DAUs and MAUs in the US & Canada will be flat or slightly down compared to the third quarter of 2020,” wrote Facebook.
With the coming holiday season, the company expects the fourth quarter advertising revenue growth rate to be higher than the currently reported numbers. Facebook also said that its VR headset Oculus Quest 2 orders have been going strong, which will further add to the company’s other revenue.
But Facebook, Inc. has expressed uncertainty regarding the company’s future in 2021. Some of the reasons for it are as follows:
- The trends induced by the pandemic which led to the profound increase in advertising revenue are likely to change direction in 2021, when everything begins to return to a normal. This, the company says can serve as a headwind for their 2021 ad revenue growth.
- The company expects more targeting and measurement headwinds in 2021, some of them includes the platform changes coming in Apple iOS 14, and the “evolving regulatory landscape.”
- The uncertainty of viability of transatlantic data transfers in light of recent European regulatory developments is another significant concern for the company. “Like other companies in our industry, we are closely monitoring the potential impact on our European operations as these developments progress,” wrote Facebook.
Facebook, Inc. stocks saw a slight decline in after-hours trading even after the announcement of impressive third quarter results. The expressed concerns regarding the uncertainty of the future and expected headwinds are very likely to have contributed to the drop.
“We had a strong quarter as people and businesses continue to rely on our services to stay connected and create economic opportunity during these tough times,” said Mark Zuckerberg, Facebook founder and CEO. “We continue to make significant investments in our products and hiring in order to deliver new and meaningful experiences for our community around the world.”