Facebook Q2 Revenue Up 56% to $29 Billion and Profit Doubles, Stock Falls on Warning of Slowing Grow
Mark Zuckerberg (Courtesy of AP)
In the tech world, the big keep getting bigger.
Facebook’s revenue for the second quarter of 2021 jumped 56%, to $29.08 billion, while its net profit doubled to $10.4 billion — smashing analyst expectations — comparing favorably to Q2 2020, which was the quarter most hurt by the COVID pandemic. But shares were down 3.8% in after-hours trading as the company said it anticipates revenue slowing in the second half of the year.
For Facebook, daily active users were 1.91 billion on average in June, up 7% year over year. DAUs across all of the company’s apps (Facebook, Instagram, WhatsApp and Messenger) averaged 2.76 billion for the month of June, up 12% on an annual basis.
The social media company posted earnings per share of $3.61. On average, Wall Street analysts predicted Q2 revenue of $27.82 billion and EPS of $3.02, per Refinitiv data.
However, in the second half of 2021, Facebook said, it expects year-over-year total revenue growth rates “to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth” driven by the COVID pandemic.
In addition, the company said it still expects increased “headwinds” with respect to ad targeting in 2021 from regulatory and platform changes, most notably Apple’s update with iOS 14.5 to require users to opt-in to allow ad tracking. Facebook says it anticipates the iOS privacy change to have a greater impact in Q3 than the second quarter.
Also of concern for Facebook: DAUs for the flagship service remained flat in the U.S. and Canada at 195 million, the same as the previous two quarters. That said, Facebook’s average revenue per user in the region jumped 45%, from $36.49 in Q2 2020 to $53.01 in the most recent quarter. Worldwide, average revenue per user increased 44% year over year, to $10.12.
“We had a strong quarter as we continue to help businesses grow and people stay connected,” Facebook CEO Mark Zuckerberg said. “I’m excited to see our major initiatives around creators and community, commerce, and building the next computing platform coming together to start to bring the vision of the metaverse to life.”
On the earnings call, Zuckerberg said video now accounts for almost half of all time spent on Facebook.
To attract even more users and boost usage — and also as a counterweight to negative PR — Zuckerberg this month announced that Facebook would pay more than $1 billion to creators who use certain Facebook and Instagram features through the end of 2022. He noted that Facebook will not charge fees to use its content tools or take a revenue share from creators through 2023.
At the same time, Facebook has recently become a bigger political target over the issue of misinformation on its platforms. President Biden this month said companies like Facebook are “killing people” by allowing falsehoods about COVID vaccines to proliferate.
Facebook hit back at Biden, saying “We will not be distracted by accusations which aren’t supported by the facts.” In a blog post, VP of integrity Guy Rosen pointed to the White House’s goal of 70% of Americans vaccinated by July 4 and wrote, “Facebook is not the reason this goal was missed.” Biden later walked back the comment, telling reporters that “Facebook isn’t killing people” but added that he wanted the social giant to step up its ability to block “outrageous misinformation” about vaccines on its platforms “instead of taking it personally that somehow I’m saying Facebook is killing people.”
The company also has drawn fire over failing to protect kids from social-media dangers. On Tuesday, Facebook announced changes on this front for its Instagram app, including: setting accounts for users 16 or younger (in most countries) to be private by default; making it harder for “potentially suspicious accounts” to find young people; and limiting options advertisers have to target ads to young people.
Facebook had 63,404 employees as of June 30, 2021, an increase of 21% year over year.
On the Q2 call, Zuckerberg sketched out his vision for the “metaverse” — an open, virtual environment where you can share experiences with other people — that will be the successor to today’s mobile internet. He said it will be the “ultimate expression” of social technology and predicted that Facebook will be seen in the future as a “metaverse” company, not a social-media company.
In Facebook’s so-called metaverse, ads will still be a key part of the business model but Zuckerberg said he believes commerce is going to be an increasingly important component of revenue.
Variety's Todd Spangler contributed to this post.