Facebook revenue rises 48%, driven by higher-priced ad

Facebook revenue rises 48%, driven by higher-priced ad

 

 

 

Facebook announced their F 1 quarter results that was much higher than the earlier forecast. Their ad revenue rose by a whopping 48% to $26.2 billion in the first three months of the year, whereas the profits almost doubled to $9.5 billion. This only proved how the leading social network has continued to benefit even during the pandemic crisis.

Advertisement revenue that forms the bulk of Facebook’s main income, rose 46 percent to $25.4 billion. Moreover, there are now 3.5 billion people that regularly use one of Facebook’s apps every month. The figures are up by 15 percent from last year.

Facebook’s massive profit resulted following a blockbuster financial performance in the 2020, as people were holed up indoors with their computers and other devices spending bulk of their time onto the social network and its associated apps like Instagram, Messenger, and WhatsApp and— in ever-increasing numbers.

Facebook managed a record highs in users and revenues and its services were so much sought after that engineers had a tough time coping up with users’ demands. It was an unprecedented situation, but in the end they all braced up to the challenges posed by this sudden spurt in demand.

It’s obvious leading social media apps are experiencing a golden patch, and are laughing all the way to bank with a massive increase in their profitability. Talking of Facebook, it clearly beat both on earnings, and revenue in their Q1 results. Consequently, their stock rose by as much as @6% within hours of the announcements of results.

How it happened? Facebook attributed its massive revenue growth to their earlier decision of jacking up their advertisements prices by 30% ias well as a 12% increase in number of ads shown.

Not only that, it also reduced its forecast for capital expenditures for the year to be between $19 billion and $21 billion. In fact, the stupendous performance by the Facebook has created a lot of buzz in the social media world. Now, the brand new apps like Connected, Helo, and Vero are also very excited about the new business prospects. The general thinking has been that if Facebook can turnaround so majestically, other lesser known apps can emulate the big brother too.

Facebook beats earnings, driven by ad revenue. Facebook stock price was up% in after-hours trading on There was a lot of forward movement last week on Wednesday after the Facebook released its first-quarter earnings, beating Wall Street’s expectations for earnings and revenue.

Let’s find out how the social media giant fared in the quarter, relative to estimates compiled by the wallstreet. • Magnitude of Earnings: Against the forecast of $2.37 per share, the actual earning was $3.30 per share. • Total Revenue: The actual revenue was $26.17 billion vs. against $23.67 billion expected.DAUs (Daily Active Users): It was on an average 1.88 billion vs. 1.89 billion forecast by the FactSet. • MAUs( Monthly active users): It was 2.85 billion vs. 2.86 billion earlier forecast by FactSet • ARPU (Average revenue per user): It was $9.27 vs. $8.40 forecast by FactSet.

Facebook revealed a total revenue of $26.17 billion for the quarter ending, which was almost up by 48% compared just a year back. Social giant’s net income as a matter of fact grew by whopping 94% to $9.5 billion, from $4.9 billion just a year back.

What made this turnaround possible was Facebook’s decision of significantly increasing the average price per ad with a 12% increase in the number of ads delivered. This in turn brought a total increase in the revenue by 30% from last year, and that was huge.

Facebook further added they expect their revenue growth to remain stable or accelerate modestly in the second quarter when compared with slower growth just an year back due to the Corona pandemic. However, Facebook expects revenue growth in the third and fourth quarters to be tepid and less than expected sequentially compared with fast growth experienced a year back because of the pandemic.

Moreover, the company is also preparing for “ad targeting headwinds” to meet regulatory and platform challenges. This is directly connected to Apple’s recent privacy changes in iOS 14 that maked it rather difficult for the company to personalize ads for iPhone and iPad users. In fact, the iOS 14 change will also affect Facebook’s ad targeting in the second quarter.

Mark Zuckerberg, the CEO especially mentioned about his company’s focus on building e-commerce framework as a key part of delivering a “personalized” experience for users. The CEO announced that the Facebook has now more than 1 billion monthly active users who regularly visit Facebook’s Marketplace service, where users can easily buy and sell goods.

According to Zuckerberg, the commerce have been continuously on a growth path for a while, but now it has become far more important as the pandemic has brought a broader shift towards businesses moving online.

Facebook from now on will focus more on technologies such as building out payment technology, including the diem digital currency and Novi digital wallet, which will enable them much improved commerce on Facebook’s services.

Now commerce across most of these platforms is going to be very important, and the various platforms that Facebook is busy building, they intend to allow payments seamlessly so that economics all work out for developers/p>

Facebook CEO also talked about features the company is currently building for Instagram creators to make money. Such features are supposed to incentivize creators to post more content on Instagram.

After Zuckerberg’s remarks on upcoming creator features rhe stock prices also rose modestly. Facebook further added it counts their 3.45 billion monthly users across its family of apps, compared with the last year’s 3.30 billion in the previous quarter. This metric includes Facebook’s total user base across their main app, Instagram, Whatsapp, and Messenger.

Facebook expects their 2021 capital expenditures to be in the range of $19 billion to $21 billion, which is lower from their earlier estimate of $21 to $23 billion.