Facebook Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $3.30 $2.32
Revenue Beat $26.2B $23.6B
Monthly Active Users Beat 2.85B 2.84B

Source: Predictions based on analysts' consensus from Visible Alpha

Key Takeaways

  • Monthly active users came in at 2.85 billion, surpassing analysts' expectations.
  • Monthly active users provide a measure of the size of Facebook's global user base.
  • The company saw strong advertising revenue, fueled by a 30% year-over-year (YOY) increase in the average price per ad.

Facebook (FB) Financial Results: Analysis

Facebook Inc. (FB) reported Q1 FY 2021 earnings that dramatically beat analyst expectations. Earnings per share (EPS) rose 93%, beating estimates by a wide margin. Revenue also surpassed forecasts and was up about 48% compared to the year-ago quarter. Facebook's monthly active users (MAUs) came in approximately 10 million above what analysts were expecting. The company's shares jumped more than 6% by 6 p.m. New York time in after-hours trading. Over the past year, Facebook's shares have provided a total return of 67.9%, above the S&P 500's total return of 46.1%.

FB Monthly Active Users

Facebook's MAUs rose approximately 10% compared to the year-ago quarter, a slight deceleration from the final quarter of FY 2020. MAUs are a key metric Facebook uses to gauge the size of its global active user base. Facebook defines a MAU as a registered and logged-in user who visited Facebook through its website or a mobile device, or used its Messenger app sometime during the 30 days of the measurement period. The company derives nearly all of its revenue through selling advertising space, based largely on the strength of MAU, on its social media sites and apps to marketers. The bigger its user base, the more attractive its platform is to advertisers. Facebook's share of total digital ad spending in the U.S. in 2020 was 25.2%, second only to Alphabet Inc.'s (GOOGL) Google.

FB Advertising Revenue

Facebook generates its revenue mainly from selling advertising space on its various social media platforms to marketers. The company's ad revenue growth was driven by a 30% increase in the average price per ad as well as a 12% rise in the total number of ads that were delivered. Facebook expects ad prices to be the primary driver of revenue growth for the rest of the year.

FB Outlook

Facebook gave no guidance on earnings for the current quarter in its press release. But the company said that it expects year-over-year (YOY) revenue growth to remain stable or accelerate modestly compared to Q1 FY 2021. However, it expects that growth to decelerate considerably in the third and fourth quarters of the year when Facebook will face tough comparisons with last year's strong quarterly revenue growth numbers. Facebook's revenue grew 21.6% in Q3 and 33.2% in Q4 of FY 2020 after rising only 10.7% in Q2 .

Facebook also said that its ad targeting campaigns are likely to face headwinds due to regulator and platform changes. The most notable of these changes is Apple Inc.'s (AAPL) privacy update to its iOS 14 operating system, which will allow its mobile customers to opt out of letting certain data be collected by third-party apps. The move could make it harder for Facebook to profit from targeted ads, and the company expects the change to start affecting results in the second quarter.

Facebook (FB) Earnings Call Recap

CEO Facebook Mark Zuckerberg said that the company was planning to focus on building features related to e-commerce, which will be key to providing a personalized experience to users. The COVID-19 pandemic has accelerated a shift toward online e-commerce. Facebook intends to position itself to benefit from that transition. Zuckerberg highlighted that its Marketplace service, which allows users to buy and sell goods, now has more than 1 billion MAUs. Facebook said it's also counting on its entire family of apps to fuel broader growth at the company. These apps had 3.5 billion users globally in Q1, up from 3.3 billion users in the previous quarter.

Facebook's next earnings report (for Q2 FY 2021) is estimated to be released on July 28, 2021.