Key Takeaways

  • Monthly active users came in at 2.9 billion, matching analysts' forecasts.
  • Facebook uses monthly active users to measure the size of its global active user base, which it monetizes through the sale of ad space on its social media platform.
  • Revenue grows at fastest pace since 2016.
Facebook Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $3.61 $2.99
Revenue Beat $29.1B $27.9B
Monthly Active Users Match 2.9B 2.9B

Source: Predictions based on analysts' consensus from Visible Alpha

Facebook (FB) Financial Results: Analysis

Facebook, Inc. (FB) reported Q2 FY 2021 earnings that beat analyst expectations. Earnings per share (EPS) smashed consensus estimates, more than doubling the year-ago quarter's EPS. Revenue also exceeded analyst forecasts, up 55.6% year over year (YOY). It was the fastest pace of revenue growth for the company since 2016. Facebook's monthly active users (MAUs) just matched expectations. The company's shares fell as much as 5% in after-hours trading. Over the past year, Facebook's shares have provided a total return of 62.3%, well above the S&P 500's total return of 36.7%.

FB Monthly Active Users

Facebook's MAUs rose 7.4% compared to the year-ago quarter to reach 2.9 billion. 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. A bigger user base also makes it easier to attract new users as people want to be on Facebook because their friends are on it, a classic example of the network effect.

FB Advertising Revenue

Facebook's ad revenue rose 56.0% YOY. That growth was mainly driven by a 47% increase in the average price per ad as well as a 6% increase in the total number of ads delivered. Facebook said that it expects ad revenue growth for the rest of 2021 to be mainly driven by YOY increases in ad prices. It also noted that its ad targeting efforts would face headwinds from regulatory and platform changes, most notably Apple Inc.'s (AAPL) iOS updates that enables users to opt out of having third-party apps track their activity. The iOS update is expected to make it more difficult for companies like Facebook to target users with personalized ads. The company said it expects changes like this to have a greater impact in Q3 than in Q2.

Facebook did not provide any earnings guidance for future quarters. However, it did mention that YOY revenue growth was likely to slow significantly on a sequential basis in Q3 and Q4 as it laps periods where it posted increasingly strong growth. Facebook's next earnings report (for Q3 FY 2021) is estimated to be released on Oct. 27, 2021.