Facebook Earnings Report Shows Continued Strength
By Jeff Horwitz
Facebook Inc.'s third-quarter revenue climbed 22% to $21.47
billion, as strong digital ad spending offset a high-profile ad
boycott, restrictions that reduce the efficacy of ad targeting and
continued fallout from the pandemic.
Facebook reported per share earnings of $2.71 in the three
months through September, compared with $2.12 in the year-earlier
quarter, beating analysts' average projection of $1.90, according
to data from FactSet. Facebook's net income rose to $7.85 billion
from $6.09 billion.
The company also announced its expectations for a strong fourth
quarter. But tempering those results, Facebook Chief Financial
Officer David Wehner warned of a "significant amount of
uncertainty" in the coming year. While the company believes the
pandemic has accelerated the shift to online commerce, he said, it
faces significant regulatory threats in both the U.S. and abroad as
well as limitations imposed on its data gathering and targeting by
other tech giants, including Apple Inc.
The company's operating margin stood at 37%, compared with 41% a
year earlier, as headcount rose by a third over the past year. The
number of people using Facebook products each month -- which
include Instagram, Messenger and WhatsApp -- increased to 3.21
billion from 2.82 billion a year ago, up 14%.
Following the third-quarter report, Facebook's stock rose about
5% in after-hours trading. As of Thursday's close, Facebook shares
had risen by more than 33% since the beginning of the year, with
pandemic-driven surges in user growth and increased use of its
platforms compensating for both the advertiser boycott and lower
spending by Covid-stricken advertisers in retail, travel and
entertainment. U.S. political advertising also provided a boost,
with some analysts predicting the spending boom could account for a
mid single-digit percentage of Facebook's total revenue.
The third quarter began on a difficult note for Facebook, with a
boycott over its alleged failure to rein in hate speech on the
platform. Civil rights groups including the National Association
for the Advancement of Colored People and the Anti-Defamation
League convinced major advertisers including Verizon and Unilever
to temporarily stop spending on Facebook's platforms, a halt that
the company acknowledged would likely weigh on its results.
Facebook also has warned that it expected slower revenue growth
due restrictions from both data protection laws in California and
limitations on data sharing by other tech companies.
Write to Jeff Horwitz at Jeff.Horwitz@wsj.com
(END) Dow Jones Newswires
October 29, 2020 16:52 ET (20:52 GMT)
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