Facebook’s first-quarter profit climbs on strong advertising revenue
29 April, 2021
Social-networking company Facebook's first-quarter net profit surged a lot more than 93 % on the trunk of rising advertising revenue.
The Menlo Park-based company’s net profit soared to $9.4 billion in the 90 days ending March 31, nearly $4.5bn a lot more than the same period a year earlier.
Revenue through the quarter increased 48 % on an twelve-monthly basis to $26.1bn, beating analysts' average estimate of $23.6bn.
"We had a solid quarter as we helped persons stay linked and businesses grow," said Mark Zuckerberg, Facebook’s billionaire founder and chief executive.
Facebook attributed the significant increase in revenue to a “30 % yearly rise in the average price per ad and a 12 per cent surge in the amount of advertisings delivered” in the first quarter.
The business's stock was up nearly 5.7 % in after-hours trading to $324.8 a share on Wednesday.
The share price has increased a lot more than 58 per cent in the past year.
The company spent a lot more than $4.4bn in capital expenditure in the first quarter, practically $4m less than the amount spent in 90 days to December 31.
Facebook said it expects its 2021 capital expenditure to hover in the number of $19bn to $21bn, down from its prior estimate of $21bn to $23bn.
It is driven mainly by its investments in data centres, servers, network infrastructure and office facilities.
“We will continue steadily to invest aggressively to provide new and meaningful experience for years to come … including in newer areas like augmented and virtual reality, commerce and the creator economy,” Mr Zuckerberg said.
The platform’s daily active users increased 8 per cent yearly to reach 1.8 billion in the January to March period. Its monthly active users grew 10 per cent to 2.8 billion.
Facebook’s chief financial officer David Wehner predicts that advertising income growth will still be mostly driven by price during the remaining year.
“We expect second quarter year-over-year total revenue growth to stay stable or modestly accelerate in accordance with the growth rate in the first quarter,” Mr Wehner said.
In the third and fourth quarters, Facebook expects the total annual earnings growth rate to “significantly decelerate sequentially”, he said.
The company said it could continue steadily to face "uncertainty" this year.
“We continue steadily to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently launched iOS 14.5 update, which we be prepared to begin having a direct effect in the next quarter,” Mr Wehner said.
Apple’s new software update iOS 14.5 is supposed to make it harder for advertisers to track persons because they rotate between different software on the device.
People will get the option to opt in or out of iphone app tracking. This will restrict how technology companies such as for example Facebook and Google gather data to promote purposes.
Facebook, which owns Instagram and WhatsApp, saw a sharp rise in the number of users of its platforms during the Covid-19 pandemic.
Many persons switched to social media and entertainment options during lockdowns.
Total expenses for the entire year will be between $70bn and $73bn, the business said, narrowing a prior forecast of $68bn to $73bn.
“We remain committed to investing for long-term growth and our expense outlook reflects the underlying strength of our business and the compelling investment opportunities we see across our products, including consumer hardware,” Mr Wehner said.
The business invested almost $1.4bn on research and development through the quarter, almost $409m more than the same period this past year.
Source: www.thenationalnews.com
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