Facebook's stock surged 10% in after-hours trading on Wednesday, after the company announced surging user numbers and better-than-expected financial earnings for the first quarter that helped to assuage traders' concerns about the potential impact of the pandemic on its business.
In the first three months of the year, Facebook netted $17.74 billion in revenue, up 18% year-over-year, though it says it experienced a "significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020."
Meanwhile, its user numbers and engagement have surged, as people trapped inside turn to the company's product to communicate with friends and family. Its daily and monthly active user numbers for the core Facebook app grew by double-digits year-over-year, to 1.73 billion and 2.6 billion respectively. The number of people active on any one of Facebook's "family" of products, which includes WhatsApp and Instagram, swelled to an astonishing 2.99 billion people per month in Q1.
The data figures "[reflect] increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about," Facebook said in a press release.
"We expect that we will lose at least some of this increased engagement when various shelter-in-place restrictions are relaxed in the future."
Facebook's financial results add to a trend of internet companies with ad businesses that took a hit from the coronavirus in March yet still managed to beat analyst expecations thanks to strong January and February results. On Tuesday, Google announced a Q1 report card that cheered investors, despite a "significant slowdown in ad revenues" in March.
Facebook also took the unusual step on Wednesday on releasing some financial information relating to its second quarter early. Advertising revenues for the first three weeks of April have been roughly unchanged from the same time period a year ago, it said — a stark contrast to its typical double-digit growth, but an indicator that the business is managing to weather the crisis.
Here are the key numbers Facebook reported for Q1, as well as what Wall Street was expecting:
- Revenue: $17.74 billion, up 18% year-over-year ($17.48 billion expected)
- Earnings Per Share (GAAP): $1.71 ($1.75 expected)
- Daily Active Users: 1.73 billion, up 11% year-over-year
- Monthly Active Users: 2.6 billion, up 10% year-over-year
Facebook said it would hold back on some of its spending plans this year because of the coronavirus. Capital Expenditures will range between $14 billiona and $17 billion, instead of the previously planned $16 billion to $19 billion range, the company said.
"Given the strong engagement growth and related demands on our infrastructure, this year's capex reduction should be viewed as a deferral into 2021 rather than savings," Facebook said.
Tbe company also noted that it wold take steps to rein in expenses in areas like travel and marketing, as well as to slow its pace of hiring — though Facebook said it would continue to hire for strategic and importanty roles in the months ahead.
Here's a look at the growth in the number of people using Facebook's "family" of products, suchas WhatsApp and Instagram:
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