Facebook Delivers Another Strong Quarter as Business Revenue Soars 30%

By Adriaan Brits Thursday, April 29, 2021

Facebook stock jumped over 6% after the social media company reported better-than-expected results for Q1.

Phone that says, "Quarterly Earnings" with Facebook like and love icons.

Higher Ad Pricing Fuels Business Revenue Growth

The social media company reported earnings per share (EPS) of $3.30, compared to the analysts’ estimates of $2.37 per share. Business revenue for the quarter was reported at $26.17 billion — easily topping the $23.67 billion consensus.

The average revenue per user, a business financial metric better known as ARPU, came in at $9.27 versus the expected $8.40. On the other hand, the number of daily active users (DAUs) was slightly lower at 1.88 billion, down from the 1.89 billion consensus. The number of users on a monthly basis (MAUs) was 2.85 billion, also missing the forecast of 2.86 billion.

"We had a strong quarter as we helped people stay connected and businesses grow," said Mark Zuckerberg, Facebook founder and CEO.

Q1 business revenue was 48% higher than the previous quarter, while the company’s net income surged 94% to $9.5 billion, from $4.9 billion a year ago. The increase in business sales was driven by a 30% surge in average price per ad and a 12% rise in the number of delivered ads compared to last year.

The social media company expects its business sales to continue growing at a stable pace in Q2; however, Facebook estimates revenue growth to slow down significantly in Q3 and Q4 compared to the same periods last year.

Also, the social media company said it expects “ad targeting headwinds” due to regulatory and platform issues. More specifically, this mostly includes recent changes from Apple in iOS 14, which could make it more challenging for Facebook to personalize ads for those who use Apple devices. The move is expected to affect Facebook’s ad targeting in the next quarter.

Mark Zuckerberg, CEO and founder of the social media company, previously announced Facebook’s plans to introduce ecommerce features to improve the “personalized” experience for its users. He said that more than 1 billion users use the Marketplace feature each month to trade goods.

"We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas like augmented and virtual reality, commerce, and the creator economy,” Zuckerberg added.

Facebook also continues to develop its digital currency and digital wallet — diem and Novi, respectively — which represent a key part in enabling additional commerce on the platform. Zuckerberg said he hopes to launch new features soon.

The chief executive also talked about a set of new Instagram features that the company is planning to launch that will allow creators to make money and encourage them to post more content.

The social media company currently serves 3.45 billion monthly users across all of its apps, including Facebook, Instagram, Messenger, and WhatsApp, which compares to 3.30 billion in the previous quarter.

Facebook stock soared 7.5% in early trading Thursday after a Q1 beat.

Summary

Social media company Facebook reported better-than-expected profit results for Q1 as its business sales soared 30% year-on-year, driven by a surge in average price per ad.

About the Author


Headshot of Adriaan Brits

An analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in advanced analytics and media.

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