4 key takeaways from Facebook’s Q1 earnings report

Facebook Inc. (NASDAQ: FB) reported its financial results for the first quarter on Wednesday that beat Wall Street estimates.

1. Financial performance

According to Refinitiv, experts had forecast the company to post £16.98 billion of revenue in the first quarter. Their estimate for per-share earnings stood at £1.70. In its report on Wednesday, Facebook topped both estimates noting a higher £18.77 billion of revenue in Q1 and £2.37 of earnings per share.

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At £6.81 billion, Facebook’s net income climbed by 94% in the recent quarter. Its revenue was up 48% on a year over year basis. The social media giant’s advertising sales soared 46% to top estimates. In the prior quarter (Q4), Facebook’s revenue had jumped 33%.

2. Other notable figures

Facebook reported 1.88 billion daily active users (DAUs) in the first quarter versus 1.89 billion expected. Monthly active users (MAUs) in Q1 were 2.85 billion – only marginally lower than the FactSet consensus of 2.86 billion.

The average revenue per user (ARPU), the American multinational added, registered at £6.65 in the recent quarter to top analysts’ estimates of £6.03. Facebook’s “Other” revenue saw an annualised growth of 146% in Q1.

3. Guidance for the second quarter

For the fiscal second quarter, Facebook forecasts its revenue to remain unchanged or show modest growth. It expects up to £15.06 billion of capital expenditures in 2021 versus up to £16.50 billion it had anticipated earlier.  

4. Joshua Brown’s comments on CNBC’s “Closing Bell”

CFO Dave Wehner said he expects total revenue growth to tank sharply on an annualised basis in the third and fourth quarter. Responding to his comments CEO Joshua Brown of Ritholtz Wealth Management said on CNBC’s “Closing Bell”:

“This is not just a Facebook-specific issue. It’s also going to hit Twitter, Snap, YouTube, and Google. Because there was a three-month period where there wasn’t anything else to do but drink and be on these mobile platforms, but they are not going to see that same level of engagement unless we have a new pandemic.”

Impact on the share price

Facebook shares were reported more than 5% up in after-hours trading on Wednesday. Including the price action, the stock is now exchanging hands at £233 per share. In comparison, it had started the year at a lower £193 per share.

Facebook performed fairly upbeat in the stock market last year with an annual gain of close to 30%. At the time of writing, it is valued at £626 billion and has a price to earnings ratio of 30.43.