Facebook blames Apple as sales fall shy of estimates in Q3

Facebook Inc (NASDAQ: FB) reported mixed results for its fiscal third quarter on Monday. Shares of the social media giant jumped 3.5% despite its sales guidance falling short of estimates.

Q3 financial performance

Facebook earned $3.22 a share in the third quarter versus the year-ago figure of $2.71. It generated $29.01 billion in sales – an increase from $21.47 billion last year, as per the earnings press release. According to FactSet, experts had forecast $3.19 of EPS on a higher $29.49 billion in sales.  

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For Facebook, most of the revenue comes from advertising. In its Q3 report, however, the California-based company said its non-advertising revenue nearly tripled from 2020 to $734 million.

It will, therefore, split its non-advertising business, including its virtual reality unit, as Facebook Reality Labs (FRL) – a separate reporting segment from Q4. According to CFO David Wehner, investment in FRL could hit operating profit by roughly $10 billion this year.

Guidance for the fourth quarter

For the fiscal fourth quarter, Facebook forecasts up to $34 billion in revenue. In comparison, analysts are calling for $34.72 billion instead. The conservative guidance, Wehner explained, reflects privacy changes in Apple’s iOS 14 that Wedbush Securities’ Dan Ives called a gut punch to Facebook.

Being a bigger platform with a more diversified set of advertisers, however, FB is unlikely to see the kind of impact from Apple’s changes that peer Snap Inc noted last week when it reported quarterly results.

Other factors that could hit Facebook’s Q4 sales include the global pandemic and macroeconomic factors, as per Wehner.

MAUs and stock repurchase

Globally, Facebook’s monthly active users (MAUs) climbed by 6.0% in the third quarter to 2.91 billion – roughly matching Wall Street expectations. But investors may see this growth with a pinch of scepticism after internal leaks indicated that the social network was struggling to identify users with multiple accounts.

FB continues to be hit with a series of negative headlines in recent weeks. The American multinational also said on Monday it plans on buying back an additional $50 billion worth of its stock.