Liveblog for Facebook Q2 Earnings Report
The big day is finally here. After the close today, Facebook executives will talk about the second-quarter financial results, and hopefully what they see for the rest of the year.
The social media giant has been under attack from lawmakers and civil rights groups. Critics say the platform is abusing its dominant position, and allowing members to spread hate speech.
The attacks have not tempered enthusiasm within the investment community. Analysts have been pushing revenue and earnings estimates higher since the first quarter in anticipation of a pickup in advertising demand, especially for direct response.
We will know soon enough.
I will be liveblogging the earnings call beginning at 4:00 p.m. EST.
Scroll straight down to the "Live Coverage Starts Here!" section.
Live Coverage Starts Here!
4:03 We getting ready for the Facebook Q2 earnings call
Here is what to expect based on the latest numbers from FactSet
· Daily active users (DAUs): 1.7 billion
· Monthly active users (MAUs): 2.6 billion
· Average revenue per user (ARPU): $6.76
4:10 The numbers are out.
4:13 the stock is up 5.6% to $247.50
4:15 Revenue: $18.7 billion vs. $17.4 billion forecast by
4:19 Facebook DAUs and MAUs in the second quarter of 2020 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
4:20 Facebook daily active users (DAUs) – DAUs were 1.79 billion on average for June 2020, an increase of 12% year-over-year.
4:22 Facebook monthly active users (MAUs) – MAUs were 2.70 billion as of June 30, 2020, an increase of 12% year-over-year.
4:23 Revenue - In the first three weeks of July, our year-over-year ad revenue growth rate was approximately in-line with our second quarter 2020 year-over-year ad revenue growth rate of 10%. We expect our full quarter year-over-year ad revenue growth rate for the third quarter of 2020 will be roughly similar to this July performance.
4:24 Impact of COVID-19 on Outlook
Our business has bee
n impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook. We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the U.S. dollar.
4:26 Facebook now has 3.14 billion monthly users across its family of apps, up from 2.99 billion last quarter.
4:27 Facebook shares now up to $252.48, 7.7%
4:36 revenue at $18.6 billion was up 11%, that's far better than the 3% revenue growth that was expected
4:37 also, earnings per share, at $1.39 were well above even the higher consensus estimate
4:45 Revenue outlook contributing factors
o First, continued macroeconomic uncertainty, including the pace of recovery and the prospects for additional economic stimulus;
o Second, our expectation that some of the recent surge in community engagement will normalize as regions reopen;
o Third, the impact from certain advertisers pausing spend on our platforms related to the current boycott, which is reflected in our July trends; and
o Lastly, headwinds related to ad targeting and measurement, including the impact of regulation, such as the California Consumer Privacy Act, as well as headwinds from expected changes to mobile operating platforms, which we anticipate will be increasingly significant as the year progresses.
4:48 Ahead of the conference call, the Facebook numbers look like a huge beat
4:50 Total expenses - We expect total expenses in 2020 to be in the range of $52-55 billion, narrowed slightly from the prior range of $52-56 billion.
4:51 Expenses still in check. That might be COVID-19 related with most employees working from home and new hires essentially on hold
4:54 Stock settling in at $250.70, up 7% on about 5 million shares in the after-hours
5:00 Here is a summary of the Facebook Q2 beat, FactSet
Daily active users (DAUs): 1.79 billion vs. 1.7 billion
Monthly active users (MAUs): 2.7 billion vs. 2.6 billion
Average revenue per user (ARPU): $7.05 vs. $6.76
5:02 Facebook also beat handily on both the top and bottom lines
Revenue: $18.7 billion vs. $17.4 Earnings: $1.80 vs. $1.39
5:05 "Other" revenue, like its hardware business Oculus Rift and Portal, a video-chatting device seem to be contributing. Sales up to $366 million, up 40% year over year
5:06 The strength across the board refutes the narrative going into the numbers ad sales would be hurt by a number of high profile boycotts
5:09 It's hard to see any weakness but we'll have to wait for the call to see if managers say anything about Q3 and the rest of the year
5:10 So far, looking through the numbers, you have to conclude ad buyers are not leaving the platform
5:15 For what it's worth, the $5.18 billion in quarterly profits was almost double the $2.6 billion reported a year ago. And that's in the middle of a pandemic, with a 1,000 strong ad buyer boycott.
5:16 Waiting to the analyst conference call for more color
Next time someone tries to tell you that Facebook is slowing down or irrelevant as newcomers like TikTok come along, show them this chart from Statista. It shows the number of active Facebook users worldwide thru Q1 2020. .... FB went public in 2012.
Active users are those which have logged in to Facebook during the last 30 days. During the last quarter, the company stated that almost 3 billion people were using at least one of the company's core products (Facebook, WhatsApp, Instagram, or Messenger) each month.
Fun fact from Statista: The US is the biggest Instagram audience but Kazakhstan and Brunei are the countries with the highest Instagram audience reach.
The conference call is scheduled to begin at 6:00 EST. I'll be back then. In the interim, this piece I wrote 3 weeks ago about Facebook is worth a read
6:01 OK the call is about to begin
6:02 Mark Zuckerberg is on. Says that 3 billion active users. Nine million business advertisers, many of these small businesses
6:03 Zuckerberg now saying how Facebook was critical for people connecting during the pandemic
6:05 Company is working to further remove hate speech. Independent audit is underway to do even more
6:09 Zuckerberg making the case that movement to curtail targeted ads will hurt small businesses, the biggest customers of Facebook
6:10 Company is using this COVID-19 moment to make workforce more remote. Looking for 50% of workforce to work from home permanently.
6:11 Facebook will try to help 4 million people register to vote in the 2020 presidential election
6:12 Sheryl Sandberg , COO now speaking about curtailing hate speech on the platform
6:15 Sandberg says small business is a big focus. Company is trying to help more small and medium-sized business (SMB) transform with digital tools
6:20 now telling stories about SMBs using Facebook to find customers in their neighborhoods
6:20 Facebook launched a $100 million initiative to help SMBs, and another $100 million for black-owned businesses
6:23 Ad revenues stronger in May and June, than earlier in the year.
6:24 Facebook now has 52,500 employees
6:26 The company seeing signs of normalization. Expects MAUs and DAUs to be flat or decline slightly
6:27 Changes to mobile operating systems may impact future ad targetting.
6:28 Conference call now open to questions
6:28 Question about Facebook Shops, a plan to help SMBs get online quickly
6:30 Mark Zuckerberg says Facebook is working on a comprehensive platform with payments, shop storefronts across Facebook, Instagram and WhatsApp
6:34 Zuckerberg sees a potential brand new business vertical based solely on messaging. SMBs should be able to reach and conduct business using only messaging
6:35 Question about Facebook investment in India, and longer-term work-from-home plans
6:36 Zuckerberg says India is part of the bigger plan to target messaging as a new business vertical.
6:37 Regarding WFH, the company is focused on getting better hires by lifting geographic restrictions.
6:38 Question about the macroeconomic view in the second half.
6:40 Facebook says changes to the iPhone mobile platform may be a headwind for targetted ads.
6:41 Question about SMBs growth despite COVID-19
6:43 Sandberg says that more businesses are migrating online in the wake of COVID-19. Says 180 million SMBs are using Facebook free tools to find customers.
6:45 Another question about Facebook Shops growth
6:46 Sandberg answering. Says that it is too early to know how big the business will be, but the business is ramping quickly in terms of usage.
6:50 Question about online gaming, and the acquisition of Mixer from Microsoft
6:50 Zuckerberg says the larger game plan with gaming is building community and augmenting Facebook's augmented and virtual reality investments.
6:51 Question about pricing trends and the outlook for the second half.
6:53 The company is seeing targeting headwinds with iPhone. There is no clarity in Q4.
6:55 Question about political advertising and ads boycott.
6:56 Sandberg says Facebook is working with industry groups for brand safety to address media concerns. Regarding political ads, these ads are still a very small part of the overall business.
7:00 The call is wrapping up
Thanks for dropping by.