Last month, Facebook issued dire warnings of steep drops in ad revenue due to the coronavirus. But on Wednesday, as the company reported its first-quarter earnings, the social media giant told investors that its ad business has stabilized, giving Wall Street enough reason to breathe a sigh of relief.
“We 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,” the company said in a press statement. While it won’t offer specific revenue guidance due to the uncertainty in the business’ outlook, it did provide a “snapshot” of what it’s seen so far in the first three weeks of the current quarter.
The company noted that ad revenue is down from the 17 percent year-over-year growth seen in the first quarter of 2020, but described it as roughly flat compared to the same time last year.
On a typical cycle, that might be concerning news. But here, Facebook characterized it as “signs of stability.”
As it stands, revenue for the period landed at $17.74 billion, which is up nearly 18 percent from the $15.08 billion in the year-ago quarter and bests analyst projections of $17.41 billion. Earnings of $1.71 per share didn’t quite measure up to expectations of $1.75 per share.
But the news was enough for investors to exhale and send Facebook shares up more than 10 percent in after-hours trading.
Monthly active users for Facebook’s primary platform hit 2.6 billion for an increase of 10 percent year-over-year, while across its family of apps — which includes Instagram, Messenger and WhatsApp — the company tallied 2.99 billion MAUs. The latter shows growth over the previous quarter’s 2.89 billion and 11 percent growth over the same quarter last year.
Facebook’s daily active users hit an average of 1.73 billion in March, representing growth of 11 percent year-to-year. Across all Facebook apps, daily use hit a 2.36 billion average for the same month, for an increase of 12 percent over the first quarter of 2019.
The company knows that these results reflect rarified behavior as people look to connect from the confines of their homes. So, while users may be leaning on these platforms to communicate and stay connected right now, the company expects to “lose at least some of this increased engagement when various shelter-in-place restrictions are relaxed in the future.”
That won’t stop Facebook from investing in its video chat apps and features, though. It already introduced new offerings like Messenger Rooms for large groups, and it plans to expand WhatsApp to accommodate slightly larger chats and bring new livestreaming features to Facebook and Instagram.
Notably, Facebook devices did very well during the first quarter. Its “Other” revenue — which covers its Portal TV video-calling device and Oculus virtual reality headsets — shot up 80 percent over last year, approaching close to 300 million.