Earnings

Facebook earnings: 3 billion users and counting

Facebook earnings: 3 billion users and counting
  • Q1 revenue: $17.7 billion (+18% YoY, -16% QoQ vs. $17.5 billion expected)
  • Q1 earnings: $4.9 billion (+102% YoY, -33% QoQ)
  • Q2 guidance: Facebook didn't provide second quarter guidance due to uncertainty related to COVID-19. But the company said it's "seen signs of stability" during the first three weeks of April, with advertising revenue "approximately flat" compared to the same period last year.

The big number: As expected, the coronavirus crisis increased usage across Facebook's family of apps. For the first time ever, Facebook reported more than 3 billion monthly active users across Facebook, Instagram, WhatsApp and Messenger. At the same time, advertising revenue and revenue per user fell sharply. Facebook lost more than $3 billion in advertising revenue and went from making an average of $7.38 per user across its apps last quarter to $6.03 this quarter.

People are talking: "The impact on our business has been significant. And I remain very concerned that this health emergency, and therefore the economic fallout, will last longer than people are currently anticipating." — Facebook CEO Mark Zuckerberg said on Wednesday's earnings call.

Opportunities: While advertising revenue declined, Facebook's chief operating officer Sheryl Sandberg noted some ad categories, including gaming, grew, while categories like technology and ecommerce remained stable.

Zuckerberg also noted that while he doesn't expect the spike in user engagement on Facebook's apps to last, he does anticipate the growth in "private social communication" to continue well into the future.

Facebook is investing substantially in ecommerce, particularly in India, where Facebook recently invested $5.7 billion in Jio Platforms, a telecom giant whose JioMart product enables small businesses to set up online storefronts.

One other bright spot: Facebook's non-advertising revenue, which still constitutes a tiny slice of overall revenue, increased by 80% year-over-year, driven largely by the success of Oculus virtual reality products.

Threats: Facebook's biggest threat is the uncertainty in the advertising industry. As long as vast swaths of the economy are shut down, the ad industry will continue to suffer, and Facebook, which derives 98% of its revenue from advertising, will continue to feel the pinch.

The power struggle: Facebook's push into ecommerce undoubtedly sets the company on a collision course with Amazon. That's especially true in India, where Facebook is already piloting a WhatsApp integration with JioMart.

Internally, there may also be power struggles between different business units. Facebook intends to hire 10,000 more people in product and engineering roles this year. "I've always believed that in times of economic downturn, the right thing to do is to keep investing and building the future," Zuckerberg said. But it's clear that hiring won't be spread equally across the company. Right now, Facebook needs engineers both to manage the excess demand on its apps and build new tools to respond to the crisis. But Zuckerberg warned that the company will likely "moderate" its expenses in other business functions, including ad sales.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

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Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

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FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

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Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

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Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

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