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.


How I decided to leave the US and pursue a tech career in Europe

Melissa Di Donato moved to Europe to broaden her technology experience with a different market perspective. She planned to stay two years. Seventeen years later, she remains in London as CEO of Suse.

“It was a hard go for me in the beginning. I was entering inside of a company that had been very traditional in a sense.”

Photo: Suse

Click banner image for more How I decided seriesA native New Yorker, Melissa Di Donato made a life-changing decision back in 2005 when she packed up for Europe to further her career in technology. Then with IBM, she made London her new home base.

Today, Di Donato is CEO of Germany’s Suse, now a 30-year-old, open-source enterprise software company that specializes in Linux operating systems, container management, storage, and edge computing. As the company’s first female leader, she has led Suse through the coronavirus pandemic, a 2021 IPO on the Frankfurt Stock Exchange, and the acquisitions of Kubernetes management startup Rancher Labs and container security company NeuVector.

Keep Reading Show less
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.

Sponsored Content

Great products are built on strong patents

Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America's technology leadership.

Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.

From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: "intellectual property protection is vital for American innovation and entrepreneurship.”

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.

UiPath had a rocky few years. Rob Enslin wants to turn it around.

Protocol caught up with Enslin, named earlier this year as UiPath’s co-CEO, to discuss why he left Google Cloud, the untapped potential of robotic-process automation, and how he plans to lead alongside founder Daniel Dines.

Rob Enslin, UiPath's co-CEO, chats with Protocol about the company's future.

Photo: UiPath

UiPath has had a shaky history.

The company, which helps companies automate business processes, went public in 2021 at a valuation of more than $30 billion, but now the company’s market capitalization is only around $7 billion. To add insult to injury, UiPath laid off 5% of its staff in June and then lowered its full-year guidance for fiscal year 2023 just months later, tanking its stock by 15%.

Keep Reading Show less
Aisha Counts

Aisha Counts (@aishacounts) is a reporter at Protocol covering enterprise software. Formerly, she was a management consultant for EY. She's based in Los Angeles and can be reached at acounts@protocol.com.


Figma CPO: We can do more with Adobe

Yuhki Yamashita thinks Figma might tackle video or 3D objects someday.

Figman CPO Yuhki Yamashita told Protocol about Adobe's acquisition of the company.

Photo: Figma

Figma CPO Yuhki Yamashita’s first design gig was at The Harvard Crimson, waiting for writers to file their stories so he could lay them out in Adobe InDesign. Given his interest in computer science, pursuing UX design became the clear move. He worked on Outlook at Microsoft, YouTube at Google, and user experience at Uber, where he was a very early user of Figma. In 2019, he became a VP of product at Figma; this past June, he became CPO.

“Design has been really near and dear to my heart, which is why when this opportunity came along to join Figma and rethink design, it was such an obvious opportunity,” Yamashita said.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.


Microsoft lays out its climate advocacy goals

The tech giant has staked out exactly what kind of policies it will support to decarbonize the world and clean up the grid.

Microsoft published two briefs explaining what new climate policies it will advocate for.

Photo by Jeremy Bezanger on Unsplash

The tech industry has no shortage of climate goals, but they’ll be very hard to achieve without the help of sound public policy.

Microsoft published two new briefs on Sept. 22 explaining what policies it will advocate for in the realm of reducing carbon and cleaning up the grid. With policymakers in the U.S. and around the world beginning to weigh more stringent climate policies (or in the U.S.’s case, any serious climate policies at all), the briefs will offer a measuring stick for whether Microsoft is living up to its ideals.

Keep Reading Show less
Brian Kahn

Brian ( @blkahn) is Protocol's climate editor. Previously, he was the managing editor and founding senior writer at Earther, Gizmodo's climate site, where he covered everything from the weather to Big Oil's influence on politics. He also reported for Climate Central and the Wall Street Journal. In the even more distant past, he led sleigh rides to visit a herd of 7,000 elk and boat tours on the deepest lake in the U.S.

Latest Stories