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.

Protocol | Policy

5 things to know about FCC nominee Gigi Sohn

The veteran of some of the earliest tech policy fights is a longtime consumer champion and net-neutrality advocate.

Gigi Sohn, who President Joe Biden nominated to serve on the FCC, is a longtime net-neutrality advocate.

Photo: Alex Wong/Getty Images

President Joe Biden on Tuesday nominated Gigi Sohn to serve as a Federal Communications Commissioner, teeing up a Democratic majority at the agency that oversees broadband issues after months of delay.

Like Lina Khan, who Biden picked in June to head up the Federal Trade Commission, Sohn is a progressive favorite. And if confirmed, she'll take up a position in an agency trying to pull policy levers on net neutrality, privacy and broadband access even as Congress is stalled.

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Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

If you've ever tried to pick up a new fitness routine like running, chances are you may have fallen into the "motivation vs. habit" trap once or twice. You go for a run when the sun is shining, only to quickly fall off the wagon when the weather turns sour.

Similarly, for many businesses, 2020 acted as the storm cloud that disrupted their plans for innovation. With leaders busy grappling with the pandemic, innovation frequently got pushed to the backburner. In fact, according to McKinsey, the majority of organizations shifted their focus mainly to maintaining business continuity throughout the pandemic.

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Gaurav Kataria
Group Product Manager, Trello at Atlassian
Protocol | Workplace

Adobe wants a more authentic NFT world

Adobe's Content Credentials feature will allow Creative Cloud subscribers to attach edit-tracking information to Photoshop files. The goal is to create a more trustworthy NFT market and digital landscape.

Adobe's Content Credentials will allow users to attach their identities to an image

Image: Adobe

Remember the viral, fake photo of Kurt Cobain and Biggie Smalls that duped and delighted the internet in 2017? Doctored images manipulate people and erode trust and we're not great at spotting them. The entire point of the emerging NFT art market is to create valuable and scarce digital files and when there isn't an easy way to check for an image's origin and edits, there's a problem. What if someone steals an NFT creator's image and pawns it off as their own? As a hub for all kinds of multimedia, Adobe feels a responsibility to combat misinformation and provide a safe space for NFT creators. That's why it's rolling out Content Credentials, a record that can be attached to a Photoshop file of a creator's identity and includes any edits they made.

Users can connect their social media addresses and crypto wallet addresses to images in Photoshop. This further proves the image creator's identity, but it's also helpful in determining the creators of NFTs. Adobe has partnered with NFT marketplaces KnownOrigin, OpenSea, Rarible and SuperRare in this effort. "Today there's not a way to know that the NFT you're buying was actually created by a true creator," said Adobe General Counsel Dana Rao. "We're allowing the creator to show their identity and attach it to the image."

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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.

Protocol | China

Why another Chinese lesbian dating app just shut down

With neither political support nor a profitable business model, lesbian dating apps are finding it hard to survive in China.

Operating a dating app for LGBTQ+ communities in China is like walking a tightrope.

Photo: Nicolas Asfouri/AFP via Getty Images

When Lesdo, a Chinese dating app designed for lesbian women, announced it was closing down, it didn't come as a surprise to the LGBTQ+ community.

It's unclear what directly caused this decision. 2021 hasn't been kind to China's queer communities; WeChat has deactivated queer groups' public accounts and Beijing has pressured charity organizations not to work with queer activists.

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Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

The Oura Ring was a sleep-tracking hit. Can the next one be even more?

Oura wants to be a media company, an activity tracker and even a way to know you're sick before you feel sick.

Over the last few years, the Oura Ring has become one of the most recognizable wearables this side of the Apple Watch.

Photo: Oura

Oura CEO Harpreet Rai swears he didn't know Kim Kardashian was a fan. He was as surprised as anyone when she started posting screenshots from the Oura app to her Instagram story, and got into a sleep battle with fellow Oura user Gwyneth Paltrow. Or when Jennifer Aniston revealed that Jimmy Kimmel got her hooked on Oura … and how her ring fell off in a salad. "I am addicted to it," Aniston said, "and it's ruining my life" by shaming her about her lack of sleep. "I think we're definitely seeing traction outside of tech," Rai said. "Which is cool."

Over the last couple of years, Oura's ring (imaginatively named the Oura Ring) has become one of the most recognizable wearables this side of the Apple Watch. The company started with a Kickstarter campaign in 2015, but really started to find traction with its second-generation model in 2018. It's not exactly a mainstream device — Oura said it has sold more than 500,000 rings, up from 150,000 in March 2020 but still not exactly Apple Watch levels — but it has reached some of the most successful, influential and probably sleep-deprived people in the industry. Jack Dorsey is a professed fan, as is Marc Benioff.

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David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

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