Facebook Reports Q3 Earnings Beat, See User Growth Slowing In Q4

Facebook, Inc. FB reported third-quarter results after Thursday's close. The company said it earned $2.71 per share in the third quarter on revenue of $21.47 billion versus expectations of $1.91 per share and $19.82 billion.

The Numbers: Total advertising revenue rose from $17.383 billion in the same quarter last year to $21.221 billion, while total revenue was higher by 22% year-over-year. Total costs and expenses rose from $10.467 billion to $13.430 billion.

Net income improved from $6.091 billion to $7.846 billion while operating margins fell from 41% to 37%.

The company's effective tax rate was 4% and reflects a one-time income tax benefit of $913 million versus 17% last year. Excluding the benefit, Facebook's effective tax rate would have been 11 percentage points higher and its diluted EPS would have been 31 cents lower.

Cash and cash equivalents and marketable securities were $55.62 billion at the end of the quarter.
See Also: Twitter Reports Smallest Daily Active User Growth Since 2017

User Metrics: Facebook noted the following user metrics:

  • Facebook's daily active users (DAUs) rose 12% year-over-year to 1.82 billion.
  • Facebook monthly active users (MAUs) rose 12% to 2.74 billion.
  • Family daily active people (DAP) rose 15% to 2.54 billion
  • Family monthly active people (MAP) rose 14% to 3.21 billion.

User Outlook: Management expects a sequential acceleration in ad revenue growth in the fourth quarter while 2021 remains a year of "significant" uncertainty.

Management is guiding for flat to slightly lower fourth-quarter DAU and MAU metrics in the U.S. and Canada compared to the third quarter.

While a continued growth of online shopping represents a headwind to revenue growth in 2021, there is a lot of uncertainty around the viability of transatlantic data transfers due to regulatory developments.

2020 total expenses are expected to be in the range of $53 billion to $54 billion and $68 billion to $73 billion in 2021.

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