Facebook Q3: $21.47B revenue, up 22% YoY, net income $7.85B, up 29% YoY, as DAUs rise 12% YoY to 1.82B, MAUs rise 12% YoY to 2.74B

Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended September 30, 2020. — “We had a strong quarter as people and businesses continue …

Facebook 2020-10-30

Context & Ripple Effects

Facebook's Q3 closes out a whipsaw year for its ad business: Q2 growth had collapsed to 11% YoY as advertisers pulled spend during the pandemic, before this quarter's rebound to 22% growth on $21.47B in revenue. The comparison point is last year's Q3, when revenue grew 29% — so even the recovery quarter lands below the pre-pandemic growth rate.

The user side tells the opposite story: DAU growth accelerated from 9% YoY a year ago to 12% now, pushing daily users to 1.82B and monthly users to 2.74B. Engagement swelled during lockdowns and is holding, giving Facebook more inventory to sell into a recovering ad market.

First-order effects

Advertisers who cut budgets ahead of Q2's 11%-growth quarter came back, lifting revenue growth from 11% to 22% YoY and net income to $7.85B, up 29%.

Second-order effects

With DAUs up 12% while revenue growth trails last year's 29% pace, Facebook is monetizing a larger audience at a lower per-user growth rate — pressuring ad pricing and making international user growth carry more of the load.

Third-order effects

Even with the rebound, the trajectory across these quarters runs from 42% growth in mid-2018 to high-teens/low-twenties now: Facebook is settling into a slower-growth profile where scale of engagement, not headline growth, becomes the investment case.

The trend: Digital advertising is recovering faster than the pandemic trough suggested, but Facebook's structural growth rate has stepped down even as its audience keeps compounding.

Discussion

@wcathcart Will Cathcart on x
This year we've all relied on messaging more than ever to keep up with our loved ones and get business done. We are proud that @WhatsApp is able to deliver roughly 100B messages every day and we're excited about the road ahead.
@rmac18 @rmac18 on x
Also to the FB employee screenshotting my tweets and asking on the internal message board if I have an invite to the next Q&A: I do not have an invite yet, but would love one. Thank you.
@alexeheath Alex Heath on x
Facebook Q3 earnings: - 10% ad growth in Q2 - 22% ad growth in Q3 - Expects higher growth rate in Q4 - User growth declining in North America after pandemic bump https://www.theinformation.com/ ...
@amy_siskind Amy Siskind on x
Finally. Yes. https://twitter.com/...
@paigeleskin @paigeleskin on x
NEW: Even as its revenue beats expectations for Q3, Facebook has seen a DECLINE in active users in the US + Canada. https://www.businessinsider.com/ ...
@richtechexec John W. B. Rich on x
Earnings predictions on key metrics for each company: Amazon: $10 trillion in sales Facebook: 52 billion angry boomer posts Twitter: 146 billion hours wasted debating politics Google: 62 pissed off senators who won't actually do anything
@kurtwagner8 Kurt Wagner on x
Facebook Earnings: Good: Revenue was up big. $21.5 billion for the quarter, up 22%. That was a beat. Bad: Daily and monthly active users in the U.S. and Canada declined in the quarter. That's not a shock, but also FB's most valuable market so not good to lose people there
@semperdiced DeMarcus on x
Another reason this in not 2016. Even though Facebook remains a cesspool, awareness of it's evil has caused sane people to exit. That will have a positive affect on society. https://twitter.com/...
@richlightshed Rich Greenfield on x
Facebook (Blue) was supposed to be in secular decline years ago, yet it reached 198 million DAILY active users in Q2 2020 and declined for the first time ever in Q3 2020 to 196 million - with mgmt saying Q4 2020 will be flat to down sequentially as well $FB @facebook
@antoniogm @antoniogm on x
Tl;dr: When all of humanity is relegated to interacting with the world via only screens, the screen people do well. https://www.wsj.com/...
@public_citizen @public_citizen on x
8,000,000 Americans have been pushed into poverty and our tech overlords are just buzzing along, piling on to their already obscene fortunes. These companies need to be broken up — immediately. https://twitter.com/...
@lorakolodny Lora Kolodny on x
as predicted... but harder to measure- did it hurt (or help) other aspects of Fb, like recruiting and retention? https://twitter.com/...
@rmac18 @rmac18 on x
Listening to Facebook's earnings call now, and there's something telling about Zuckerberg answering questions from financial analysts and not employees five days before a presidential election. https://twitter.com/...
@swodinsky Shoshana Wodinsky on x
mfw every time fb uses small biz's as human shields when arguing against better privacy legislation https://twitter.com/...
@sarahfrier Sarah Frier on x
Facebook lost users in its most lucrative ad market: the U.S. the company attributes this to the covid bump in 2Q not lasting https://twitter.com/...
@willoremus Will Oremus on x
Respect to the one Facebook employee who submitted the all-hands question to Zuckerberg about why content moderators are not full employees. https://twitter.com/...
@rmac18 @rmac18 on x
Other questions: how will a breakup of Facebook be possible, can contract content mods get free covid tests and hazard pay, and what is the healthy amount of time ppl should spend on fb and Instagram?
@rmac18 @rmac18 on x
Facebook canceled Zuckerberg's all hands meeting with employees today. No reason given. He testified in the Senate yesterday and still has an earnings call today. Unless something else is scheduled, his employees will not hear from him until after Election Day.
@sal19 Sal Rodriguez on x
The StopHateForProfit ad boycott did not seem to impact Facebook's advertising revenue, which was up 22% compared to a year ago https://www.cnbc.com/...
@slpng_giants @slpng_giants on x
https://twitter.com/... https://twitter.com/...
@mott_lab_ Matt Gottsacker on x
FB sees the future value in VR, so they're looking to capitalize on everyone's data once they get them in their user pipeline. This shouldn't have been hard to predict (even if the founder of Oculus promised it wouldn't happen), but it is tough to swallow nonetheless. 7/
@meredithperry Meredith Perry on x
Oculus x Peloton would be cool. Would probably motivate people to work out more. “Scenic rides” on a screen really aren't all that interesting unless immersive.
@rubberninja Ross O'Donovan on x
Nearly every single person I play Among Us with regularly bought VR just to come play VR Among Us. Oculus and Valve I'm your #1 unofficial salesman.
@kurtwagner8 Kurt Wagner on x
One high level thing: Facebook, Twitter, Pinterest and Snap have all reported revenue that was WAY better than everyone expected in the third quarter. A great sign for the digital ad market, which was in flux a few months ago following the Covid outbreak. It's back.
@jesselehrich Jesse Lehrich on x
@swodinsky is it always this egregious? seems even more aggressive than I've heard before. perhaps getting ahead of new dynamics in Washington...
@dhh @dhh on x
@realBobBruley Split Instagram, WhatsApp, Facebook. Just one example. Or split newsfeed from groups. Facebook Messenger from the rest. Endless opportunities.
@colinsholes Colin S on x
@swodinsky I told you about how they only issued small biz grants in metro areas where they had offices right
@swodinsky Shoshana Wodinsky on x
also remember how we all thought july's ad ban would actually put a dent in the company's revenue???????????
@sarahcuda Sarah Lacy on x
only ones with any power to change facebook are the employees. https://twitter.com/...
@dhh @dhh on x
Even coordinated, private action is insufficient to put even a dent in big tech. This is exactly why there are monopoly laws, why the congressional report on tech antitrust is crucial, and why these companies must be restricted and broken up to restore competition. https://twitte…
@brendancarrfcc Brendan Carr on x
Courts have misread Section 230 as providing social media companies with carte blanch to censor content while maintaining their statutory immunity protections. That's not what Section 230 says.

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