Facebook reports Q2 revenue of $29.08B, up 56% YoY, MAUs of 2.9B, up 7% YoY, headcount of 63,404, up 21% YoY; stock down ~3% on warning of revenue slowdown

“We had a strong quarter as we continue to help businesses grow and people stay connected,” said Mark Zuckerberg, Facebook founder and CEO.

Facebook 2021-07-29

Context & Ripple Effects

Facebook’s Q2 follows a year in which revenue growth moved from 11% in the prior Q2 to 22% in Q3, while reported audience growth has slowed from 12% in 2020 to 7% now. The company is therefore pairing a much larger revenue base with a more mature user base.

The warning attached to the quarter matters because it shifts attention from the reported 56% revenue gain to Facebook’s next growth period, immediately pushing its shares lower.

First-order effects

Facebook’s revenue-slowdown warning drove its stock down about 3%, despite Q2 revenue reaching $29.08 billion.
Facebook enters the next period with 2.9 billion MAUs and a 63,404-person workforce, both still growing but at materially different rates from revenue.

Second-order effects

Facebook investors must recalibrate expectations around the company’s forward revenue trajectory rather than its headline Q2 growth rate.
The widening gap between Facebook’s 56% revenue growth and 7% MAU growth puts greater weight on maintaining revenue growth from an audience that is expanding more slowly.

Third-order effects

Facebook’s sequence of quarterly reports points to a platform-scale business where audience growth is decelerating even as revenue can surge, making revenue durability the central measure of future performance.
If that pattern persists, Facebook’s growth narrative will increasingly depend on extracting more economic value from its existing global audience rather than on rapid expansion in MAUs.

The trend: Large consumer platforms are moving into a maturity phase in which slowing audience growth makes the durability of revenue growth more consequential to investors.

Discussion

@shiringhaffary Shirin Ghaffary on x
Mark Zuckerberg on Facebook earnings call talking about the metaverse: “The metaverse is a virtual environment where you can be present with people in digital spaces. You can kind of think of this as an embodied internet.”
@ryanfduffy Ryan Duffy on x
The Metaverse Hype Cycle: https://twitter.com/...
@swiftstories Mike Swift on x
Zuckerberg opens @Facebook 2Q #earnings call with a stat: 3.5 billion people now actively use one of Facebook's services. Also, video now accounts for half of al time spent on #Facebook. Earnings release here: https://s21.q4cdn.com/...
@jason_kint Jason Kint on x
OMG, in the release, Facebook is actually going to try to gaslight its investors and trade press with this metaverse FUD. If any analyst asks a single question about it rather than effects of Apple on Facebook's surveillance, and the many harms, they should resign on the spot. /3…
@jason_kint Jason Kint on x
The fact that Andrew Bosworth's name is on top of the “metaverse” BS from Facebook should both infuriate and disgust you at the same time. he's a soldier for zuckerberg, sandberg and the stock regardless of harm. leaked memos and all. /5
@caro_milanesi Carolina Milanesi on x
8/ What is the Metaverse? “You're basically gonna be able to do everything that you can on the internet today, as well as some things that don't make sense on the internet today like dancing” 🤯🤯
@parismarx Paris Marx on x
After inventing stories and newsletters, Facebook is now inventing Second Life. https://twitter.com/...
@silvermanjacob Jacob Silverman on x
The most important thing is that we trust this guy to do what's right. https://twitter.com/...
@jason_kint Jason Kint on x
When Facebook tries to talk FUD today whether metaverse or AR/ VR devices, a reminder that 98.2% of their revenues come from microtargeted advertising dependent on surveillance of YOU. All of this is under scrutiny for all sorts of harms and anticompetitive abuses. /2 https://twi…
@lizthegrey Liz Fong-Jones on x
everything old is new, apparently. those of us who worked on Whirled or Second Life don't matter, apparently! https://twitter.com/...
@thekenyeung Ken Yeung on x
Wow, Facebook is nearing 2 billion DAU and 3 billion MAU. https://investor.fb.com/...
@jason_kint Jason Kint on x
wow, 95% of Facebook's Q2 revenue growth in US & Canada came as a result of charging more from its advertisers and users. /4 i.e. Monopoly Power. Q2 '20 Ad $ = 9.1B ARPU = 35.6 Q2 '21 Ad $ = 13.4B ARPU = 51.6 math: Growth from ARPU = 1-((13.4-(51.6/35.6*9.1)/(13.4- 9.1))
@karissabe Karissa Bell on x
something something something PIVOT TO VIDEO (and then pivot to metaverse) https://www.engadget.com/...
@jack @jack on x
1992: the internet will be like Snow Crash 2021: the facebook will be like Snow Crash
@jamesliamcook James Cook on x
Maybe Sony should bring back PlayStation Home and become a metaverse company https://twitter.com/...
@william_partin Will Partin on x
im sorry but this metaverse stuff is just embarrassing. it is just every bad internet idea of the last 30 years rebranded. https://twitter.com/...
@cnbcnow @cnbcnow on x
EARNINGS: Facebook Q2 EPS $3.61 vs. $3.03 Est.; Q2 Revs. $29.08B vs. $27.89B Est. • $FB https://www.cnbc.com/... https://twitter.com/...
@rezendi Jon Evans on x
This is outrageous. ...Neuromancer preceded Snow Crash by eight years, I'll have you know. https://twitter.com/...
@chrisinsilico @chrisinsilico on x
Disinformation pays. https://www.cnbc.com/...
@caro_milanesi Carolina Milanesi on x
9/ I must admit the level of ambition that see Facebook become a whole world is as fascinating as it is scary. How much worse will harassment be in the Metaverse?
@cnbc @cnbc on x
EARNINGS: Facebook Q2 EPS $3.61 vs. $3.03 Est.; Q2 Revs. $29.08B vs. $27.89B Est. • $FB https://www.cnbc.com/... @JBoorstin reports. https://twitter.com/...
@caro_milanesi Carolina Milanesi on x
1/ Reading the transcripts of the #FB earnings call seems even more surreal than listening to it
@jordannovet Jordan Novet on x
Facebook's Other revenue, including devices and developer fees, reported the second quarter of sequential decline, which didn't match the pattern last year. Other revenue was lower than analysts had expected. wonder if supply was a factor https://www.cnbc.com/... https://twitter.…
@micsolana Mike Solana on x
journalists now mad about this new word “metaverse” which tech industry VR enthusiasts have been using in reference to snowcrash for at least the last decade of my career, but in all likelihood since that book was published literally thirty years ago
@matthewstoller Matt Stoller on x
Facebook earnings: “Advertising revenue growth in the second quarter of 2021 was driven by a 47% year-over-year increase in the average price per ad and a 6% increase in the number of ads delivered.” It's good to be a monopoly. https://s21.q4cdn.com/...
@jason_kint Jason Kint on x
Facebook earnings - there it is: “We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter.” https://twitter.co…
@jason_kint Jason Kint on x
Here comes the CFO who has the important role of balancing the tension between freaking out investors and creating more liability for the likely class action lawsuit if/when privacy changes hurt them worse than forecasted. /9
@alexeheath Alex Heath on x
Narrative violation: Facebook grew faster than Apple in the second quarter and profits are up 101%. Users also continue to climb. What scandals again? https://www.theverge.com/...
@moonalice Roger McNamee on x
Outstanding thread on FB earnings by @jason_kint. It was a blowout quarter, but does not include impact from iOS 14.5, which is likely to be a big drag next quarter and beyond. Much deflection ... https://twitter.com/...
@benedictevans Benedict Evans on x
Facebook ad revenue up 56% year-on-year, net income doubled to $10bn in the quarter. It's a good thing they didn't have a fight with Apple
@munster_gene Gene Munster on x
Apple ad tracking changes are having an impact FB on the near term. Eventually that goes away and Facebook finds a way forward even with the Apple headwind.
@jason_kint Jason Kint on x
FUD, FUD, FUD, FUD, FUD, FUD, FUD, FUD....the only question that matters for Facebook today is: What percent of app users for Facebook Blue app, Instagram and WhatsApp respectively are opting out of Facebook tracking on Apple's iOS 14.5+ platforms when prompted by users????? /7
@jason_kint Jason Kint on x
Sandberg has shifted back and forth from her normal pleas for small business, the benefits of “personalized ads” and innovation. I honestly don't think she's ever run a material business that doesn't depend on surveillance economics. /8
@benedictevans Benedict Evans on x
I would actually be much more interested in transparency around Facebook's ad revenue than reach for particular kinds of content. How much of FB's revenues comes from the long tail - from SMEs that never advertised at all before?
@pinboard @pinboard on x
Facebook really powered through that advertiser boycott that made every front page last summer. https://twitter.com/...
@anthonyquintano Anthony Quintano Photography on x
Pivot to text? https://twitter.com/...
@turnernovak @turnernovak on x
This would imply TikTok now has ~2x total time spent watching video in the US than Facebook https://twitter.com/...
@jason_kint Jason Kint on x
As zuckerberg spits out video metrics, a reminder to what we learned about his predictions and bogus metrics from an unsealed fraud lawsuit on the matter a couple years ago. /6 https://www.niemanlab.org/...
@joshgnosis Josh Taylor on x
it's a trap https://twitter.com/...
@pt Parker on x
Nothing empowers people to build community and bring the world closer together like feeding them clickable videos to watch alone on their phone all day. https://twitter.com/...
@niinegames Philip Bak on x
The other half being in the settings trying to find where the hell to turn the auto-playing bastards off. https://twitter.com/...
@finchstrife Chandler Wood on x
I swear, if this forces another “pivot to video” for companies who don't have the expertise or resources to do so... https://twitter.com/...
@codepo8 Chris Heilmann on x
Addiction machine in full effect. Mark Zuckerberg says video now accounts for almost half the time spent on Facebook, and that Reels is the “largest contributor to engagement growth” (Karissa Bell/Engadget) https://www.engadget.com/...
@seldo Laurie Voss on x
It's time to pivot to video! https://twitter.com/...
@amcmanus @amcmanus on x
Remember when Facebook straight up lied about video engagement? Good times. https://twitter.com/...
@tprstly Theo Priestley on x
Ah, that explains why Vice is pivoting to video. Again. https://twitter.com/...

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