Facebook Beats in its Q2 Report and Talks About the Metaverse

Social media giant Facebook just reported its second quarter earnings report that revealed a beat in both earnings and revenue.

Shares however fell as much as 5% in after-hours trading afteer the company warned of significant growth slowdown in the quarters ahead.

For the second quarter, Facebook reported EPS of $3.61 a share adjusted. This was way ahead of the $3.03 a share that had been expected by analysts per Refinitiv.

Revenue at $29.08 billion was also better than the $27.89 billion that had been expected by analysts, according to Refinitiv.

Daily active users hit 1.91 billion, coming in line with what analysts expected, per StreetAccount.

Monthly active users at 2.90 billion was slightly lower than the 2.91 billion as expected by analysts, according to StreetAccount.

Average revenue per user was $10.12, vs. $9.66 as expected by analysts, according to StreetAccount.

Facebook’s revenue grew by 56% year over year in the second quarter. This was the fastest growth for the company since 2016 when it saw a 48% increase from a prior quarter.

The company pointed to a 47% rise in average price per ad, along with a 6% increase in the number of ads it delivered.

The company’s Other segment, including consumer hardware such as Oculus virtual reality headsets, saw revenue hit $497 million, up 36% and less than the $685.5 million StreetAccount consensus estimate.

The company’s free cash flow of $8.51 billion however missed the $9.08 billion StreetAccount consensus.

Looking ahead, Facbook says it expects “year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.”

Analysts polled by Refinitiv had expected $28.22 billion in revenue for the third quarter, which implies 31% growth.

Facebook said in Wednesday’s statement that it still expects “increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates.”

Facebook’s finance chief David Wehner, said the company expects a larger impact from iOS 14.5 in the third quarter than in the second quarter. The degree of opting in is in line with Facebook’s expectations, Wehner said.

“We’re not fully rolled out with those changes, but Q3 will have the impact more or less of those meaningfully rolled out,” he said.

CEO Mark Zuckerberg talked about the company’s goal to help develop the metaverse, which he described as “a virtual environment where you can be present with people in digital spaces.”
“In the coming years, I expect people will transition from seeing us primarily as a social-media company to seeing us as a metaverse company,” Zuckerberg said.

The CEO has said Facebook is striving to build a maximalist, interconnected set of experiences straight out of sci-fi — a world known as the metaverse.

“What I think is most interesting is how these themes will come together into a bigger idea,” Zuckerberg said in June. “Our overarching goal across all of these initiatives is to help bring the metaverse to life.”

As of Wednesday’s close, Facebook shares were up 37% since 2021 began.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.