© Reuters. FILE PHOTO: This image shows a 3D printed Facebook logo on a keyboard
By Katie Paul and Noor Zainab Hussain
(Reuters) – Facebook Inc. (NASDAQ 🙂 warned Thursday of a tougher year 2021, despite beating analysts' estimates for quarterly revenue as companies preparing for the global pandemic continue to rely on the company's digital advertising tools.
The social media company said in its outlook that it was facing "significant uncertainties", citing upcoming data protection changes by Apple (NASDAQ 🙂 and a possible reversal of the pandemic-triggered move to online commerce.
"Given that e-commerce is our largest advertising industry, a change in this trend could serve as a headwind to our ad revenue growth in 2021," it said.
The shares of the world's largest social network remained unchanged in expanded trading.
"It seems that investors are disappointed that despite the surge in user growth in most regions during the quarter, the social media platform saw a decline in users in North America, which covers the US and Canada – the most lucrative ad market," said Jesse Cohen. Senior Analyst at Investing.com.
Total revenue, which consists primarily of ad sales, rose to $ 21.47 billion from $ 17.65 billion in the third quarter ended September 30, beating analysts' estimates of $ 19.82 billion, according to IBES data from Refinitiv U.S. dollar.
Revenue growth at Facebook, the world's second largest online ad provider after Alphabet's Google (NASDAQ :), had already cooled off before the pandemic as the business matured, although it was still over 20% in 2019.
However, compared to expectations, the company had a bumpy year as the usage of its platforms by users stuck at home spiked due to virus-induced bans that dampened online ad sales despite the more general economic activity.
A July boycott of Facebook's handling of hate speech that paused some of the social media giant's biggest single editions in the press barely detracted from revenue, which comes mostly from small businesses.
Monthly active users rose to 2.74 billion, compared to an estimated 2.70 billion.
Total costs rose 28% to $ 13.43 billion, with costs rising as Facebook tries to quell criticism that it has neglected its use of user privacy and abusive content.
The company has been under particularly heavy pressure ahead of next week's US presidential election and is trying to avoid a repeat of 2016 when Russia used its platforms to spread election-related misinformation.
EMarketer lead analyst Debra Aho Williamson said Facebook continues to be a go-to for advertisers looking to reach a wide range of consumers despite the challenges of campaigning and content moderation.
"Looking ahead to 2021, we expect more advertisers to look closely at their reliance on Facebook and wonder if the environment is safe for their brands," she said.
Net income was $ 7.85 billion, or $ 2.71 per share, compared to $ 6.09 billion or $ 2.12 per share last year. According to IBES data from Refinitiv, analysts had expected earnings of USD 1.90 per share.