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Facebook Reports Second Quarter 2020 Results

Facebook Reports Second Quarter 2020 Results

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Published by Press release

MENLO PARK, Calif.July 30, 2020 /PRNewswire/ — Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended June 30, 2020.

“We’re glad to be able to provide small businesses the tools they need to grow and be successful online during these challenging times,” said Mark Zuckerberg, Facebook founder and CEO. “And we’re proud that people can rely on our services to stay connected when they can’t always be together in person.”

Second Quarter 2020 Financial Highlights

Three Months Ended June 30,

Year-over-Year %

In millions, except percentages and per share amounts

2020

2019 (1)

Change

Revenue:

Advertising

$

18,321

$

16,624

10%

Other

366

262

40%

Total revenue

18,687

16,886

11%

Total costs and expenses

12,724

12,260

4%

Income from operations

$

5,963

$

4,626

29%

Operating margin

32%

27%

Provision for income taxes

$

953

$

2,216

(57)%

Effective tax rate

16%

46%

Net income

$

5,178

$

2,616

98%

Diluted earnings per share (EPS)

$

1.80

$

0.91

98%

_________________________

(1) Includes an additional $2.0 billion legal expense related to our settlement with the U.S. Federal Trade Commission (FTC) and a $1.1 billion income tax expense due to the Altera Ninth Circuit Opinion, both accrued in the second quarter of 2019.

Second Quarter 2020 Operational and Other Financial Highlights

  • Facebook daily active users (DAUs) – DAUs were 1.79 billion on average for June 2020, an increase of 12% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 2.70 billion as of June 30, 2020, an increase of 12% year-over-year.
  • Family daily active people (DAP) – DAP was 2.47 billion on average for June 2020, an increase of 15% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.14 billion as of June 30, 2020, an increase of 14% year-over-year.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $3.36 billion for the second quarter of 2020.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $58.24 billion as of June 30, 2020. On July 7, 2020, we paid approximately $5.8 billion at the then–current exchange rate for our investment in Jio Platforms Limited.
  • Headcount – Headcount was 52,534 as of June 30, 2020, an increase of 32% year-over-year.

Impact of COVID-19 on Outlook

Our business has been impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook. We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the U.S. dollar.

  • Engagement – Facebook DAUs and MAUs in the second quarter of 2020 reflect increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about. More recently, we are seeing signs of normalization in user growth and engagement as shelter-in-place measures have eased around the world, particularly in developed markets where Facebook’s penetration is higher. Looking forward, as shelter-in-place restrictions continue to ease, we expect the number of Facebook DAUs and MAUs to be flat or slightly down in most regions in the third quarter of 2020 compared to the second quarter of 2020.

  • Revenue – In the first three weeks of July, our year-over-year ad revenue growth rate was approximately in-line with our second quarter 2020 year-over-year ad revenue growth rate of 10%. We expect our full quarter year-over-year ad revenue growth rate for the third quarter of 2020 will be roughly similar to this July performance. There are several factors contributing to this outlook, including:

    • First, continued macroeconomic uncertainty, including the pace of recovery and the prospects for additional economic stimulus;
    • Second, our expectation that some of the recent surge in community engagement will normalize as regions reopen;
    • Third, the impact from certain advertisers pausing spend on our platforms related to the current boycott, which is reflected in our July trends; and
    • Lastly, headwinds related to ad targeting and measurement, including the impact of regulation, such as the California Consumer Privacy Act, as well as headwinds from expected changes to mobile operating platforms, which we anticipate will be increasingly significant as the year progresses.

  • Total expenses – We expect total expenses in 2020 to be in the range of $52-55 billion, narrowed slightly from the prior range of $52-56 billion.

  • Capital expenditures – We expect full-year 2020 capital expenditures to be approximately $16 billion, at the high end of our prior $14-16 billion range, as we have resumed data center construction efforts earlier than expected. However, a great deal of uncertainty remains in our outlook, and our full year capital expenditures will depend on how the pandemic impacts our ability to construct data centers and refresh equipment.

  • Tax rates – We expect our full-year 2020 tax rate to be in the mid-teens, although we may see fluctuations in our quarterly rate depending on our financial results.

Webcast and Conference Call Information

Facebook will host a conference call to discuss the results at 3 p.m. PT / 6 p.m. ET today. The live webcast of Facebook’s earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Facebook uses the investor.fb.com and newsroom.fb.com websites as well as Mark Zuckerberg’sFacebook Page (https://www.facebook.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (404) 537-3406 or +1 (855) 859-2056, conference ID 3783991.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

About Facebook

Founded in 2004, Facebook’s mission is to give people the power to build community and bring the world closer together. People use Facebook’s apps and technologies to connect with friends and family, find communities and grow businesses.

 

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