Facebook Inc. beat analysts’ estimates for quarterly revenue on Thursday, as businesses used its digital advertising tools to tap a surge in online traffic during the coronavirus pandemic even as they slashed marketing budgets elsewhere.
Shares of the world’s biggest social network jumped more than 8 per cent in extended trading.
Revenue growth was its slowest ever as a public company, reported at 11 per cent, although it beat analysts’ expectations that it would sink to 3 per cent, according to IBES data from Refinitiv.
Previously, growth of 18 per cent in the first quarter this year was its slowest on record. Facebook projected that ad revenue for the third quarter is likewise expected to grow faster than Wall Street estimates, despite an ad boycott in July.
Ad sales, which make up nearly all of Facebook’s revenue, rose 10 per cent to US$18.3-billion in the second quarter. Monthly active users rose to 2.7 billion in the second quarter, ahead of estimates of 2.6 billion.
Investors were bracing for difficulties in the second quarter, the first period to show the full impact of virus-related lockdowns. Facebook said in April it was seeing signs of stability for sales in the first three weeks of the quarter after a plunge in March.
Revenue growth at Facebook, the world’s second-biggest seller of online ads after Alphabet Inc.’s Google, had been cooling even prior to the pandemic as its business matured, although it still came in at more than 20 per cent throughout 2019.
Alphabet shares were up 1 per cent after posting revenue and profit that beat expectations but failed to smash estimates.
Chief executive Mark Zuckerberg said in April that Facebook would somewhat control costs this year in response to the pandemic, without “slamming on the brakes” on strategic investments.
Total costs and expenses increased 4 per cent to US$12.7-billion in the second quarter, compared with the US$12.5-billion analysts had forecast.
Net income came in at US$5.2 billion, or US$1.80 a share, in the three months ended June 30. It had been US$2.6-billion a year earlier, reflecting a US$2-billion charge related to Facebook’s privacy settlement with the Federal Trade Commission.
Analysts had expected a profit of $1.39 a share.
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