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Social media beast Facebook reported better than expected second quarter earnings after the close Wednesday. $FB also agreed to a $5 billion settlement with the Federal Trade Commission after the 2018 Cambridge Analytica scandal.

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Facebook Inc. (NASDAQ: $FB) Reported Earnings After Close Wednesday

$1.99 Beat $1.88 EPS AND $16.9 Beat  $16.50 billion Revenue Forecast

Earnings

Facebook reported second quarter earnings of $1.99 cents per share beating the $1.88 per share, forecast by Refinitiv. Revenue was $16.9 billion ahead of the $16.5 billion, forecast by Refinitiv. Net income grew 48% year-over-year to $2.6 billion or $0.91 per share. Excluding a one-time legal expense and income tax expenses, adjusted EPS was $1.99.

  • Daily active users: 1.59 billion, vs. 1.59 billion forecast by FactSet
  • Monthly active users: 2.41 billion, vs. 2.41 billion forecast by FactSet
  • Average revenue per user: $7.05 vs. $6.87 forecast by FactSet

 

Facebook, Inc. Common Stock NASDAQ: $FB

Market Summary > After hours 206.05 +1.39 (+0.68%)

Highlights

  • Facebook said it recorded a $2 billion charge in the quarter tied to the FTC $5 billion settlement. It previously set aside $3 billion.
  • Advertising revenues, which make up the majority of Facebook’s revenues, increased 28% year-over-year to $16.6 billion.
  • Mobile advertising revenue represented approx. 94% of advertising revenue, up from approx. 91% of advertising revenue in the year-ago quarter.
  • Revenue from payments and other fees rose 36% to $262 million.
  • Total costs and expenses increased 66% to $12.2 billion.
  • Operating margin dropped to 27% in the second quarter from 44% in the year-ago period.
  • The company said it counts over 2.7 billion monthly users across the its family of apps, up slightly on last quarter.
  • Facebook user base in Europe remained flat quarter-to-quarter at 286 million daily active users.
  • FB’s user base in the U.S. and Canada was 187 million, up slightly compared to 186 million in the prior quarter.
  • The company said average revenue per user was $7.05, up 18% from $5.97 a year ago.
  • Facebook also announced that it was informed by the FTC in June that the agency had opened an antitrust investigation into the company.
  • Facebook says it has more than 500 million daily users for the Stories features across Facebook, Instagram, WhatsApp and Messenger

Facebook Q2 2019 earnings

What Analysts Are Watching

Data Privacy

Social media data privacy and Facebook in particular has been a beacon of controversy with many hoping earnings will allow a change of focus.

During the conference call, expect Zuckerberg to again address questions about the impact of the Cambridge Analytica data scandal, which led to the congressional hearings and $5 billion settlement.

Anti Trust Investigation

Late Tuesday, the night ahead of earnings, the Department of Justice announced a broad antitrust review of the dominant tech platforms including Facebook

Advertising Revenue Metrics

Advertising accounts for the bulk of Facebook's revenue. Investors will also be watching  for improvements in ad impression, Continued growth in the user base for the Facebook flagship social media site is a key metric. The potential for multiple expansion, and digital advertising growth momentum across its family of products.

Instagram

With Instagram now Facebook's fourth platform to exceed 1 billion users while launching IGTV. There is much excitment here, Updated user growth or engagement information are expected to show that adoption of the app is accelerating,

Facebook's future growth may well depend on the success of Instagram, as its own user growth is slowing.

Messaging Apps

Facebook's messaging apps with WhatsApp and Messenger users sending a combined 100 billion messages per day, along with 3 billion minutes of video and voice calls last quarter. Investors are expecting monstrous growth as usual.

From Last Year: Facebook $FB Buys tbh Anonymous App To Compete With $SNAP 

Facebook’s rival Snap Inc. (NASDAQ: SNAP) reported second quarter 2019 results on Tuesday, beating estimates. Another competitor Twitter Inc. (NYSE: TWTR) is set to report Q2 results on Friday.

Source: Traderscommunity, Facebook, AlphaStreet

From The Traders Community News Desk

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