Facebook's revenue growth was hurt by Apple's new ad-tracking selectivity requirements, but the social giant still made a lot of money. Its posting profits beat Wall Street expectations.
In the third quarter of 2021, Facebook reported $29.01 billion in revenue, up 35% from the previous year. Net income increased 17% to $9.2 billion ($3.22 per diluted share). Wall Street analysts expected Facebook to report revenue of $29.58 billion and earnings per share of $3.19, according to Refinitiv.
The company's flagship service saw little user growth in the quarter: Facebook's global monthly active users reached 2.91 billion, up 7 percent from a year earlier but unchanged from 2.99 billion in the second quarter. The entire APP family (Facebook, Instagram, Messenger and WhatsApp) reached 3.58 billion monthly active users, up 12% year-over-year and 70 million quarter-over-quarter.
Facebook said it expected total revenue for the fourth quarter to be between $31.5 billion and $34 billion, up 12 to 21 percent from a year ago. "Our outlook reflects the significant uncertainty we face in the fourth quarter, given the changes to Apple's iOS 14 and the continued adverse impact of macroeconomic and COVID-19-related factors," Dave Wehner, chief financial officer, said in prepared remarks.
Third-quarter results and guidance were not as bad as investors worried: Facebook shares rose 1.9 percent in after-hours trading on Monday.
Facebook has warned investors that it expects revenue growth to decelerate in the second half of 2021 after announcing q2 earnings, due to increased resistance to advertising targeting from 2021 due to regulatory and platform changes, most notably Apple's update with iOS 14.5 that requires users to opt in to allow AD track.
Starting in the fourth quarter, Facebook said it will adopt a new financial reporting breakdown structure that will split into two retractable segments: the Family of Applications (FOA), which includes Facebook, Instagram, Messenger, WhatsApp and other services. And Facebook Reality Labs (FRL), which includes augmented Reality and VR related consumer hardware, software and content.
Facebook's third-quarter earnings report comes at a time of heightened scrutiny by the media, lawmakers and regulators over alleged harms at the power company.
Facebook has endured a wave of bad PUBLIC relations in recent weeks after a whistleblower leaked internal documents to the media alleging that the company prioritized profits over safety (a charge Mr. Zuckerberg denies).Facebook executives repeatedly ignored or downplayed employees' concerns about misinformation and other harmful content, according to multiple reports based on the documents.
The latest batch of material, known as the "Facebook files", was obtained by a consortium of 17 Us news organizations through lawyers for a former employee, Frances Haugen.
Frances Haugen gave the materials to the SEC and provided a redacted version to Congress. Meanwhile, Facebook is reportedly planning to change the company's name, which Zuckerberg is expected to discuss at the Facebook Connect developer conference on Thursday (October 28).
