Facebook's first-quarter revenue and user numbers beat Wall Street expectations Wednesday, even as the social media giant cautioned that has caused "unprecedented uncertainty" for the future of its ad business.
Facebook has seen a surge in people using the social network to stay in touch with family and friends during lockdowns designed to slow the spread of COVID-19, the respiratory illness caused by the virus. That's given the company, which has been plagued by various privacy scandals, a chance to show that its services can be used for good.
Facebook said a record number of people are using the social network but that the coronavirus outbreak slowed demand for advertising in the last three weeks of the first quarter. The social network saw a decrease in ads from travel and auto businesses, which have been hit hard as people stay at home. The company said monthly active users rose to 2.6 billion, up 10% from the same quarter a year ago. Analysts expected Facebook to report 2.56 monthly active users. Nearly 3 billion people used one of Facebook's apps, including Instagram and WhatsApp.
At the same time, Facebook has had to weather challenges created by the outbreak. Production of Facebook's consumer hardware products, such as its Oculus Portal video chat devices, has been affected by the virus. Coronavirus misinformation also continues to spread on Facebook, forcing the company to ramp up efforts to moderate content that could harm people's health and safety.headsets and its
In a statement, the company said it expected its business performance to be affected by issues outside of its control, including the length of shelter-in-place orders, the effectiveness of measures to stimulate the economy and the value of the US dollar.
"I remain very concerned that this health emergency and therefore the economic fallout will last longer than people are currently anticipating," Facebook CEO and co-founder Mark Zuckerberg said during a call with analysts. At the same time, he's also worried that reopening certain places too quickly will lead to future outbreaks and longer-term health and economic impacts.
Facebook reported $17.7 billion in revenue from January to March, surpassing the $17.4 billion in revenue that analysts surveyed by Thomson Reuters had projected. Though Facebook makes most of its money from ads, the social network said other revenue, such as virtual reality headsets, increased by 80% to $297 million compared with the same period last year.
Facebook earned $1.71 per share, below estimates of $1.75 per share. The company's stock was up more than 10% to $214.39 per share in after-hours trading.
Facebook said that ad revenue in the first three weeks of April has been relatively flat, a sign that some analysts say could result in a more challenging second quarter for social media companies.
"Some countries will be open for business sooner than others and ad spending will start to rise there, but other countries will remain largely on lockdown into May and possibly beyond," said eMarketer principal analyst Debra Aho Williamson in a statement. "Even within countries, such as in the US, businesses will open up at varying rates, making it incredibly difficult for a company like Facebook to get its ad sales momentum back."
A double-edged sword
To combat misinformation, Zuckerberg and wife Priscilla Chan have interviewed infectious disease experts and politicians via live video. The chats appear in Facebook 's coronavirus information center, an online hub the social network launched in March to direct people to more-trustworthy sources of information.
Still, misinformation remains a big problem for social networks. Conspiracy theories and hoaxes still thrive in Facebook groups, including false claims that the coronavirus is caused by 5G, according to an analysis by NBC. The New York Times also found that there were 487 Facebook communities pushing the 5G conspiracy theory, which government officials believe is linked to cell tower fires.
Outside of new products, Facebook is also donating millions of dollars to small businesses and local news organizations. The company is offering businesses $100 million in cash grants and ad credit. It's also been donating thousands of its Portal video chat devices to veterans in the US and people in hospitals and care homes in the UK.
Facebook has been doubling down on video with the release of new features. Last week, the company released a tool called Messenger Rooms, which lets you video chat with up to 50 people, a move that could help Facebook compete with Zoom and HouseParty.
Zuckerberg said the company still plans to build new products and plans to hire 10,000 people in product and engineering roles this year. People will have new needs and the company has a responsibility to invest in the economic recovery, he said. In April, Facebook said it was investing $5.7 billion in India's Jio Platforms, a large market for the social network and its messaging app WhatsApp.
"I've always believed that in times of economic downturn, the right thing to do is to keep investing and building the future," Zuckerberg said.