Facebook Brings in USD 29.08 Billion in Revenue in Q2 2021

The social media giant Facebook reported second-quarter (Q2) earnings on Wednesday. Even though it has beat the Wall Street expectations, its commentary on slow growth in the upcoming quarter tanked the stock price by 5%. The company brought in USD 29.08 Billion in revenue in this June quarter, up by 56% year-over-year. Its advertising business segment accounted for over 98% of the total revenue.

Facebook generated USD 12.3 Billion from operations, which doubled since Q2 2020. The operating margin rose to 32%, an increase of 11% year-over-year. In the earnings report, the company said that its price per ad has grown by 47%, and it has executed 6% more ads in this quarter. It reported 2.90 monthly active users (MAUs) and 1.91 daily active users (DAUs) on its social media platform. The firm generated an average of USD 10.12 revenue per user in Q2 2021.

The company’s other business segment, which includes Oculus virtual reality headsets, brought in USD 497 Million, a rise of 36% in revenue from last June quarter. Facebook said that it anticipates “year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth.”

Facebook to Transition Itself to Become a Metaverse Company

During the conference call, CEO of Facebook Mark Zuckerberg said that the company’s goal is to develop a metaverse, which is “a virtual environment where you can be present with people in digital spaces,” according to Zuckerberg. The announcement comes after Facebook revealed it will establish a product team to work on the metaverse concept. The company is heavily investing in augmented reality (AR) and virtual reality (VR) technologies to create a digital universe.

“In the coming years, I expect people will transition from seeing us primarily as a social-media company to seeing us as a metaverse company,” Zuckerberg said on a call. Various tech giants such as Microsoft, Google, and Amazon are investing in virtual technologies. The creation of metaverse might help the company to sell digital products and services. “We had a strong quarter as we continue to help businesses grow and people stay connected,” he said in a statement.

iOS 14.5 Update May Impact the Revenue

Apple’s iOS 14.5 software update for iPhone is expected to bring more transparency for the users. However, this privacy update can create few challenges for Facebook, as it can reduce the effectiveness of its ads to iPhone users. On Wednesday, the California-based company said that it expects “increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates.” Facebook’s CFO David Wehner said that the “recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter.”

Facebook expects that its 2021 capital expenditures would be between USD 19 Billion and USD 21 Billion. Moreover, it speculates its total expenses to be in the range between USD 70 Billion and USD 73 Billion. “The year-over-year growth in expenses is driven primarily by investments in technical and product talent, infrastructure, and consumer hardware-related costs. Our expense outlook reflects our commitment to invest ahead of the compelling long-term growth opportunities we see across our product portfolio,” CFO said in the earnings report.

Facebook Under Scrutiny

Recently, US President Joe Biden said that social media companies should be held accountable for spreading misinformation. He said that tech giants like Facebook are “killing people” by spreading misinformation regarding COVID-19 vaccines. The White House press secretary Jen Psaki said that the Biden administration has begun “flagging problematic posts for Facebook that spread disinformation.”

Facebook’s Statement on Vaccination

The company wants its employees to be vaccinated. “As our offices reopen, we will be requiring anyone coming to work at any of our US campuses to be vaccinated,” VP of Human Resources Lori Goler said on Wednesday. “How we implement this policy will depend on local conditions and regulations.” Facebook’s announcement comes after Google CEO Sundar Pichai said that the employees returning to offices have to be vaccinated.