Facebook’s revenue climbs 18% as it increases marketing spend by 38%

Facebook’s global revenues for the first quarter of the 2020 calendar year have climbed 18% to US$17.737bn – US$3.527bn of which came from the Asia Pacific region.

During the three months to 31 March, 2020, the social media, technology, data and information company – also responsible for apps including Instagram and WhatsApp – saw its marketing and sales expenses climb to US$2.787bn, a 38% increase on the same period last year.

As a percentage of revenue, marketing and sales costs were also up to 16%. Last quarter, sales and marketing was just 14% of revenue, while in Q1 of last year, it was 13%.

Daily Active Users (DAU) were also up 11% year-on-year, to 1.73bn, the company said.

Facebook’s Q1 financial highlights (Click to enlarge)

Despite the growth, the company said COVID-19 was taking its toll.

“Our business has been impacted by the COVID-19 pandemic and, like all companies, we are facing a period of unprecedented uncertainty in our business outlook. We expect our business performance will be impacted by issues beyond our control, including the duration and efficacy of shelter-in-place orders, the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the US dollar,” an announcement to investors said.

Facebook’s average revenue per user (ARPU) (Click to enlarge)

The last three weeks of the quarter, in particular, painted a worrying picture, with the company admitting there was a significant reduction in demand for advertising over the 21-day period, and a related pricing decline.

Facebook’s regional revenues (Click to enlarge)

The company said as a result, it would not provide a revenue guidance for Q2.

Facebook will also be looking to save money in the coming quarter due to less expenses around travel, events and marketing, as well as slowing its headcount growth. It expects expenses for 2020 will be US$52bn to US$56bn, down from the prior aim of US$54bn to US$59bn.

A breakdown of Facebook’s expenses (Click to enlarge)

The top end of the media release about the results focused on the company’s efforts to keep consumers informed and safe during the pandemic.

“Our work has always been about helping you stay connected with the people you care about,” CEO and founder Mark Zuckerberg said. “With people relying on our services more than ever, we’re focused on keeping people safe, informed and connected.”

Facebook’s DAUs (Click to enlarge)

Facebook said it is supporting the global public health community’s work to ensure everyone has access to accurate information, and is working to address the long-term impacts of the crisis by supporting industries in need. It has committed US$300m to help communities during the crisis, including US$100m in grants to small businesses and US$100m to support the news industry.


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