Highlights from the Second Quarter

In Q2 2021, Facebook reported $26.2 billion in revenue, a 32% year-over-year increase. In addition, daily Active Users (DAU) increased 11% year-over-year to 1.79 billion, and Monthly Active Users (MAU) increased 11% year-over-year to 2.74 billion.

This overview will dive into the key highlights of these reports.

Summary of results

The second quarter of 2020 was a period of growth and improvement for the organization. The team achieved significantly higher revenues and gross profits year-over-year with ongoing collaborations, new product developments, and other initiatives. Here’s a summary of our second-quarter results:

Revenues: Revenues were up 11.7% compared to last year’s period.

Gross profit margin: Gross profit margins were up 9.3% compared to last year, driven by increased efficiency and cost cutting measures across our operations departments.

Sales volume growth: Sales volume grew 16.5%, driven by increased demand from core customers and an expanded customer base due to new initiatives implemented during the quarter.

New product development: The team successfully launched three new products during the quarter, further diversifying our revenue streams. These products received favorable market reception which helped us maintain high revenue momentum throughout the quarter.

Operating expenses: Operating expenses dropped 4% over the past twelve months due to process optimization and cost cutting measures implemented at all levels of our organisation.

Revenue

Facebook reported strong revenue growth of 17.7% year-over-year for the second quarter of 2021. With a total of $25.44 billion in revenue for the quarter, Facebook saw an increase of almost $4 billion compared to the same quarter a year ago.

This was largely driven by an increase in the number of advertisers using their services and an increase in the average price per ad.

Let’s look closer at the details.

Total revenue

Total net revenue increased in the second quarter to $2.075 billion, an increase of 12.3% compared to the prior-year period. International net revenue of $828 million surpassed domestic net revenue of $1,247 million, representing 39.5% and 60.5%, respectively, of the second quarter’s total revenue.

Digital revenues also saw significant gains this quarter, growing 32% yearly and nearly 24% overall revenue. Operating income ($455 million) increased nearly 3x compared to the prior-year period and income before taxes totaled $385 million for the second quarter alone.

We anticipate continued organic growth across our markets and higher spending from our core retail customers. We remain committed to leveraging our investment in technology to drive efficiency, cost savings and scale within operations so that our customer offerings stay competitive in a rapidly changing global landscape.

Revenue breakdown by segment

The second quarter of 2020 saw a considerable drop in overall revenue for most major businesses. However, for businesses with multiple segments or divisions, it’s important to drill down and analyse the individual performance of each segment. This is especially true for companies operating in industries or locations that have seen greater-than-average impacts from COVID-19 or geopolitical changes.

This report will provide an overview of the breakdown of revenue by segment, separated into three main categories:

1. Domestic Revenue: This includes all products and services sold in the domestic market. 2. International Revenue: This includes products and services sold to customers outside the domestic market, such as exports and licence fees collected from international customers. 3. Other Revenue: Any additional sources of income not included in domestic or international segments, such as interest earned on investments, gains on sales of fixed assets during the period, and royalties received from intellectual property like patents and copyrights.

For each category above, sales figures will be broken down further into smaller categories when relevant to better understand how each subsection is performing relative to one another and to overall revenue as a whole. Additionally, any significant changes in practices or approaches driving growth (or losses) will be noted for deeper analysis later on if needed.

User Metrics

Facebook reported strong user metrics in the second quarter of 2021, with growth in its daily and monthly active user base and daily average reactivity continuing. The company reported that monthly active users reached 2.82 billion, up from 2.44 billion a year prior. Meanwhile, daily active users rose to 1.88 billion, up from 1.82 billion a year prior. Additionally, the company reported that daily average reactivity rose to 1.88 billion, an increase from 1.82 billion in the same period the previous year.

Take a closer look at user metrics for the second quarter of 2021.

Total monthly active users

Total monthly active users is one of the most important metrics in assessing the health of a platform. It tells us how many people actively engage with the platform and how quickly it is being adopted. During the second quarter of 2020, we saw an increase in monthly active users, with a total of 958,311 MAUs across both web and mobile platforms, an 8.6% increase from the previous quarter.

This growth was driven by continued investment in our user Acquisition campaigns and successful onboarding initiatives that resulted in higher engagement and retention. Our user base grew mainly across all of our target markets and new markets we had recently opened up to.

We also saw healthy engagement numbers during the second quarter with 36% daily active users (DAU) out of our total MAUs, a 3% increase from first quarter. In addition, further analysing user activity data revealed that nearly 70% of those DAUs spent more than 6 minutes within a single session, giving us valuable insights into what resonates with our existing user base.

We further anticipate strong growth for this metric over the next few quarters, given our plans to scale up marketing efforts, optimise product features for better engagement, and introduce new partnerships to expand reach into new markets.

Daily active users

Daily active users (DAUs) measure how many unique users come to a product or service daily. They are a key indicator of user loyalty and engagement, as well as the long-term sustainability of the business. DAUs for the second quarter showed an increase of 28%, compared to last year.

On average, users visited our platform 4 times a day during the second quarter. In addition, average session lengths were 7 minutes and an 11% increase in page views per session compared to last quarter, indicating that users are more engaged on the site than previously.

We saw strong growth among male and female users, with 60% of our daily active users being male and 40% female. This demonstrates our appeal across genders and could indicate potential possibilities for marketing campaigns within different target markets.

These metrics demonstrate that user engagement is growing on our platform, signalling potential for future expansion opportunities.

Average revenue per user

Average revenue per user, also known as ARPU, is a measure of a company’s average revenue generated per user account over a specified period. It is often used to measure the success of an organisation in monetizing its services over short or long-term periods. The average revenue per user metric provides an insight into the demand for the products and services offered by an organisation and its ability to monetize it effectively.

In the second quarter, many organisations saw increases in ARPU across their consumer base and important emerging markets such as India and Latin America. Companies can increase their ARPU rates by providing premium services, offering discounts or promotions, expanding into new markets, or concentrating on high value activities. In addition, this rate can be further segmented based on product type, subscriber status or geography.

Average revenue per user is just one indicator that can help measure performance; companies should also consider other metrics that may play a part in overall success such as customer satisfaction levels and click-through rates. In addition, organisations should strive to continuously monitor their users’ behaviour so they can evaluate how specific actions are either increasing or decreasing revenue per user during different quarters throughout the year.

Advertising

Facebook released the second quarter 2021 results report and the results show that it’s growing at a rapid pace. The advertising sector of the report was especially impressive. Facebook reported a revenue increase of 48% compared to the same period last year. The impressive revenue growth was primarily driven by strong demand for advertising products.

Let’s take a deeper dive into this report and look at the advertising numbers in more detail.

Total advertising revenue

Total advertising revenue for the second quarter of 2020 was $68.6 billion, a decrease of 23.2 percent from the same period a year ago, according to the Interactive Advertising Bureau’s (IAB) Internet Advertising Revenue Report. This report is released quarterly and based on data supplied by companies that sell Internet advertising to guide industry decisions about media buying and selling.

The report shows that search had the highest share of spending with 35 percent of all interactive advertising revenues followed by display-related with 19 percent and classifieds/directories with 8 percent. Other categories include lead generation (7 percent), email (3 percent), mobile (7 percent), and digital video/rich media (11 percent).

The results are derived from a survey which encompasses all U.S.-based IAB members representing more than 95% of total interactive ad revenues earned by companies who create, sell or place interactive advertising or marketing messages in cooperation with content providers (such as Web portals, ISPs and other on-line or digital media outlets). Therefore, this report does not measure non-IAB members or technology companies who do not work in conjunction with content providers such as agencies, advertisers or marketers.

Advertising revenue breakdown by segment

Advertising revenue continues to be a major contributor to the company’s overall performance, representing over 78% of total revenue for the quarter. In segment breakdown, online advertising revenue grew 21.4% YoY, driven by strong display and search advertising growth. Digital out-of-home (DOOH) advertising revenue also saw strong growth at 28%, while TV and radio combined declined 5%.

Online Advertising

Online advertising was the largest segment contributing 56% to total advertising revenue with YoY growth of 21.4%. On the other hand, display advertising witnessed solid double-digit growth of 12%, driven by robust travel, apparel and finance demand. In addition, search constantly expanded its share of overall online ad spending due to growing demand for user intent targeted ads.

Digital Out-of-Home Advertising

DOOH accounted for a 8% share in overall ad revenue with 28% growth compared to last year supported by resilient demand from large auto, telecom and consumer goods customers. Average CPM rates also saw an uptick resulting in good margin expansion sequentially in this segment.

Television & Radio Advertising

Television & radio

Operating Expenses

Facebook reported its financial results for the second quarter of 2021, including its operating expenses, which increased 67% year-over-year to $20.34 billion. Most of the increase was driven by higher costs associated with research and development investments, and the amortisation of intangible assets.

Let’s take a closer look at the details of these operating expenses.

Total operating expenses

Total operating expenses for the second quarter of 2020 amounted to $4.7 million, representing a decrease of $0.9 million compared to the prior quarter. This decrease was primarily attributable to decreased research and development and general and administrative costs, partially offset by increased cost of sales due to higher raw material prices.

Due to the pandemic, research and development expenses decreased by approximately $0.7 million due to reduced activities in our R&D pipeline. In response to the current economic environment, general and administrative expenses decreased by approximately $0.2 million from heightened cost control measures. Cost of sales increased by approximately $0.1 million driven primarily by higher raw material costs that were passed through to customers on an as incurred basis, resulting in no impact on gross margins for this quarter, compared with the previous quarter.

Operating expense breakdown by category

Operating expenses for the second quarter of 2020 totaled $54.6 million, an increase of 22.3% compared to the same period in 2019. Breaking this down further, our operating expenses included the following:

– Sales and Marketing: This expense is associated with activities intended to drive revenue growth, such as advertising and sales personnel expenses. For the quarter ended June 30th 2020, sales and marketing expenses increased by 40.9% from $18.7 million to $26.3 million year-over-year due to increased spending on digital initiatives such as online promotion campaigns for our new product launch.

– Research and Development: This line item reflects spending on research projects leading to developing new products or services. Our R&D expenditure decreased by 0.8% from $11.7 million in the year-ago quarter to current level of $11.6 million as we remobilized resources towards other projects in progress due to pandemic related restrictions that impacted our testing timeline.

– General & Administrative: Administrative costs experienced an increase of 14% compared with Q2 2019, totaling $16.7M during the second quarter of 2020 primarily due to higher legal costs incurred with our process optimization program initiative.

Facebook Reports Second Quarter 2021 Results

Facebook Reports Second Quarter 2021 Results with financial highlights demonstrating the growth of their business and financial performance. Facebook reported a total revenue of $26.2 billion, a 48% year-over-year increase, and an operating income of $8.8 billion, an increase of 68% year-over-year. The quarterly earnings results also showed increased engagement across all of Facebook’s core services and a record level of monthly and daily active users.

Let’s take a closer look at the financial highlights from Facebook’s second quarter.

Total cash and marketable securities

At the end of the second quarter, total cash and marketable securities stood at 399.6 million dollars, a $58.8 million increase compared to the same period in the prior year and a $18.2 million increase from the first quarter of this fiscal year.

This represents an increase in total cash and marketable securities position to 28% of total assets compared to 26% in the prior year, reflecting an increase in liquidity levels and strengthening of financial health.

Cash flows from operations during this period also reflected improved operating performance resulting from disciplined cost management practices, increases in pricing with key customers, and strong growth across parts and aftermarket businesses.

Net income

Net income reflects revenues minus expenses, and is a standard measure of profitability that can be used to compare operations over time or between organisations. For the year’s second quarter, net income stood at $2.3 million due to higher sales revenue and decreased overhead costs. This represents a 20 percent increase compared to the same period last year, when net income was $1.9 million.

The company successfully reduced expenses in the second quarter by utilising automated accounting systems, streamlining processes and reducing staffing costs in certain divisions. Additionally, aggressive marketing strategies helped increase sales revenue from new customers and existing clients making additional purchases from us.

The capacity to protect our bottom line through efficiency savings and bring on new business for growth is a sign that the company is successfully managing both short-term operations and long-term strategic initiatives. Management will continue analysing earnings statements and implementing cost-effective measures to generate profits.

Earnings per share

Earnings per share (EPS) represent the portion of a company’s net income allocated to each outstanding share of common stock. EPS serves as an indicator for investors to assess a company’s profitability and historically has been used by investors to identify stocks with higher returns. EPS can be calculated by dividing the total earnings for a given period by the number of shares outstanding during that time frame.

The second quarter financial highlights showed that the EPS for this region was very profitable, increasing from 0.96 in the previous quarter to 1.69 this quarter. In addition, all sectors reported positive growth in earnings per share, leading to an overall increase in third-quarter earnings compared to last year’s second quarter results. The most significant gains were seen in consumer services and industrial manufacturing, which saw increases of 32% and 22% respectively compared to the same period last year. As a result, this has shown a notable increase in total EPS figures over previous quarters and improved efficiency across all sectors.

Outlook

Facebook reported its second quarter 2021 results on July 29. This report included highlights from the past three months and an outlook for the following quarter. Notably, the company reported record revenue of $25.2 billion and a sharp increase in daily and monthly active users.

Going forward, Facebook expects to continue to invest in its core product while also investing in new products, including the recently launched Messenger Rooms product. Let’s take a closer look at these results and the outlook for the next quarter.

Financial guidance for the third quarter of 2021

Following a strong second quarter, financial guidance for the third quarter of 2021 includes continued improvements in our core business operations and further progress on investments in long-term growth initiatives.

We expect revenue to grow between 2-3% year over year and Adjusted EBITDA* to increase by 5-6%. We also anticipate that our capital expenditure requirement should remain at about 5% for the third quarter.

Looking further ahead, we will continue to strive for operational excellence and penetrating new markets with innovative products. In addition, meticulous management of our financial resources will be critical in supporting the investments required to foster long-term growth while keeping costs manageable. We look forward to providing updates on progress throughout the coming quarters.

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