Facebook is booming, owing to the worldwide shelter-in-place and quarantine orders due to COVID-19. The pandemic has made everyone turn to social networks and stare at screens far more than average.
The company reported its first-quarter earnings for 2020 on Wednesday. A record number of people are using its services, primarily its Messenger, WhatsApp chat apps, and Instagram.
Last month, as the coronavirus intensified, FB said it was seeing spikes of more than 50 percent on its messaging products. Now it logs about 700 million daily calls across Messenger and WhatsApp.
But it knows its popularity is likely only temporary. Those products that are seeing spikes are not the ones FB can most easily monetize. This was according to analytics chief Alex Schultz and engineering chief Jay Parikh in a blog post.
They don’t monetize many of the services where they’re seeing increased engagement. And they’ve seen a weakening in their ads business in countries taking aggressive actions to reduce the spread of COVID-19.
Facebook CEO Mark Zuckerberg said they’re just trying to keep the lights on over there.
The pandemic’s effects on consumer buying habits and marketing budgets may continue falling dramatically in the coming months. The company’s core advertising business may take a serious hit come next quarter.
Facebook and Google are the most dominant web advertising platforms in the industry. Yet some of the biggest spenders, including travel and dining-related websites and companies have all been slashing marketing spend.
That will, over time, create big holes in both companies’ ad revenue as the shelter-in-place orders remain in effect. That goes for large ad markets like the US and Europe.
Facebook Likely to Make Less Profit when COVID-19 Subsides
The company stated that their business has been impacted by the COVID-19 pandemic. Because of this, like all companies, they are facing a period of unprecedented uncertainty in their business outlook.
They expect their business performance will be impacted by issues beyond their control such as the duration of shelter-in-place orders. This also includes the effectiveness of economic stimuli around the world, and the fluctuations of currencies relative to the dollar.
Facebook says it’s keeping an eye for drops in engagement. They expect to lose at least some of this increased engagement when various shelter-in-place restrictions are relaxed in the future.
It also is starting to feel the downturn in the global advertising industry over the course of the last month.
They experienced a significant reduction in advertising demand, over the last three weeks of this year’s first quarter. They also experienced a related decline in the pricing of their ads.
Currently, amid COVID-19 however, Facebook’s key numbers are looking good. It reported a revenue of $17.7 billion and a profit of $4.9 billion. Those were 18 percent, and 102 percent jumps from this time last year, respectively.
The number of users who log into Facebook daily jumped 11 percent from Q1 2019 to 1.7 billion. The number of monthly active users increased by 10 percent to 2.6 billion during this COVID-19 crisis.
The “Family daily active people” and “Family monthly active people” both hit 2.4 billion and 3 billion, respectively. They both measure when a user has used at least one of Facebook’s various products within those time frames.
Facebook’s non-ad business is up 80 percent this quarter from a year ago, to nearly $300 million. This includes its Oculus virtual reality headsets and Portal family of video chat devices.