Facebook Q3 beats, forecasts ‘significant amount of uncertainty’ in 2021

Facebook’s third quarter earnings report beat investor expectations on top and bottom lines after hours on Thursday. The platform saw 12% growth in both daily and monthly active users across its platforms year over year, as consumers around the world spent more time online due to the coronavirus pandemic. Looking ahead, the company forecasted a ‘significant amount of uncertainty for 2021.’ Yahoo Finance’s Myles Udland breaks down the company’s earnings report on The Final Round.

Video Transcript

SEANA SMITH: Facebook, they're out with their earnings results. Myles Udland has those numbers for us. Myles.

MYLES UDLAND: Yeah, another company beating on the top and the bottom lines here. Really a theme for these big giants I think we're going to see over the next hour or so. Facebook coming out earnings per share, $2.71. The Street was looking for $1.91. Revenue, $21.47 billion, notably better than the $19.8 billion that the Street was looking for.

Company also beating on its user metrics. Daily active users, 1.82 billion in the most recent quarter. The Street was looking for 1.78. Monthly active users, 2.74 billion. That is better than the 2.7 that the Street was looking for. And so, again, a company that certainly has benefited from a lot more activity going online not just this quarter, but over the last decade plus.

But certainly, COVID even for a major and what would seem more mature business like Facebook an accelerant for so many of those trends. And the stock here we mentioned earlier up 4.9% during the regular trading hours today. It had popped about 3% after hours. Right now, right around 4.08. It's up about 8/10, right around 1%, let's call it, for shares of Facebook, following these results.

And as I'm speaking, stock has now flipped negative off about 1%. So after a big rally during the regular hours, Facebook shares a little bit more volatile after hours following a beat on the top and bottom lines as well as on its user metrics, Seana.

ANDY SERWER: And Myles, you know, we talked about the ad boycott and we were wondering, well, you know what we're doing right now, Myles? I don't see it. I don't see any impact from the ad boycott.

MYLES UDLAND: Only on Facebook, Andy.

ANDY SERWER: Yeah, right, and you know what's also interesting is that, you know, people love to hate it, except for portfolio managers who stuck by it. Because this thing has just gone all over the place. But overall, the sawtooth has been bottom left to top right. And I think you're absolutely right that, you know, people don't think of them as right away in terms of the stay at home trade. But obviously, it is big time when it comes to, you know, the ad market. Go ahead, Myles.

MYLES UDLAND: Yeah, and I just want to come back on Facebook on a couple other numbers. And one that they include that we love to talk about in the past couple of quarters is their headcount. Facebook now employs 56,653 people. That's up 32% year over year. Their capex almost $4 billion, $3.88 billion in the most recent quarter.

And we've talked a lot about Facebook changing expenses. You know, Andy, you said that the ad boycott, that's really about platform security, how happy are Facebook's customers with what's happening on the platform. And they've had to invest. Again, someone had the classic line maybe a year or so ago. They had to invest, like, a railroad in their social media platform.

And we continue to see expenses pretty hefty here at the company, $13.4 billion of expenses against $21.47 billion in revenue. Obviously, very good business there but you're continuing to see costs rise. That's up from $10 billion in the same quarter last year. And so, again, it's been a very interesting period to see Facebook's business mature like this in the last couple of years.

DAN ROBERTS: And, guys, just a thought on Facebook, too. Andy mentioned the ad boycott, which we haven't really seen the impact. And I think a lot of people knew that it wouldn't really be hurt by that. And yet, the following can also be true, that other companies have seen a little benefit. We saw yesterday from Pinterest earnings that Pinterest specifically said in its earnings that it saw some new ad money coming over, thanks to the Facebook boycott.

But the bigger distinction here is large companies, big, big brands that were able to say, oh, we're boycotting, and small businesses. But a lot of the analysts have said during the pandemic is that Facebook can think its ad dollars growing despite all of the hue and cry and all the controversy to small businesses that really rely on Facebook advertising.

I think we sometimes forget about that, that there are a lot of small businesses that maybe they haven't fully digitized. They don't have a big internet presence. But they dipped their toe into Facebook advertising, and they've seen a direct benefit from that. Those businesses have not ditched Facebook.