[HN Gopher] Facebook reports second quarter results
___________________________________________________________________
Facebook reports second quarter results
Author : aminozuur
Score : 71 points
Date : 2020-07-30 20:34 UTC (2 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| subsubzero wrote:
| Of course the company is having a great quarter even with the
| boycotts. It has a complete strange-hold over all social media.
| _not really counting China social media except tikTok
|
| FB - 2.4B MAU [1]
|
| Instagram(FB Owned) - 1B MAU_ [2] _2018 numbers
|
| WhatsApp(FB Owned) - 2B MAU [3]
|
| Facebook totals - 5.4B MAU (overlap between apps, not unique
| users)
|
| Everyone else:
|
| Snap - 360M MAU [4]
|
| Twitter - 330M MAU [5]
|
| TikTok - 800M MAU [6] _estimate
|
| Everyone else totals = 1.49B
|
| *MAU = Monthly Active User B = Billions, M = Millions
|
| [1] - https://www.businessinsider.com/facebook-grew-monthly-
| averag...
|
| [2] - https://www.statista.com/statistics/253577/number-of-
| monthly...
|
| [3] - https://www.statista.com/statistics/260819/number-of-
| monthly...
|
| [4] - https://www.omnicoreagency.com/snapchat-statistics/
|
| [5] - https://www.omnicoreagency.com/twitter-statistics/
|
| [6] - https://wallaroomedia.com/blog/social-media/tiktok-
| statistic...
| dvt wrote:
| The boycotts are priced in. Companies get to virtue signal a
| bit[1], but ad spend was going to go down anyway during the
| pandemic
|
| [1] For example, in a blatant show of hypocrisy, Nike slashed
| FB advertising, but has had plenty of child labor and sweatshop
| scandals to boot.
| ponker wrote:
| Notably, YouTube is absent from "Everyone else"
| subsubzero wrote:
| Its not really a social media network, like the others in the
| list. You don't broadcast personal messages to your friends,
| and update a feed/homepage with personal info. Sort of like
| pinterest, and if I am missing these hidden giants please
| bring them up(I may have missed some).
| Keyframe wrote:
| Quick google search revealed that to be around 2B. Facebook
| is a giant here.
| bpodgursky wrote:
| Up 7% after hours. That boycott! Mark must be quivering in his
| sweatshirt.
|
| Or, actually he knows it was just cheap PR for marketing budgets
| making cuts anyway (and apparently, not even that many at all).
| cowpig wrote:
| I have a different interpretation, and mine has more to do with
| the naturally monopolistic nature of these platform economies,
| coupled with a legislature that has lost its teeth (turned into
| massaging fingers, maybe!) when it comes to economic problems.
| umeshunni wrote:
| "The good thing about platform monopolies is that there are
| so many to choose from"
| mtgx wrote:
| The US is looking down at an economic cliff, and the stocks keep
| going higher. Amazing. This won't end well (for the vast majority
| of people).
| PunchTornado wrote:
| listening to Zuckerberg yesterday in the testimony you would
| think fb is almost bankrupt. He tried to make it look, we're so
| small, don't waste your efforts on us. pick on the big guys,
| apple, google, amazon.
| polyomino wrote:
| Apple, Google, and Amazon are each an order of magnitude bigger
| Jabbles wrote:
| In what dimension?
| reaperducer wrote:
| Lengthwise.
| aminozuur wrote:
| The members of Congress were constantly interrupting the CEO's
| within two or three sentences. I could not watch more than a
| few minutes of it.
| novia wrote:
| Each member of Congress was limited to 5 minutes at a time.
| It was clear that some of the CEOs (Bezos) had been advised
| to try to fill that time with as much fluff as possible.
|
| The members of Congress would ask a yes or no question, and
| then the CEO would start in on a speech about how great their
| company is. That's why you kept seeing those interruptions.
| TLightful wrote:
| Yep, was a basic advertising campaign.
|
| American democracy and accountability is over.
| ponker wrote:
| The members of Congress weren't trying to get answers from
| Facebook, they were trying to go viral on Facebook.
| [deleted]
| actuator wrote:
| Yeah, some of the questioning was just stupid. Like the
| cookie question to Zuck. She reduced FB usage of cookie to
| remember the logged in user to FB using cookies against their
| promise.
| imglorp wrote:
| Yep. Hearings aren't used to get information out of
| witnesses. They're to grandstand.
|
| "... the smallest minds and the selfishest souls and the
| cowardliest hearts that God makes." -- Twain
| dang wrote:
| Their press release is at https://investor.fb.com/investor-
| news/press-release-details/...
|
| (via https://news.ycombinator.com/item?id=24002529, merged
| hither)
| actuator wrote:
| Wow, the numbers that AAPL, AMZN, FB have reported. While
| everyone struggled I guess mid/big tech companies were
| unaffected.
|
| I am surprised ad industry is not affected heavily. Isn't ads the
| first thing a company will cut if things look bleak.
| mytailorisrich wrote:
| These good results were expected.
|
| Working from home and lockdowns in general.
| basch wrote:
| Facebook has a very long tail of advertisers in line for spots.
| The biggest companies boycotting just gave the same ad space to
| smaller companies. Facebooks business is built exceptionally
| well to be resilient to these sorts of boycotts, and the
| results are in the pudding. Facebook revenue YoY up 11% and
| Alphabet down 2%.
|
| >[At Facebook] Q1 2019 the top 100 advertisers made up less
| than 20% of the company's ad revenue; most of the $69.7 billion
| the company brought in last year came from its long tail of 8
| million advertisers.
|
| >This focus on the long-tail, which is only possible because of
| Facebook's fully automated ad-buying system, has turned out to
| be a tremendous asset during the coronavirus slow-down.
|
| >This explains why the news about large CPG companies
| boycotting Facebook is, from a financial perspective, simply
| not a big deal. Unilever's $11.8 million in U.S. ad spend, to
| take one example, is replaced with the same automated
| efficiency that Facebook's timeline ensures you never run out
| of content. Moreover, while Facebook loses some top-line
| revenue -- in an auction-based system, less demand corresponds
| to lower prices -- the companies that are the most likely to
| take advantage of those lower prices are those that would not
| exist without Facebook, like the direct-to-consumer companies
| trying to steal customers from massive conglomerates like
| Unilever.
|
| >In this way Facebook has a degree of anti-fragility that even
| Google lacks: so much of its business comes from the long tail
| of Internet-native companies that are built around Facebook
| from first principles, that any disruption to traditional
| advertisers -- like the coronavirus crisis or the current
| boycotts -- actually serves to strengthen the Facebook
| ecosystem at the expense of the TV-centric ecosystem of which
| these CPG companies are a part.
|
| from https://stratechery.com/2020/apple-and-facebook/
| elorant wrote:
| The majority of ads on FB are from e-commerce sites, and
| e-commerce skyrocketed during the pandemic.
| overcast wrote:
| Those AMZN numbers are completely nonsensical, how do you beat
| estimates by 9x? Who the hell did that estimating???
| crdrost wrote:
| Possible that estimates were before COVID was affecting us?
| mikeschmatz wrote:
| You purposely set them very low, then "beat" them and watch
| stock price go to the moon.
| nostrademons wrote:
| Because Amazon is comparatively low-margin vs. other tech
| companies, improved revenue has a much greater effect on
| earnings. Amazon's revenue was $88.9B vs. $81.24B expected.
| That's each household spending about 10% more from Amazon,
| which is pretty reasonable with lockdown and nobody going to
| brick & mortar retail outlets. But with expenses at around
| $80B, that translates into earnings of $10.30/share vs.
| $1.51.
| mikeschmatz wrote:
| > Because Amazon is comparatively low-margin vs. other tech
| companies, improved revenue has a much greater effect on
| earnings.
|
| Are you saying that 10% revenue increase has led to 10x
| earnings beat? That doesn't make any sense.
| UncleMeat wrote:
| If a lot of their costs are fixed it makes sense.
| esoterica wrote:
| How does basic arithmetic not make sense?
|
| If you were expected to make $1.01 and spend $1, and
| instead you made $1.10 and spent $1, your revenue only
| beat by 9% but your income beat by 900%.
| selectodude wrote:
| Amazon promised to spend all of their profits on reinvestment
| into the company, but they didn't.
| donor20 wrote:
| Uh? They expected to have $4B in profit, said they may
| spend $4B on extra expenses this period -> but demand has
| SOARED and they already huge, so absolutely pumping out the
| $.
|
| I know we've read about the major strikes by Amazon workers
| here repeatedly (supposedly all of them walking out etc).
| Doesn't seem to have affected the top line sales at least.
| adventured wrote:
| I think the ad market was heavily affected. We saw that with
| Snap for example (their stock fell badly on the earnings
| release as it disappointed). Google just reported the first
| revenue decline in their history. Facebook's sales growth rate
| was a mere 11%, which is the slowest in their history and is
| very slow for them. It probably would have been considerably
| higher in normal times (more like ~18%-25% or more). Forecasts
| across the ad industry are quite weak going forward.
| mic47 wrote:
| They will not cut ads off. They will try to consolidate ads and
| use ad budget more efficiently. Most likely, google, facebook
| ads are more likely more effective than non-targeted ads like
| TV, so while total ads budget goes down, targeted ads budget
| don't.
|
| Or there could be other effect...
| Snoozle wrote:
| Not really. Ads done properly are heavily tracked from
| appearance on a page to purchase of an item. When campaigns are
| no longer bringing in more revenue than they are costing, those
| campaigns are suspended. It has nothing to do with anything
| else, just if money in > money out.
| reaperducer wrote:
| _Isn 't ads the first thing a company will cut if things look
| bleak._
|
| It depends on the advertiser and the industry. For example,
| immediately after 9/11, and again when states started locking
| down, ads for local auto dealers evaporated almost overnight.
| But others were ready to take their place.
|
| I wonder if it's also because these are Q2 results, and those
| ad campaigns would already have been budgeted and allocated.
| But I don't know what Facebook's Q2 months are.
| bcatanzaro wrote:
| Look at FB's taxes. Effective tax rate went from 46% to 16% if
| you compare last year to this year. Made FB 1.3B extra money this
| quarter.
|
| I wonder if this is why Zuckerberg seems to be so friendly to
| Trump...
| ksdale wrote:
| The financial says that they had a $2B penalty (which decreased
| net income, but I'm assuming wasn't deductible for tax
| purposes) and a court decision that resulted in tax of about
| $1B, so their effective tax rate (edit: last year) looked a lot
| higher than it would have without the penalty and judgment.
| Their tax rate didn't actually go down from year to year.
| bcatanzaro wrote:
| Thanks, this is helpful.
| actuator wrote:
| If that was the reason. Every CEO would be friendly with him.
| michaelyoshika wrote:
| Look at Kodak.
| metalliqaz wrote:
| Aren't they? The CEO at my company sucks up shamelessly.
| three_seagrass wrote:
| Facebook quarterly revenue ($17.2 B) beat the expected revenue
| ($17.7 B) by just ~3%.
|
| I imagine this is one of the reasons Facebook didn't want to drop
| political ads (like the competition) in an election year.
| fataliss wrote:
| Can someone explain why the effective tax rate dropped so
| drastically for this Quarter? `16%` is a bargain! I wish I was
| paying 16% ...
| whoisjuan wrote:
| I said this before here in HN and I'd said it again. Facebook is
| a freaking money making machine and will be that for many years
| to come.
|
| Feel whatever you want about Zuckerberg, the company, their
| products and anything else, but what they created is simply the
| best digital distribution channel besides Google. Many business
| are built and scaled on Facebook Ads.
|
| Putting opinions about privacy and politics aside (which are
| definitely topics that should be discussed), Facebook was the
| last Silicon Valley company to create something that literally
| has disrupted the way we live and interact. All the other ones
| that supposedly were on that road are barely alive (e.g: Uber).
|
| In contrast many of the current public tech companies with
| promising trajectories of global disruption (for example Shopify)
| were created outside of Silicon Valley.
|
| This is my personal opinion, but I think the golden Silicon
| Valley days are way in the past.
| dvt wrote:
| > Many business are built and scaled on Facebook Ads.
|
| Completely agreed. Not to mention that their M&A strategy has
| also been nothing short of a master class: from Instagram, to
| WhatsApp, to Oculus. Money making machine indeed.
| sneak wrote:
| To that end: is it possible today to build a major VC-funded
| consumer facing tech company (eg Oculus) without being forced
| to sell to an "evil" (privacy/human rights-disrespecting
| amoral multinational) acquirer?
|
| Snap is the only example I can think of that remained
| independent so far, and even they are one App Store flipped
| bit away from being out of business. Are there "never
| Google/Facebook/Microsoft/Apple/Amazon" startups that have or
| would be able to raise nine figures to pursue big projects?
|
| Is that even a viable path, or is the winning endgame always
| just being acquired by Big Tech and Big Tech only?
|
| I guess my question is "Is avoiding major/typical VC funding
| the only way to "win" and not end up as FAANG staff?"
|
| The reason I ask is because I already have a perfectly
| comfortable lifestyle business, and would love to pursue
| something larger (that requires funding and a medium-sized
| staff) but there is no amount of money or equity that would
| make me ever be okay with working for a company that helps
| governments abuse human rights, which is 100% of Big Tech
| these days. Is there any third path?
| dvt wrote:
| > The reason I ask is because I already have a perfectly
| comfortable lifestyle business, and would love to pursue
| something larger (that requires funding and a medium-sized
| staff) but there is no amount of money or equity that would
| make me ever be okay with working for a company that helps
| governments abuse human rights, which is 100% of Big Tech
| these days. Is there any third path?
|
| You mention Snapchat, and I think that's a great example.
| I'm somewhat cynical, having tried (and failed) several
| times launching a consumer-facing social-style app, but
| Snapchat gives me hope. For _years_ , it was a pretty
| mediocre one-trick-pony, but it just goes to show how
| important user metrics are. It didn't start out with
| millions of dollars (like TikTok) and it didn't start out
| with influencers (like Clubhouse). It just resonated with
| high school and college kids, and that was enough.
| kgraves wrote:
| No. But there are some different (and new) approaches /
| alternatives to the VC surveillance capitalist cycle we see
| when it comes to building a business.
|
| Be bootstrapped and profitable (Basecamp/Indie Hackers) or
| independent and ethical (Small Tech) [0].
|
| You don't need to have the same goals as cancer to win in
| the tech space.
|
| [0] https://small-tech.org/
| sneak wrote:
| I believe this is a false dichotomy. It's not cancerous
| to want to pursue e.g. advanced hardware (Oculus) or
| hundreds of millions of users (Instagram, WhatsApp, et
| c).
|
| I refuse to believe that with capital being what it is
| today, there is no funded route to having e.g. 100M users
| that doesn't eventually involve working for the big five.
|
| OWS has done it (in a strange way), so there are
| definitely some paths, if a bit weird.
| kgraves wrote:
| Those are just quick examples I listed, (you could have
| both or utilise crowdfunding!) I do find that companies
| that need to continuously raise cash from venture
| capitalists (as many startups do) don't have the
| customers (not users) interests at heart and are already
| financially and morally bankrupt. (They are already
| thinking about a 10x exit rather than focusing on
| building a great profitable business!)
|
| > It's not cancerous to want to pursue e.g. advanced
| hardware (Oculus) or hundreds of millions of users
| (Instagram, WhatsApp, etc).
|
| All of this (and every startup needs this to grow) is
| usually at the cost of the customers privacy. All the
| time.
|
| > I refuse to believe that with capital being what it is
| today, there is no funded route to having e.g. 100M users
| that doesn't eventually involve working for the big five.
|
| You don't have to sell out to the big tech companies,
| just be a regular profitable business from the start and
| don't spy on your customers.
| modeless wrote:
| Oculus was not forced to sell. They sold because the price
| was really high plus it gave them a guarantee of huge
| investment into the technology going forward without
| raising new rounds all the time or trying to make profits.
| But they could have stayed independent if they wanted.
| tqi wrote:
| Some hits for sure, but also a lot of duds: https://en.wikipe
| dia.org/wiki/List_of_mergers_and_acquisitio...
|
| The tbh acquisition was a complete waste of time and money.
| Time will tell how giphy works out...
| robterrell wrote:
| Hard disagree. TBH had great disruptive potential -- it was
| huge in middle/high schools. If someone else acquired it,
| FB was looking at possible a re-run of the Snapchat
| playbook, where a younger audience not yet on FB was lost
| to them.
| [deleted]
| perl4ever wrote:
| >simply the best digital distribution channel besides Google
|
| It appears Google just had their first revenue decline ever. I
| guess it was anticipated, and people aren't particularly
| freaking out, but I wonder if it will be a turning point in
| hindsight a year from now.
| cma wrote:
| Travel ads/flights are huge for them compared to Facebook.
| dcolkitt wrote:
| Personal opinions aside, it's amazing how little credit
| Zuckerberg gets as an executive. At least compared to Bezos,
| Gates, Jobs, Musk, even Larry&Sergei.
|
| I think it's pretty hard to identify even a single major
| strategic decision that Zuckerberg didn't get right given
| enough hindsight.
| throwaway_fb730 wrote:
| I recently read Steven Levy's _Facebook_, which I thought was
| a well-balanced history of the company.
|
| Some mistakes he highlights that resonated with me: Facebook
| Platform, Beacon, Cambridge Analytica, foreign expansion
| without native language support, release of private Messenger
| records to 3rd parties, placing Security within the business
| rather than engineering organization and failing to respond
| to state-actor threats
| sp332 wrote:
| He may be good, but he's not so good that it's hard to find
| mistakes. The old Open Graph Search, email accounts, re-
| writing everyone's address books to include FB email
| accounts, Beacon
| https://en.wikipedia.org/wiki/Facebook_Beacon , not actually
| letting users delete their data, letting genocide
| coordinators operate openly on the platform?
| johnfn wrote:
| I'd suspect this is because we evaluate CEOs not just as
| ruthless money maximizers but as people who use their
| outsized leverage and influence to create a positive impact
| on the world. It's hard to argue that Facebook has given us
| anything of the degree of benefit that, say, Google has, or
| Tesla could.
| SirensOfTitan wrote:
| Asking out of curiosity, not sarcastically: how has Google
| made a positive impact on the world?
| nsnick wrote:
| Have you ever had to research something in a library like
| in books?
| peripitea wrote:
| Improving the world's access to information is probably
| the biggest one? I would guess Google Search is, if you
| could magically add up all the net positives/negatives,
| one of the best things to happen to humanity in the last
| few decades. Having grown up before it existed, I can't
| imagine how much I would personally pay just for Search
| to come back if Google all of a sudden disappeared. I
| would probably give up my car before I gave up Search.
| maccard wrote:
| Plenty of ways. Google maps provides accurate maps and
| route planning pretty much worldwide and for no
| (monetary) cost. I remember the days before when you had
| to pay Garmin PS60 for up to date maps.
|
| Chrome, while heading the way of ie6 in it's dominance is
| a massive public benefit.
|
| Search - given that it's free of charge, it is a hugely
| valuable tool and has changed the world in the last 20
| years.
|
| I think you can argue that they don't provide this
| altruisticly, but it's definitely been a positive impact
| s1t5 wrote:
| Personality and public image play a big part too.
| Zuckerberg has the charisma of a head of lettuce on his
| best days.
| CerealFounder wrote:
| True, but dont underestimate how little effort he's made
| to anything but growing revenue.
| ajzinsbwbs wrote:
| Modifying the news feed algorithm to send less traffic to
| traditional news sites contributed to a lot of layoffs and
| general turmoil in the industry. This resulted in major
| animosity toward Facebook among journalists, which has
| encouraged them to highlight the negative effects of
| Facebook. These narratives encourage regulatory action
| against Facebook, which is now one of the main risks facing
| the company. I'd go so far as to say this little revenue-
| optimizing move may be a major cause of the media's turn from
| fawning over big tech to trying to take it down. Similar
| story with the fights over payment for Google News previews
| in Europe. Squeezing journalists financially is a great
| example of a penny-wise, pound-foolish move.
| victorvation wrote:
| The original goal of reducing news prevalence was to show
| less outrage/clickbait and show more friends and family
| content. Of course, hindsight shows that the move was of
| limited efficacy, but it's disingenuous to suggest that it
| was done in order to 'squeeze journalists'.
| ajzinsbwbs wrote:
| I don't think harming journalists was the motive, but it
| was the outcome, and in hindsight it seems predictable.
| At least it should serve as a lesson to anyone who faces
| a similar decision in the future.
| Shish2k wrote:
| So is the lesson here "the media will destroy any social
| network that doesn't feed the clickbait-outrage machine"?
| :(
| ajzinsbwbs wrote:
| I'm not sure. If Facebook had been more surgical to send
| less traffic to clickbait listicles, but more to
| Prestigious Investigative Journalists, would the outcome
| have been the same? Did the unemployed listicle authors
| find their passion and become serious journalists working
| the tech beat?
| hrktb wrote:
| > Facebook was the last Silicon Valley company to create
| something that literally has disrupted the way we live and
| interact.
|
| I feel completely out of the loop. What has facebook created
| that is so impactful ?
|
| I see them as a company that incrementaly executed better than
| the previous social networks and successfully killed/absorbed
| competition. But is there any critical thing they really
| created from the end user point of view ?
| lalos wrote:
| I'm also out of the loop, there were tons of social media
| companies before Facebook so no creation of something new and
| disruptive. The comment you are responding to reads to me as
| survivor-ship fallacy of whatever social media company
| managed to move away from investor money and into ad money in
| an effective way. Which, in my opinion, seems like a luck
| factor mixed with more luck regarding on how the end users
| react to it (or if ad-free investor backed competition came
| at that moment too). In another world, MySpace would've done
| this transition but they didn't and someone would be arguing
| that MySpace and Tom is an excellent executive and that only
| them could achieve what was achieved.
| hrktb wrote:
| I don't mind the downvotes, but would want some guidance. I
| don't use facebook, so I'd genuinely want to know what it has
| disrupted in the way you live that the other SNS won't do.
| whoisjuan wrote:
| They are so incredibly large in user numbers that they have
| the ability to reach almost anyone in developed countries
| through their platforms.
|
| It's not the product but its magnitude. That's the
| disruption IMO.
| hrktb wrote:
| But is it a disruption if they operate as a larger
| version of an already successful phenomenon ?
|
| I'd see how a service like Streetview would be seen as
| disruptive because of bringing a fringe fonctionnality to
| a mass market in a unprecedented scale.
|
| But I feel like calling Facebook disruptive is like
| saying Samsung is revolutionnary, by the sheer massive
| number of smartphones they sell.
| whoisjuan wrote:
| I mean. We clearly have different definitions of
| disruptive. For me disruptive != innovative.
|
| For me disruptive boils down to how likely is something
| to produce a change in the behaviors of a general
| population and improve (or worsen) their lives.
|
| Streeview is very innovative, for sure. But it hasn't
| changed me or anyone that I know in any significant way.
|
| On the other hand Facebook services allow me to stay in
| touch with my elder parents who live in Colombia and stay
| in touch with people I care about. The technology or the
| concepts may not be incredibly innovative but I can
| characterize them as disruptive just because of their
| size (reach).
|
| Also I have discovered interesting products through
| Instagram Ads. That seems minor but ultimately many of
| those things have had a certain impact in my overall
| quality of life.
| mdoms wrote:
| > What has facebook created that is so impactful ?
|
| facebook.com
| [deleted]
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