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Facebook Q3 net profit exceeds 17% year-on-year: Report

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Financial report for the third quarter of the fiscal year 2021 as of September 30 shows that Facebook’s total revenue in the third quarter was US$29.01 billion, an increase of 35% from US$21.470 billion in the same period last year; net profit was US$9.194 billion, an increase of 17% from US$7.846 billion in the same period last year.

Facebook said that the company’s investment in augmented reality, virtual reality, and other related businesses will result in a reduction of approximately US$10 billion in overall operating profit for the company this year. Facebook also announced an additional $50 billion in stock repurchases. Facebook’s third-quarter revenue fell short of expectations, but earnings per share exceeded expectations, and its stock price rose more than 2% in after-hours trading.

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Facebook’s opening price on the Nasdaq exchange on Monday was $320.30. As of Monday’s close, Facebook’s stock price rose by 4.08 US dollars to close at 328.69 US dollars, an increase of 1.26%. As of 17:17 on Monday, Facebook’s stock price rose by US$6.64 to US$335.33 in after-hours trading, an increase of 2.02%. In the past 52 weeks, the highest Facebook share price was $384.33 and the lowest was $244.61.

Key operating points for the third quarter:

  • In September 2021, the average daily active users (DAU) of Facebook was 1.93 billion people, a year-on-year increase of 6%;
  •  As of September 30, 2021, Facebook has 2.91 billion monthly active users (MAU), a year-on-year increase of 6%;
  • In September 2021, the average daily active users (DAP) of the application family (Facebook, Instagram, etc.) was 2.81 billion, an increase of 11% year-on-year;
  • As of September 30, 2021, the monthly active users (MAP) of the application family were 3.58 billion, a year-on-year increase of 12%.

Financial Performance for the third quarter:

  • Total revenue was US$29.01 billion, an increase of 35% from US$21.470 billion in the same period last year;

・Advertising revenue was USD 28.276 billion, an increase of 33% from USD 21.221 billion in the same period last year;

・Other revenue was US$734 million, an increase of 195% from US$249 million in the same period last year;

  • Total costs and expenditures were USD 18.587 billion, an increase of 38% from USD 13.430 billion in the same period last year;
  • Operating profit was 10.423 billion U.S. dollars, an increase of 30% from the 8.40 billion U.S. dollars in the same period last year; the operating profit ratio was 36%, which was a decrease of 1 percentage point from 37% in the same period last year;
  • The income tax reserve was 1.371 billion U.S. dollars, an increase of 378% from the 287 million U.S. dollars in the same period last year;
  • The effective tax rate is 13%, an increase of 9 percentage points from 4% in the same period last year;
  • Net profit was USD 9.194 billion, an increase of 17% from USD 7.846 billion in the same period last year;
  • Diluted earnings per share were US$3.22, an increase of 19% from US$2.71 in the same period last year;
  • Capital expenditures of US$4.54 billion, including principal repayment of financial leases;
  • As of September 30, 2021, the total amount of cash, cash equivalents, and marketable securities held by Facebook was US$58.08 billion;
  • As of September 30, 2021, the total number of Facebook employees was 68,177, a year-on-year increase of 20%.

Additional USD 50 billion in stock repurchase

In the third quarter, Facebook repurchased the company’s Class A common stock worth $14.37 billion. As of September 30, 2021, Facebook’s previously announced share repurchase plan has a remaining amount of US$7.97 billion. Facebook also announced today that it will increase the size of the company’s authorized stock repurchase by $50 billion.

Facebook founder and CEO Mark Zuckerberg said: “We made good progress in the third quarter and our community continues to grow. I’m very excited about our roadmap, especially about creators, Business, and a road map to help build the meta-universe.”

Outlook for the fourth quarter:

  •  Starting from the fourth-quarter earnings report, Facebook will spin off the Facebook Reality Lab (FRL) as a separate department report. Under this structure, Facebook will report revenue and operating profit in two parts: one is the application family, including Facebook, Instagram, Messenger, WhatsApp, and other services; the second part is the Facebook reality laboratory, which includes augmented reality and Virtual reality related hardware, software, and content.
  • Facebook expects that the company’s investment in Facebook Reality Lab will result in a decrease of approximately US$10 billion in overall operating profit in 2021, and will increase investment in the next few years;
  • Total revenue for the fourth quarter is expected to be between US$31.5 billion and US$34 billion;
  • Total expenditure this year will be between US$70 billion and US$71 billion, which is lower than the previously estimated US$70 billion to US$73 billion; the total expenditure for the whole year of 2022 will be between US$91 billion and US$97 billion. Mainly driven by investment in technology and product talents and infrastructure-related costs;
  • This year’s capital expenditure is expected to be approximately US$19 billion, compared to the previous forecast of between US$19 billion and US$21 billion; capital expenditure in 2022 is expected to be between US$29 billion and US$34 billion; tax rates for the fourth quarter of 2021 It is expected to range from 18% to 19%, and the annual tax rate in 2022 is expected to be close to this year.

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