Facebook posts strong Q2 2021, but expects significant slowdown in YOY revenue growth

“We had a strong quarter as we continue to help businesses grow and people stay connected,” said Mark Zuckerberg, Facebook founder and CEO, while speaking on the tech giant’s Q2 2021 results. “I’m excited to see our major initiatives around creators and community, commerce, and building the next computing platform coming together to start to bring the vision of the metaverse to life,” he added.

Q2 2021 Operational & Financial Highlights:

Facebook daily active users (DAUs) – DAUs were 1.91 billion on average for June 2021, an increase of 7% year-over-year.
Facebook monthly active users (MAUs) – MAUs were 2.90 billion as of June 30, 2021, an increase of 7% year-over-year.
Family daily active people (DAP) – DAP was 2.76 billion on average for June 2021, an increase of 12% year-over-year.
Family monthly active people (MAP) – MAP was 3.51 billion as of June 30, 2021, an increase of 12% year-over-year.
Capital expenditures – Capital expenditures, including principal payments on finance leases, were $4.74 billion for the second quarter of 2021.
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $64.08 billion as of June 30, 2021.
Headcount – Headcount was 63,404 as of June 30, 2021, an increase of 21% year-over-year

In a release issued, Faceboon said that its advertising revenue growth in the second quarter of 2021 was driven by a 47% year-over-year increase in the average price per ad and a 6% increase in the number of ads delivered. Similar to the second quarter, Facebook expects that advertising revenue growth will be driven primarily by year-over-year advertising price increases during the rest of 2021.

However, in Q3 and Q4 of 2021, Facebook expects year-over-year total revenue growth rates to decelerate significantly on a sequential basis as it lap periods of increasingly strong growth. When viewing growth on a two-year basis to exclude the impacts from lapping the COVID-19 recovery, Facebook expects year-over-two-year total revenue growth to decelerate modestly in the second half of 2021, compared to the second quarter growth rate.

Facebook continues to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which it expects to have a greater impact in the third quarter compared to the second quarter. This is factored into Facebook’s outlook.

“We expect 2021 total expenses to be in the range of $70-73 billion, unchanged from our prior outlook. The YOY growth in expenses is driven primarily by investments in technical and product talent, infrastructure, and consumer hardware-related costs. Our expense outlook reflects our commitment to invest ahead of the compelling long-term growth opportunities we see across our product portfolio,” Facebook stated in the release.

It further expects 2021 capital expenditures to be in the range of $19-21 billion, unchanged from its prior estimate. Facebook’s capital expenditures are driven primarily by its investments in data centers, servers, network infrastructure, and office facilities.