Facebook
’s
FB
fourth-quarter 2020 earnings of $3.88 per share beat the Zacks Consensus Estimate by 19.8% and surged 51.6% year over year.
Revenues of $28.07 billion comfortably surpassed the Zacks Consensus Estimate by 6.2% and also rose 33.2% year over year. At constant currency (cc), the top line improved 32%.
Geographically, Asia-Pacific, Europe, the United States & Canada, and Rest of World (RoW) revenues grew 30.8%, 35.9%, 34% and 26.1%, on a year-over-year basis, respectively.
Average Revenue per User (ARPU) in Europe, the United States & Canada, Asia-Pacific and RoW grew 27.7%, 29.3%, 13.4% and 11.7% on a year-over-year basis, respectively.
Facebook, Inc. Price, Consensus and EPS Surprise
Facebook, Inc. price-consensus-eps-surprise-chart
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Facebook, Inc. Quote
Advertising Revenue Growth Strong
Facebook’s fourth-quarter advertising revenues increased 31.1% year over year (21% at cc) to $27.19 billion. The robust year-over-year growth was driven by a strong holiday shopping season for retail that benefited from the ongoing shift to online commerce.
Meanwhile, Facebook’s Asia-Pacific, Europe, the United States & Canada and ROW advertising revenues grew 29.1%, 34.5%, 31.2% and 25.5%, on a year-over-year basis, respectively.
Ad impressions served rose 25% and the average price per ad increased 5% from the year-ago quarter.
User Base Continues to Expand
Monthly active users (MAUs) were 2.740 billion, up 11.9% year over year. Daily Active Users (DAUs) were 1.845 billion, which increased 11.3% year over year and represented 66% of MAUs.
Family Daily Active People (DAP), defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger and/or WhatsApp) on a given day, were 2.60 billion, up 15% year over year.
Family Monthly Active People (MAP) increased 14.2% year over year to 3.30 billion.
Asia-Pacific DAUs were up 16.1% year over year to 744 million. DAUs in the RoW, Europe, and the United States & Canada grew 12.4%, 4.8% and 2.6% to 598 million, 308 million and 195 million, respectively.
MAUs in Asia-Pacific, RoW, Europe, and the United States & Canada grew 15.5%, 12.7%, 6.3% and 4% to 1.20 billion, 921 million, 419 million and 258 million, respectively..
Quarter Details
Other revenues surged 155.8% year over year to $885 million, driven by strong Quest 2 holiday sales.
In the fourth quarter, total costs and expenses increased 25.1% year over year to $15.30 billion. Moreover, as percentage of revenues, total costs and expenses were 54.5%, down 350 basis points (bps) year over year.
As percentage of revenues, marketing & sales (M&S), and general & administrative expenses (G&A) decreased 270 bps and 300 bps, on a year-over-year basis, respectively. However, research & development (R&D) increased 20 bps from the year-ago quarter.
R&D expenses increased due to hiring and investments in core products as well as Facebook’s consumer hardware efforts.
Notably, Facebook’s employee base was 58,604 at the end of the fourth quarter, up 30% year over year.
Operating income of $12.78 billion increased 44.2% year over year. Operating margin expanded 350 bps year over year to 45.5%.
Balance Sheet & Cash Flow
As of Dec 30, 2020, cash & cash equivalents and marketable securities were $61.95 billion compared with $55.62 billion as of Sep 30, 2020.
Capital expenditures increased 13.6% year over year to $4.82 billion. Free cash flow surged 90.5% year over year to $9.22 billion in the reported quarter.
Guidance
Facebook expects year-over-year growth rates in total revenues to remain stable or modestly accelerate on a sequential basis in the first and second quarters of 2021.
Facebook expects changes made by
Apple
AAPL
in its iOS 14 platform to limit the former’s ability to track user-activity trend. The company also believes that Apple has become its biggest competitor.
Additionally, Facebook expects total expenses for the current year between $68 billion and $73 billion.
Moreover, in the ongoing year, Facebook expects capital expenditures between $21 billion and $23 billion, driven by higher spending on data centers, servers, network infrastructure and office facilities.
Zacks Rank & Couple of Stocks to Consider
Currently, Facebook has a Zacks Rank #3 (Hold).
Littelfuse
LFUS
and
Kulicke and Soffa
KLIC
are a couple of better-ranked stocks worth considering from the broader computer and technology sector. Both flaunt a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Moreover, while Littelfuse is set to report its quarterly results on Feb 3, Kulicke and Soffa is scheduled to report the same on Feb 4.
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