Facebook beat analyst expectations with a more than 20 per cent rise in revenues in the third quarter and forecast growth to continue, as its ad business showed resilience despite a recent boycott from some marketers.

Revenues in the three months to the end of September rose 22 per cent to $21.5bn, above analysts’ expectations of $19.8bn, according to estimates compiled by S&P Capital IQ. 

That compared with 11 per cent growth in the second quarter, as marketers have adjusted to the coronavirus pandemic, with some markets reopening, while the company has begun to offer users more ways to shop on its apps.

“We expect our fourth quarter 2020 year-over-year ad revenue growth rate to be higher than our reported third quarter 2020 rate, driven by continued strong advertiser demand during the holiday season,” the company added.

The social media network shrugged off a boycott which took place over the summer, when more than 1,000 brands — including Ford, Coca-Cola and Verizon — pulled digital advertising spending from the platform for at least a month. The move was in protest at Facebook’s perceived failure to tackle hate speech on the platform, with some advertisers demanding increased transparency over ad placement and more precise metrics.

Lockdowns have also helped draw new users to the platform: daily and monthly active users grew 12 per cent respectively to 1.82bn and 2.74bn in the third quarter year-over-year.

However, the company warned that active user numbers in the US and Canada fell in the quarter from second-quarter levels “which were elevated due to the impact of the Covid-19 pandemic”. It said it expected the trend to continue in the final quarter of the year. 

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Net income increased by nearly 30 per cent to $7.8bn, while diluted earnings per share rose 28 per cent to $2.71.

The results come just days before a polarising US presidential election on November 3. The vote will test whether Facebook, which has invested heavily in moderation and security since the 2016 election, can adequately protect users and root out disinformation and violence-inciting content.

Apple delayed bringing in new iOS 14 privacy restrictions, which will require apps to get users’ permission in order to gather ad targeting and tracking data. This meant Facebook did not face some of the “ad headwinds” it had warned about at its last results. However, it said it still expected to be hit by Apple’s changes — and regulatory reforms in Europe — in 2021, it said.

Facebook shares rose 4.9 per cent on Thursday, and were trading marginally higher after-hours.

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Via Financial Times