Facebook missed analyst expectations for the three months ended Sept. 30 due to the ongoing impact of Apple’s iOS 14 privacy updates, but revenue and users continue to grow at the social platform.
Revenue reached $29 billion USD in Q3, representing 35% year-over-year growth. Nearly all of Facebook’s revenue came from advertising, which itself grew by 33% year-over-year to $28.3 billion USD. By geography, the U.S. and Canada generated $13.6 billion USD in revenue, compared to $10.14 billion in the same quarter last year.
There are now 1.93 billion daily active users and 2.9 billion monthly active users on Facebook, both of which represent marginal increases from the prior quarter and 6% growth year-over-year. In the U.S. and Canada, there were roughly 1 million new daily active users added compared to last quarter, with 2 million more monthly active users. Average revenue per user in the U.S. and Canada was $52.34 USD, down very slightly from Q2 ($53.01), but a marked improvement year-over-year ($39.63).
Released Monday after market close, the results came shortly after whistleblower Frances Haugen concluded testimony before the U.K.’s parliament Monday. Haugen, a former Facebook product manager, obtained thousands of pages of internal company documents, now being referred to as “The Facebook Papers.” First provided to the The Wall Street Journal earlier this month ahead of Haugen’s previously testimony to the U.S. Congress, a group of 17 U.S. news outlets that had later received the papers began releasing their own reporting based on their contents Monday morning.
The overarching theme of the documents is that Facebook has either been unable to handle the challenge of stemming the spread of misinformation, hate speech and incitement of violence, or unwilling to adopt remedies that could hamper the company’s growth, which has stagnated, especially among youth. Last week, Facebook released a statement in an attempt to get ahead of the story, saying “a curated selection out of millions of documents at Facebook can in no way be used to draw fair conclusions about us.”
CEO Mark Zuckerberg reiterated that stance briefly during a call with investors, where questions were not focused on the papers, but on the company’s plan for the “metaverse” (to which Zuckerberg said more details would be revealed at developer conference Connect on Thursday), how the growth of Reels fit into plans to engage users under 30 and the ongoing impact of Apple’s IDFA and ATT privacy changes on ad targeting.
Sheryl Sandberg, the company’s COO, said that the impact of Apple’s iOS 14 update, which hit a critical mass in June, has reduced the accuracy of its ad targeting and increased the cost of driving incomes for advertisers. She said the company is in the midst of developing tools to help businesses on the platform reach new customers and drive incremental sales in a privacy-safe way, as well as remedying the fact that the company believes it is under-reporting conversions on iOS due to measurement challenges brought on by Apple’s moves. She added that
CFO Dave Whener said the changes were more disruptive than the company had anticipated, due to the amount of retooling it has required for targeting and measurement. Particularly impacted were any areas that had offline objectives, namely gaming and commerce. He added, however, that the bulk of iOS updates happened near the beginning of Q3, meaning that impact was higher than in Q2, and doesn’t expect a similar step up going forward.
