Facebook posted record quarterly revenues on Wednesday, surpassing analysts’ expectations as the company’s push into ecommerce during coronavirus lockdowns bore fruit.
Fourth-quarter revenues at the social media group rose 33 per cent to $28.1bn, beating analyst expectations of an increase to $26.4bn. Net income jumped 53 per cent to $11.2bn, or $3.88 a share.
In a statement, the company’s chief financial officer David Wehner said the business had been boosted by “the ongoing shift towards online commerce” and “the shift in consumer demand towards products and away from services”.
But he warned that Facebook faced “significant uncertainty” in 2021, citing the potential for a reversal in the commerce trends that have driven its business, changes to Apple’s privacy policies and “regulatory concerns”.
Monthly active users grew 12 per cent year-on-year to 2.8bn, Facebook said.
The company bet big on “social commerce” across all its apps last year as people retreated indoors under shelter-in-place restrictions. It launched Facebook Shops, which allows businesses to set up digital storefronts, as well as payments tools in several markets.
Still, the company’s efforts to merge the messaging functions of its trio of apps — Facebook, WhatsApp and Instagram — for the purposes of facilitating more shopping have not been seamless. WhatsApp this month was compelled to delay the rollout of an updated policy allowing it to share more transaction data with Facebook after the changes sparked privacy concerns and sent users flocking to lesser-known rival apps.
Mr Wehner said the company expected to be affected by Apple’s new iOS 14 privacy changes, which required apps to obtain users’ permission to harvest ad targeting and tracking data, “beginning late in the first quarter” of 2021. Facebook has warned the restrictions will hurt its business, and lobbied furiously against the update, citing the impact on its small business clients.
Jessica Liu, senior analyst at Forrester, said: “The hyper-targeting that makes Facebook’s properties so attractive for advertisers won’t disappear overnight but will grow increasingly more difficult — forcing Facebook, Inc to rethink its ad model.”
Facebook is also facing significant legal and regulatory challenges. The US Federal Trade Commission and 46 US states last month filed antitrust lawsuits against the company, accusing it of wielding its dominance to crush competition.
Its content moderation policies and processes have come under scrutiny after the Capitol riots earlier this month, and it has also attracted criticism over its decision to suspend former US president Donald Trump’s account “indefinitely”.