Facebook Posts Strong Gains in Revenue and Users in Q4 of a Challenging 2020

It was business as usual for Facebook in the unusual year of 2020, as the company posted strong fourth-quarter and full-year gains in revenue, while its user base continued to grow by double-digit percentages. Facebook reported fourth-quarter revenue of $28.07 billion, up 33% from the same quarter a year ago, and total 2020 revenue of $85.97 billion, up 22% from 2019. "Facebook's strong quarterly results weren't surprising,” eMarketer principal analyst Debra Aho Williamson said in an email. “The company was well positioned to benefit from the shift toward ecommerce that's currently taking place across the digital landscape. In addition, its massive user base is still highly attractive to advertisers.” Advertising continued to account for nearly all of the company’s revenue, at $27.19 billion for the quarter and $84.17 billion for the year. Global performance marketing agency Merkle estimated in its Q4 2020 Digital Marketing Report that spending on Facebook ads, not including Instagram, rose 12% year over year in the fourth quarter of 2020, while impression growth was just 2% and CPMs (cost per thousand impressions) were up 10%. Merkle projected that spending on Instagram ads was up 30% year over year during the fourth quarter. Facebook generally does not break out Instagram spending in its earnings reports. Williamson was also bullish on Instagram, saying, “We also continue to believe that Instagram is playing an outsized role in Facebook's overall success. Last year, Instagram accounted for about 36% of Facebook's total worldwide ad revenue and nearly one-half (49%) of Facebook's total U.S. ad revenue.” Net income for the fourth quarter of $11.22 billion was up 53% year over year, and net income for full-year 2020 climbed 58% to $29.15 billion Facebook reported 2,8 billion monthly active users as of Dec. 31, up 12% year over year, and it averaged 1.84 billion daily active users in December 2020, an 11% jump from December 2019. Williamson said that while the pandemic has helped MAU growth remain strong in many regions and spurred a rebound in Canada and the U.S, when they had begun to slip, DAUs in those key markets actually fell to 195 million at the end of the fourth quarter from 198 million at the end of the second quarter of 2020, meaning people were turning their attention to other platforms. “One logical destination is TikTok, which has grown rapidly in 2020 and has some of the strongest user engagement, in terms of time spent, among all the social platforms we follow," she said. Across Facebook’s entire family of applications, monthly active people of 3.3 billion as of Dec. 31 represented a 14% increase from Dec. 31, 2019, while average daily active people rose 15% year over year in December 2020, reaching 2.6 billion. Chief financial officer David Wehner said in a statement that Facebook’s advertising business was helped, particularly in the second half of 2020, by the ongoing shift to online commerce, with the pandemic playing a role, and the shift in consumer demand toward products and away from services. Wehner cautioned that moderations or reversals in either or both of those trends could serve as a headwind to the company’s advertising growth in 2021. He also pointed to upcoming comparisons with a year drastically affected by Covid-19, saying Facebook expects stable or modestly higher revenue growth in the first and second quarters of 2021, while the opposite may occur in the second half of the year, as the company posted strong growth in the third and fourth quarters of 2020. Wehner said the imminent changes to Apple’s iOS 14 operating system may start having an impact late in the fourth quarter, and he also warned of headwinds from regulatory developments, including those affecting the viability of transatlantic data transfers. CEO Mark Zuckerberg said in a statement: "We had a strong end to the year, as people and businesses continued to use our services during these challenging times. I'm excited about our product roadmap for 2021 as we build new and meaningful ways to create economic opportunity, build community and help people just have fun."