Facebook on Wednesday reported better-than-expected second quarter financial results, driven largely by the rising cost of ads. Even as the social media giant continues to pull in huge sums from ad sales, Facebook executives once again warned of "ad targeting headwinds" that could slow growth.
Facebook's Q2 net income came to $10.4 billion, with earnings of $3.61 per diluted share. Revenue came to $29.08 billion, up 56 percent year-over-year.
Analysts were expecting earnings of $3.02 on revenue of $27.82 billion.
"We had a strong quarter as we continue to help businesses grow and people stay connected," CEO Mark Zuckerberg said in a statement. "I'm excited to see our major initiatives around creators and community, commerce, and building the next computing platform coming together to start to bring the vision of the metaverse to life."
Advertising revenue for the quarter was $28.58 billion, up 56 percent. "Other" revenue totaled 497 million, up 36 percent.
Advertising revenue growth in the second quarter of 2021 was driven by a 47 percent year-over-year increase in the average price per ad and a 6 percent increase in the number of ads delivered, according to CFO Dave Wehner.
"In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to decelerate significantly on a sequential basis as we lap periods of increasingly strong growth," Wehner said in a statement. "When viewing growth on a two-year basis to exclude the impacts from lapping the COVID-19 recovery, we expect year-over-two-year total revenue growth to decelerate modestly in the second half of 2021 compared to the second quarter growth rate.
He added, "We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recent iOS updates, which we expect to have a greater impact in the third quarter compared to the second quarter. This is factored into our outlook."
Last quarter, Wehner gave a similar warning. He specifically said Apple's iOS 14.5 update, released in April, would have an impact on Facebook's business in the second quarter. Facebook has complained about Apple's new App Tracking Transparency (ATT) feature, which requires app developers to get permission from a user in order to track their activity across other apps and websites when using an iPhone or iPad.
Facebook's daily active users were 1.91 billion on average for June 2021, an increase of 7 percent year-over-year. Its monthly active users totaled 2.9 billion as of June, an increase of 7 percent year-over-year.
The number of people active daily on at least one of Facebook's products -- including Facebook, Instagram, Messenger and WhatsApp -- was 2.76 billion on average for June, an increase of 12 percent year-over-year. Monthly active people for Facebook's "family" of products was 3.51 billion as of June 30, an increase of 12 percent year-over-year.
Video now accounts for almost half of all time spent on Facebook, Zuckerberg said on a Wednesday conference call. While other social platforms like Youtube and TikTok present serious competition for Facebook, in terms of drawing in video content creators, Zuckerberg said Facebook's advantage is its ability to help creators monetize their content.
"If you're a creator trying to get your content out there... you want to be on all these different platforms," he said. "It's not necessarily the case that people are going to be on one."
Rather than drawing content creators away from other platforms, he said Facebook's goal is to help people publish "their best content here and help them make a living better than other platforms."