Facebook on Thursday blew past market expectations for its second quarter, delivering strong top and bottom-line results. While beating estimates, the social media giant's Q2 revenue growth was notably slower than it was in Q1. The company expects that growth rate to hold steady into Q3, as a result of the current ad boycott underway and other factors.
Facebook's Q2 net income came to $5.2 billion, with earnings of $1.80 per diluted share. Revenue came to $18.69 billion, up 11% year over year.
Analysts were expecting earnings of $1.39 per share on revenue of $17.4 billion.
"We're glad to be able to provide small businesses the tools they need to grow and be successful online during these challenging times," CEO Mark Zuckerberg said in a statement. "And we're proud that people can rely on our services to stay connected when they can't always be together in person."
Facebook's daily active users were 1.79 billion on average for June 2020, an increase of 12% year over year. Its monthly active users totaled 2.7 billion as of June 30, an increase of 12% year over year.
The number of people active daily on at least one of Facebook's products -- including Facebook, Instagram, Messenger, and WhatsApp -- was 2.47 billion on average for June, an increase of 15% year over year. Monthly active people for Facebook products was 3.14 billion as of June 30, an increase of 14% year over year.
In the first three weeks of the current quarter, Facebook's year over year ad revenue growth rate was approximately in-line with its Q2 growth rate of 10%. The start of Facebook's Q3 coincided with the launch of the #StopHateforProfit campaign, a boycott meant to push the social network to do more to combat hate speech and misinformation. Hundreds of brands have publicly joined the boycott including Microsoft, Verizon, Volkswagen, and Sony Interactive.
In a Thursday conference call, Zuckerberg forcefully pushed back against the notion that the company is promoting malicious or destructive content.
"Some seem to wrongly assume that most of the content on our services is about politics, news, misinformation or hate," he said. "And let me be clear, it's not. These make up a small part of the content on our services, although they are all things that people generally tell us they'd like to see even less of... We do not want this content on our platforms. People come to our services to connect with the people they care about."
Zuckerberg also said some "seem to wrongly assume that our business is dependent on a few large advertisers." In fact, he said, "the biggest part of our business is serving small businesses."
Facebook said that it expects its full Q3 ad revenue growth rate to remain around 10 percent, for a variety of reasons, including the ad boycott. The outlook also takes into account the continued macroeconomic uncertainty and changing user engagement levels due to the COVID-19 pandemic. It also considers headwinds related to ad targeting and measurement, including the impact of regulations like the California Consumer Privacy Act.
Analysts are expecting Q3 earnings of $1.71 on revenue of $19.05 billion.
Thursday's earnings report followed Zuckerberg's latest appearance before US lawmakers. Along with his executive counterparts from Google, Apple and Amazon, Zuckerberg defended his company against antitrust complaints and a range of other issues.
As policymakers and regulators consider ways to rein in large tech companies like Facebook, Zuckerberg on Thursday pushed back against the idea of limiting targeted advertising.
"It's true that making it more difficult to target ads would affect the revenue of companies like Facebook, but the much bigger cost of such a move would be to reduce the effectiveness of the ads and opportunities for small businesses to grow," he said. "This would reduce opportunities for small businesses so much that it would probably be felt at a macroeconomic level. And is that really what policymakers want in the middle of a pandemic in recession?"