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Facebook sees dip in ad demand in last 3 weeks of Q1

It has seen signs of stability reflected in the first three weeks of April

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MUMBAI: Despite increased engagement due to shelter-in-place directives in many countries, Facebook experienced a significant reduction in the demand for advertising. After the initial steep decrease in advertising revenue in March, Facebook has seen signs of stability reflected in the first three weeks of April.

However, the social media giant has reported $17.74 billion, slightly beating analysts’ expectations for the quarter up by 18 per cent, and net income of $4.9 billion (or earnings per share of $1.71). Advertising revenue stood at $17.44 bn.

Daily active users (DAUs) on the social media platform were 1.73 billion on average for March 2020, an increase of 11 per cent year-over-year. And monthly active users (MAUs) reached 2.60 billion as of March 31, 2020, an increase of 10 per cent year-over-year.

“Our community metrics, including Facebook DAUs and MAUs and Family MAP and DAP, reflect increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about. We expect that we will lose at least some of this increased engagement when various shelter-in-place restrictions are relaxed in the future,” the company stated in a statement.

Facebook also witnessed a related decline in the pricing of its ads, over the last three weeks of the first quarter of 2020. However, due to the increasing uncertainty in its business outlook, Facebook has not provided any specific revenue guidance for the second quarter or full-year 2020.

“After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago, down from the 17 per cent year-over-year growth in the first quarter of 2020. The April trends reflect weakness across all of our user geographies as most of our major countries have had some sort of shelter-in-place guidelines in effect,” it added.

It expects to realize operational expense savings in certain areas such as travel, events, and marketing as well as from slower headcount growth in the business functions. But it also mentioned that the company plans to continue to invest in product development and to recruit technical talent.

“We plan to continue to grow our capex investments to enhance and expand our global infrastructure footprint over the long term. In 2020, we expect capital expenditures to be approximately $14-16 billion, down from the prior range of $17-19 billion. This reduction reflects a significant decrease in our construction efforts globally related to shelter-in-place orders,” it added.

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