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Facebook Reports First Quarter 2021 Results [pdf] (q4cdn.com)
59 points by mfiguiere 16 days ago | hide | past | favorite | 60 comments

I wonder how many FB users are like me: people who don't identify as FB users bur who do actually use FB out of necessity, and pretty often.

I've moved several times in the last year, and (unfortunately) FB is how I:

- connect with local groups of parents (FB has no competition in this vertical)

- connect with local athletic groups (Strava and others exist, but try planning an outing on Strava)

- see what the local take-out restaurants are offering today (FB and Instagram own this niche, which has exploded)

- get recommendations on contractors, service providers, etc (often passively, by searching groups for recent answers to someone else asking the same question)

- find out about when local organizations or companies I care about are doing something (you can't really rely on libraries etc. announcing things via email anymore, but they won't do anything without posting to FB)

On top of all this, I use Instagram, not only to post photos but also to explore the area around where we've settled. I search by location a ton and have found it's a great way to learn about what people do and where they go when you're not able to meet people and get recommendations the normal way.

So yeah, I rage quit previously but FB has got my number again.

"I am not really a car driver but i use car when i need it."

Doesnt make more sense that what you say. You ARE a facebook user.

Sounds like he's using it in an entirely different way from what used to be Facebook's focus. It's not keeping in touch with other people any more, but rather a collection of small local-centric services. (Take away restaurants, parents group, tradesmen, library, etc.).

Facebook has invested in and pushed groups, Messenger and WhatsApp consistently over the last five years.

They know that people are moving away from the broadcast style use case towards smaller organic groups.

His usage style is something Facebook is well placed to profit from.

Yes - and my point being that, to my dismay, FB is the best and/or only way of consuming this information because it is the primary (increasingly the only) place this information is shared.

After I started posting "Stories" with Facebook, which shows you viewers as well as "likers", I was surprised by how many lurkers there really are. Even lurkers are very much Facebook users, especially when serving ads is concerned.

Mostly on it since an organization I belong to and all the sub chapters are only on facebook these days (outside of meeting in public, when possible).

Total daily users increased 8% but ad revenue improved 46% because of competition for ad slots. This is because FB targeting works really well, better than any other attention based ad channel. 90% of major ad spenders on FB nowadays are very direct response, ROI based marketing orgs, and they spend where the results are.

> 8% YoY user growth and 46% YoY revenue growth

Curious how well understood the mechanics are of this. I've been fascinated by how clever the whole model works. They know revenue growth needs to outpace their ability to increase available ad space (so user growth or attention growth). So they are heavily reliant on data to improve ad targeting so they can drive more conversion per ad impression.

The power of the ad auction model is that 100% of the improved efficiency of ad targeting is translated to revenue for Facebook. Advertisers will pay $X for a conversion in their ROI calculations - so Facebook will get the maximum amount the market will pay a certain for a given conversion. Advertisers are actually a little worst off as targeting gets better - the conversion cost stays the same and the number of impressions goes down.

To keep growing revenue at this pace, Facebook needs to continually feed the beast with better and better data so they can squeeze more and more conversions out of their existing ad space.

The only other two ways to grow revenue is more users and more time from users. Which is getting tougher and tougher. That's why this Apple fight is so important to Facebook - it's really their lifeblood right now.

Exactly this. FB ad targeting is revolutionary for companies to match with prospective users. I've managed 50m+ in FB spend, getting start-ups in front of some really niche audiences, and nothing compares to the FB algo.

Increased signal (e.g. more or different data) is one of the many levers to increase ad value.

Without changing signals you can still make meaningful long term progress through ranking, delivery, and format improvements.

True. They do seem quite obsessed with slurping more data. i wonder how much it would hurt them in the long term if they couldn't get more.

Because they'll push for regulations to only regulate data collection, grandfathering in possession of existing sets.

They have been focusing on selling other products besides ads so curious how much of that revenue growth is from ads vs other products.

They mention this in the earnings report

Advertising accounted for $25.4 Billion of their revenue, up from $17.4 Billion in the same quarter last year, an increase of 46%

Revenue from other sources was $732 Million, up from $297 million in the same quarter last year, an increase of 146%

It's all there in financial statement. It's all ads.

Not sure if the breakdown is exact but financials say $25B in ads, and $700M in "other"

It’s odd that their DAU are increasing, because at least in the western countries I’m aware of, young people don’t use Facebook much. So I’d expect a gentle decline over time. Where is the growth coming from?

The majority of humans do not live in western countries

Are you saying young people in non-western countries think facebook is cool?

I don't see any data by age there. I searched around the site a bit. What we need is facebook use by age for western and other countries, e.g. USA vs India. I can't see that.

I don't debate that countries like India have large Facebook usage, but the question I asked was - is there growth coming from the young users in countries like India? Because that goes against my experience, albeit limited to Western countries.

If it's coming from young users in India and similar countries, that's really interesting to me because it shows that teenage trends are not as universal as I'd expect.

If that's not the case, then where is the growth coming from?

Genuine question (unsure why downvoted) and want to get to the bottom of it.

young people use instagram constantly

I thought those stats were for Facebook, no?

> In the third and fourth quarters of 2021, we expect year-over-year total revenue growth rates to significantly decelerate sequentially as we lap periods of increasingly strong growth. We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, notably the recently-launched iOS 14.5 update, which we expect to begin having an impact in the second quarter. This is factored into our outlook.

This isn't the best time to depend on an anti-privacy business model, it seems.

What is q4cdn? I did a whois, and I tried to find more details. I'm not sure why this wouldn't be directly from a Facebook IR or news wire hosted press release. I'd like to have some knowledge of who/what is running it, since this is a pdf.

Just a guess: Probably the CDN for Q4, which would make sense, as they’re an investor relations company. https://www.q4inc.com/

Thanks! I bet you're right, https://www.q4inc.com/soc2/default.aspx agrees with what based on what they say about their stack.

https://www.q4inc.com/products/surveillance/default.aspx is a bit disturbing, but I can understand why it sells.

The FB investor relations site links to the exact same URL.

I was updating my post accordingly: https://investor.fb.com/investor-events/event-details/2021/F... links to it.

I'm still curious, but less concerned. They appear to use Cloudflare, AWS for DNS, and registered through Godaddy. I just haven't figured out who runs it. I wouldn't be surprised if it if were via business wire, but I'm surprised it's hard to find out. Multiple companys' IR teams seem to use it based on some cursory querying.

Looks like q4inc.com is the corporate website. (Oh I see this was mentioned in a sibling comment already)

> Facebook daily active users (DAUs) – DAUs were 1.88 billion on average for March 2021, an increase of 8% year-over-year.

> Facebook monthly active users (MAUs) – MAUs were 2.85 billion as of March 31, 2021, an increase of 10% year-over-year.

Let this be another sign that Facebook's demise is greatly exaggerated: their daily & monthly active user counts are _still growing_ ... and by non-trivial amounts.

Almost _2 billion_ people visit Facebook at least once _daily_ .... that's mind-blowing.

Yes, I know: the common HN refrain is "how many are fake / bot accounts?" etc. etc. Until that's proven to be a real problem, which would lead to significant lawsuits for misleading shareholders, I will lean on the hypothesis that the significant majority of this growth is "real."

You can play "chicken little" all you want and say "Facebook will go away just like MySpace," but doubters should be sweating right now, as the numbers refuse to show that.

Bots or not - that $25B is coming from somewhere.

I'm most sad that so many smart humans are working on this of all the important problems in the world.

Makes loads of money though, so won't change until incentives change.

Solving world hunger is obviously better than ads, but I'd say in the scheme of things tech people spend their time on, ad improvements is middling in importance? It's not the bottom.

Good ad targeting means:

1) New small businesses (on Shopify) can reach customers without going through retail gatekeepers. Ask any Shopify seller, nothing beats FB.

2) New challenger SaaS brands can get in front of customers to compete with mammoth corporate brands with worse software (I see this all the time on my job).

3) Without good ad targeting, only bottom hanging fruit advertisers that appeal to the lowest common denominator can afford to spend. Weight loss, teeth whitening, etc. Good ad targeting means a better user experience with ads.

Not completely unrelated: FB makes killer programming tools loved by most.

- PyTorch for Deep Learning overtook TensorFlow in Academia and Competitions and breathing down the neck in Industry despite the latter having significant inertia.

- React.js is THE hottest frontend framework now.

- GraphQL is highly adopted in the industry.

I want FB to exist as long as possible and very successfully as I do not want the tools to go away. I have worked with two of the three, and I love them. It had made me fond of and loyal to FB and FAIR.

> React.js is THE hottest frontend framework now.

I am not quite sure what you mean by "the hottest". Would you say that jquery was THE hottest frontend library circa 2014, or that Wordpress it THE hottest CMS now?

React is hugely popular, no doubt about it. It absolutely was the hottest frontend framework somewhere around 2015. It's more complicated now, I think.

> I'm most sad that so many smart humans are working on this of all the important problems in the world.

Depends upon values and perspectives of the problem. Part of me agrees with you, and yet part of me is sympathetic to the goals of connecting the world, encouraging community discussion, and bringing transparency to social issues and reducing the power of governments to control the narratives. - to the point that many governments fear FB and ban it outright. (e.g. Do you think China banned Facebook because of "misinformation?" Or that the ratio of real information to misinformation was a little too much for them to lose control of their propaganda narratives?)

Would I say that's more important than sustainable farming / agricultural tech? I don't think so - but to each their own.

I don't work there anymore, but I always liked the idea of connecting the world. Sure a service without ads would be great, but you gotta pay the bill and you can't connect the world with a monthly fee. I get that this is HN and the majority thinks "this is bad", but just writing this because there are people like me with a different opinion.

Quite interesting that the ad revenue growth is mostly from ads commanding a higher price, and only marginally because they serve more ads.

FB's targeting is pretty good, if for no other reason then because they see all the social stuff users do even without the need for crutches like third-party cookies. Likely customers are willing to pay increasingly more for a well-targeted ad.

Why would I be sweating that Facebook is adding users? Disappointed, more like, because the science shows that Facebook actively damages people’s mental health and I hope we all want people to feel good. Your numbers show that a almost 2 billion people feel worse each day from Facebook.

If I drink enough water to kill myself from water poisoning / overhydration, that isn't a good reason to ban water. It's more like "user error."

Too much of _anything_ is bad.

So it's a strong claim to say "2 billion people feel worse each day," when it could be that the majority use it in moderation and probably feel some positive utility from it.

> because the science shows that Facebook actively damages people’s mental health

come on...

>Almost _2 billion_ people visit Facebook at least once _daily_ .... that's mind-blowing.

Does daily active users mean that? Or is it just the amount of users who visit facebook on any given day?

Isn’t your definition monthly active ?

Facebook has made their product emotionally addictive.

Their biggest threat now is regulatory changes to consumer data. I haven’t read the filings but I’d expect their lobbying efforts to be in full gear.

How does one learn to analyze these quarterly results and other financial reports (e.g., 10-K)? What books/videos/courses would take an absolute beginner towards becoming an expert? Would proper analysis of these results/other financial reports enable one to decide which company is a worthwhile investment? It seems like learning accounting would be a good start.

Martin Shkreli (yes, The pharma bro) has an excellent set of youtube tutorials on reading 10-k and 10-q forms to compile DCF valuation models. His video series focuses on household tech names

here's the first one in the series: https://www.youtube.com/watch?v=VI_riscmviI

Thanks for the link. If I remember, there was one Shkreli video where he mentions if you are not working at a hedge fund using large sums of other people's money, then the amount of profit one would make actively investing their own money is not worth the amount of research it takes to make informative investments. Not sure if that is exactly what he said, so don't quote me on it.

What's your take on retail investors and active investing, assuming that the retail investor does not have access to large sums of money.

> if you are not working at a hedge fund using large sums of other people's money, then the amount of profit one would make actively investing their own money is not worth the amount of research it takes to make informative investments

I think it's worth working out the math for yourself, rather than taking anyone's words for granted. Let's say the average annualized return of S&P500 is 10% (obviously, past returns are no guarantees of future returns). If you buy and hold, then you essentially pay no taxes on your capital gains.

Let's suppose the alternative is to actively trade, and your strategy involves holding securities < 1 year, incurring the maximum short term capital gains of 37%. Let's say your strategy generates an annualized average return of 20%, pre-tax.

So the annualized net worth (after capital gains taxes) starting from $100 would be:

passive: 100, 110, 121, 133

active: 100, 112, 126, 141

So you can generate 10% excess returns, after taxes you compound approximately 2% additional take-home money each year. Then you should ask yourself, is it worth the hassle? Maybe it is. Maybe it isn't. Some people enjoy researching companies, making predictions, and allocating capital to their beliefs.

obviously, there are ways to try and mitigate capital gains taxes - incorporating offshore LLCs, tax loss harvesting, etc. those are important considerations when designing an active trading strategy.

Separately from whether active investing is worth it or not, I think it's valuable to learn how to read financial reports and understand businesses as a projected set of cash flows, along with understanding things like balance sheets and incomes. Learning to read 10-Qs has helped me think of my own budget / personal finance planning much like a business. Financial literacy is super important, even if you are a passive investor.

Thanks for laying out the logic so coherently.

The comments by Martin Shkreli I was referring to are actually in the video that you linked. The subtlety in Shkreli's comment is that he was referring to amassing "fortunes". That is where he states that amassing fortunes most likely requires using "other people's money". Which makes sense.

He cites Joe Lewis as an example of a solo investor going from "zero to hero", but I would not say he was strictly an "investor" as he was a currency trader. Also, he had initial wealth from a luxury goods business.

Just for curiosities sake, do you know of any examples of retail investors amassing sizable amount of money starting from very little?

I don't know of role-model investors / traders who amassed a fortune in a short amount of time, starting from a small amount of capital, without borrowing money. There are of course cases like /u/DeepFuckingValue turning a few hundred grand into tens of millions with his massively bullish GME position, but in general, taking this much risk on almost guarantees that you are blow up in a few years.

I agree with Shkreli: if you want to "amass a fortune in a short amount of time" AND do so without taking on an unreasonable level of risk, then doing so with cheap cost-of-capital (e.g. investing friends&family wealth, using insurance float, gift cards) is the way to go.

But "making 10s of millions quickly" is a different statement than "active trading is not worth the effort".

I recommend Aswath Damodaran's valuation course: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcasteq...

If you don't have time for the full course, I've also heard good things about Damodaran's Little Book of Valuation.

This is a fantastic resource. I completed this course several years ago. He is a prolific teacher.

Thanks for the course link. Does the course assume any prerequisites?

Not really, but familiarity with accounting terms and some basic investment concepts helps. The course is designed for NYU MBA students and many of them have already taken corporate finance which gives them a head start. Damodaran puts all of the course info online (notes, lectures, emails to students, etc), though, which allows you to go at your own pace. The emails sometimes contain pointers to helpful supplemental materials.

If you check out the email archives [1], you'll see that Damodaran wrote this in the first message: "1. Preclass work: I know that some of you are worried about the class but relax! If you can add, subtract, divide and multiply, you are pretty much home free… In are you have forgotten your accounting, I have added my version (which would probably not be approved of by your accounting professor) of an accounting class to my website: http://people.stern.nyu.edu/adamodar/New_Home_Page/webcastac... If you want to get a jump on the class, you can go to the class web page: http://people.stern.nyu.edu/adamodar/New_Home_Page/equity.ht... "

[1] http://people.stern.nyu.edu/adamodar/New_Home_Page/eqemail.h...

Thanks for the detailed insight. Looks like a great wealth of information.

I quit Facebook in 2016. I de-activated my account, haven't come around to deleting it though. I still login to FB 1-2 times in a year. The Big Blue App simply doesn't appeal to me, its a Time sink (any app with unlimited scrolling is). I also deleted my IG account, never used it. The only FB product I use is Whatsapp. That is due to network effects.

You did not see anything yet. Wait till they put ads in WhatsApp.

Reading this I am almost tempted to login back into fb just to see what changed in 8-10 years and why ppl keep using it

Wondering if there is a finer-grained datapoint on how Oculus perform (both Q1 and last year?)

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