- Facebook reported third-quarter earnings Wednesday that exceeded Wall Street’s expectations.
- The company also showed it grew users in the US and Canada, a key region where growth stumbled previously.
- Shares rose as much as 5% in early trading Thursday following the report.
- Strong user growth in the US and Canada drove sales up 29% in the quarter and contributed to the company’s highest quarterly revenue reported.
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Facebook reported third-quarter earnings Wednesday that beat Wall Street expectations. The company also showed strong user growth in the US and Canada, a key market that previously seemed to be stretched to its limits.
Shares of the company rose as much as 5% in early trading Thursday following the earnings beat.
The highlight of the earnings release was the 3 million new users added in the US and Canada in the third quarter. Facebook has struggled to show substantial user growth in the area since 2018, but added more users in the region in the third quarter than the last five quarters combined.
Here’s what the company reported, versus what analysts surveyed by Bloomberg expected:
- Revenue: $17.65 billion, up 29% year-on-year ($17.35 billion expected)
- Earnings per share (GAAP): $2.12 ($1.91 expected)
- Net income: $6.09 billion, up 19% year-on-year
- Daily active users: 1.62 billion, up 9% year-on-year (1.61 billion expected)
- Monthly active users: 2.45 billion, up 8% year-on-year (in line with expectations)
User growth in the US and Canada is important because the North American market is a key revenue driver for the company. In the third quarter, the region was responsible for $8.5 billion in revenue, nearly half of the total $17.65 billion revenue reported in the quarter — the highest quarterly revenue reported for the social media company.
The strong revenue numbers also show that growing regulatory concerns about the platform have not scared away advertisers from Facebook. Sales grew 29% in the third quarter, even though Facebook is the target of two federal cases, one from the US Federal Trade Commission and one from the Department of Justice, and is also being investigated by a group of US state attorney’s general over antitrust issues.
Going forward, Facebook is bracing for 2020, which CEO Mark Zuckerberg said would likely be “a very tough year” on a call with analysts Wednesday, referring to the upcoming presidential election.
The social media company has recently come under fire for its political ad policy, but has maintained its position to allow political ads on free-speech grounds even following Twitter’s announcement that it would ban all political ads from its platform.
Facebook is up roughly 50% year to date.