2 must-see takeaways from Facebook’s earnings call

The social network’s advertising revenue may have been the main driver for its blockbuster first-quarter results, but investors shouldn’t overlook the company’s ambitions in e-commerce.

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Facebook CEO Mark Zuckerberg presenting at a conference

Facebook CEO Mark Zuckerberg. Image source: Facebook.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook (NASDAQ: FB) absolutely obliterated analyst estimates when it reported its first-quarter results last week. The social network reported first-quarter revenue of $26.1 billion, up 48% year over year. Net income nearly doubled, hitting $9.5 billion, translating to earnings per share of $3.30. Analysts, on average, were expecting revenue and earnings per share of $23.7 billion and $2.37, respectively.

Though the headline numbers from the earnings release certainly tell quite a story, there was a lot more for investors to digest about the tech company in Facebook's first-quarter earnings call. Two particular topics that surfaced during the call, for instance, were the company's growing ambitions in e-commerce and the key drivers for its huge advertising revenue growth.

Here's what management said about these topics during the call. 

Facebook has big plans for e-commerce

One hot topic during the earnings call that received more attention than usual was the social network's growing investment in e-commerce. Facebook CEO Mark Zuckerberg called commerce one of its "long-term opportunities" that it's "really focused on." In addition, Zuckerberg said, "Commerce has been growing in our services for a while, but it has become a lot more important as the pandemic has accelerated a broader shift toward businesses moving online."

Further, it sounds like Facebook may have an interesting new e-commerce feature in its pipeline that it's readying for release this year. "[W]ith Instagram and Facebook, we have a unique ability to bring creators and commerce together, and we will share more on that later this year," Zuckerberg said.

Facebook already has a shopping experience that lets users sell products in a seamless shopping experience that works across Facebook and Instagram. The company has over 1 million monthly active shops and sees 250 million monthly visitors to these shops.

Surging demand from advertisers

Fueling the company's advertising revenue growth was a 12% year-over-year increase in ad impressions and 30% growth in price per ad.

But what exactly caused such a sharp increase in advertising pricing across Facebook's social networks? While advertising in its commerce vertical was exceptionally strong, most of Facebook's advertising revenue growth was simply due to stronger-than-expected demand from all verticals and a sharp recovery from verticals that were negatively impacted by COVID-19.

"[R]eally just strong across-the-board demand for ads has been what's driven it for us," explained CFO David Wehner.

Facebook shareholders may want to give the first-quarter earnings call a listen. In addition to the call featuring further discussion of the topics covered in this article, management provided more details on Facebook Marketplace, WhatsApp, payments, and more.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Daniel Sparks has no position in any of the stocks mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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