The social media giant expects headwinds from Apple’s iOS changes and a reversal in pandemic trends in 2021
Facebook records strong advertising revenue growth in 2020. (Credit: athree23 from Pixabay)
Social media company Facebook has reported a net income of $11.2bn, or $3.88 per diluted share, for the fourth quarter ended 31 December 2020, a 53% increase compared to $7.3bn, or $2.56 per diluted share, for the same quarter of 2019.
The company has reported a 33% increase in its total revenue to $28.07bn for the fourth quarter of 2020, compared to $21.08bn in the same period a year earlier.
The revenue increase is mainly led by strong advertising revenue growth during the quarter.
Facebook’s advertising revenue jumped 31% to $27.1bn in the October-December quarter of last year. For the full year 2020, the company witnessed a 21% increase in its advertising revenue to $84.1bn, from $69.6bn in 2019.
Facebook founder and CEO Mark Zuckerberg said: “We had a strong end to the year as people and businesses continued to use our services during these challenging times.
“I’m excited about our product roadmap for 2021 as we build new and meaningful ways to create economic opportunity, build community and help people just have fun.”
For December 2020, the company posted an 11% year-on-year increase in its average daily active users to 1.84 billion. Its monthly active users went up 12% to 2.80 billion.
Facebook stated that the company’s revenues were positively impacted by “two broad economic trends” that prevailed during the pandemic.
The company benefitted from the ongoing shift towards online commerce and the shift in consumer demand towards products and away from services.
Facebook stated: “We believe these shifts provided a tailwind to our advertising business in the second half of 2020 given our strength in product verticals sold via online commerce and our lower exposure to service verticals like travel.
“Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth.”
California-based social media conglomerate expects to see major ad targeting headwinds in 2021, including upcoming changes to Apple’s iOS 14 platform and the evolving regulatory landscape.
Facebook is wary of expected privacy changes to iOS 14, as they could impact its ability to display targeted advertisements.
In the wake of recent European regulatory developments, the uncertainty continues to remain around the viability of transatlantic data transfers, the company stated.
The company added that “we are closely monitoring the potential impact on our European operations as these developments progress.”
Recently, Facebook has launched an enhanced version of Automatic Alternative Text (AAT) technology to enable more accurate photo descriptions for its visually challenged users.