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(Reuters) – Facebook Inc (O:FB) beat analysts’ estimates for quarterly revenue on Wednesday and said it has seen “signs of stability” for sales in April after a plunge in March, in yet another indication that tech giants may weather the coronavirus-induced economic collapse better than other sectors.
The company said advertising revenue was roughly flat in the first three weeks of April compared with the same period last year, a tentative early sign of recovery following a “steep decrease” in March revenue as lockdowns took effect worldwide to slow the spread of the virus.
Shares of the world’s biggest social network, which owns WhatsApp and Instagram, jumped 9% in extended trading.
Advertisers across industries have pulled or cut marketing budgets to rein in costs in response to virus-related uncertainty, including many of the small businesses and direct-to-consumer brands that market themselves heavily on Facebook.
Jim Cridlin, global head of innovation at WPP (LON:WPP)’s Mindshare media buying agency, said Facebook was buoyed by big brands, which have come to see the platform as essential after the company made a concerted push to attract them.
Over the past year, Facebook took pains “to diversify its advertiser mix, investing in expanding relationships with larger advertisers. This likely has helped protect the platform from the decline among smaller advertisers,” he said.
Facebook reported revenue growth of 18% in the first quarter, its slowest ever, though it beat analysts’ expectations for growth of 16%.
Ad sales rose 17% to $17.44 billion in the first quarter ended March 31, above analysts’ average estimate of $17.36 billion, according to IBES data from Refinitiv.
Total costs and expenses rose just 1% to $11.84 billion in the quarter, well below the 5.6% rise that analysts had forecast, boosting operating margins to 33% from 22% a year earlier.
Facebook said it was lowering its guidance for total expenses in 2020 to $52 billion-$56 billion, down from a prior range of $54 billion-$59 billion, citing slower headcount growth and savings from canceled travel, events and marketing.
Facebook said more than 2.99 billion users interacted with at least one of its apps each month in the quarter, up from 2.89 billion last quarter, as the use of social networks surged with people stuck at home during virus-related lockdowns. Some of that engagement is expected to slip once shelter-in-place orders are relaxed, the company said.
Total revenue rose to $17.74 billion from $15.08 billion in the year-ago quarter, beating the average analyst estimate of $17.44 billion.
The company warned in late March that the coronavirus outbreak was undercutting ad sales.
Data from digital marketing agencies indicates the pandemic wiped out Facebook ad pricing over the course of the quarter, from highs around $3 per thousand impressions in early January to less than $1 in late March.
The number of ads shown also fell in the period, the data showed, although sales appeared to have started to creep back up at the tail end of March and into early April as businesses took advantage of bargain pricing to run a heavier volume of ads.
