Facebook Inc has surpassed revenue expectations for the second quarter, thanks to businesses utilizing its digital advertising tools to target the surge in online traffic during the COVID-19 pandemic. Despite a slowdown in revenue growth, the company’s shares rose significantly, outperforming Wall Street estimates.

Ad sales, which make up the majority of Facebook’s revenue, increased by 10% to $18.3 billion in the second quarter, contributing to the company’s overall growth. Additionally, the monthly active users for Facebook rose to 2.7 billion, surpassing initial estimates.

Even with a major ad boycott in July supported by major brands like Unilever, Starbucks, and Coca-Cola, Facebook expects its ad revenue for the third quarter to exceed market expectations. The impact of the boycott was limited, as only 1,100 companies participated out of millions of advertisers on the platform. Facebook has noted that its ad sales in the first three weeks of July grew at the same rate as the second quarter, indicating a consistent growth trajectory.

Instagram, owned by Facebook, played a vital role in helping the company navigate the effects of the pandemic. It contributed significantly to Facebook’s overall revenue and witnessed rapid growth during this period.

Mark Zuckerberg, Facebook’s Chief Executive, had earlier announced that the company would focus on controlling costs while maintaining strategic investments during the pandemic. The company’s total costs and expenses increased by 4% to $12.7 billion in the second quarter, slightly surpassing analysts’ expectations.

For the quarter ended June 30, Facebook reported a net income of $5.2 billion or $1.80 per share, marking an increase from the previous year. However, it is important to note that this growth includes a $2 billion charge related to Facebook’s privacy settlement with the Federal Trade Commission.

Overall, despite challenges and a slowdown in growth, Facebook’s ability to adapt to changing circumstances and draw revenue from its advertising tools has reinforced its financial position.

Useful links:
1. Wall Street Journal: Facebook Ad Revenue Increases, Boosted by Online Traffic Surge During Pandemic
2. CNBC: Facebook posts revenue of $18.7 billion, beats estimates as businesses fill feeds with ads