Facebook Beats Quarterly Revenue Estimates

Facebook Inc. said ad sales stabilized in recent weeks, part of a strong earnings report that sent its shares soaring as the social-media giant benefits from a swell in homebound users, The Wall Street Journal reports.

The results continue a string of outperformance from Silicon Valley, where the top companies are so far proving to be somewhat resilient to the effects of the global economic slowdown.

Facebook in particular seems to be gaining from billions of users being locked inside for much of the spring, with the company’s suite of social networking and messaging apps keeping people in touch. Advertisers, in turn, are returning to the platform after a steep drop in ad sales in March, the company said.

Facebook’s announcement that ad sales stabilized in April was a surprise, helping drive a 10% gain in the company’s shares in after-hours trading.

Still, the reduced demand in the first quarter contributed to a significant decline in the cost of ads on the platform. Facebook Chief Financial Officer David Wehner said the average price of ads purchased declined by 16% in the quarter, a drop that was “largely attributable” to the latter part of March. Helping mitigate the decline has been a rise in spending by gaming and e-commerce companies that took advantage of diminished competition in Facebook’s ad auctions.

Chief Executive Mark Zuckerberg said on a call with analysts that the company would remain in growth mode.

While the company would slow its hiring for business-related roles, Mr. Zuckerberg said it intended to add “at least” 10,000 people for engineering and product-development positions.

“People have new needs. That means there are more new things to build,” Mr. Zuckerberg said, adding that he expected the crisis would accelerate a longer-term trend to people living more of their lives online. He cited Facebook’s recent rollout of “Rooms,” a Zoom-like feature that allows users to drop in on video chats with their friends in a fashion evocative of a group social gathering.

Facebook brought in $17.7 billion in revenue in the first quarter, typically its lightest, up from $15.1 billion a year ago and beating analyst projections of $17.3 billion, according to FactSet.

Facebook’s earnings report indicated steady user growth, though the crisis only set in late in the quarter. The company reported 1.73 billion daily active users of its core Facebook platform, up 11% year-over-year, exceeding analysts expectations of 1.70 billion.