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Facebook Q3 earnings: profit beats estimates but misses on revenue; stock rallies

Facebook reported mixed third quarter earnings on Monday, slightly missing revenue estimates but continuing to grow its user base in the face of multiple controversies that have sparked widespread criticism and calls for tighter regulation.

Here are the most important numbers from the report compared to analysts' expectations, as compiled by Bloomberg:

  • Revenue: $29.01 billion versus $29.45 billion expected

  • Earnings per share: $3.22 versus $3.17 expected

  • Family daily active users: 2.81 billion versus 2.76 billion expected

  • Family monthly active users: 3.58 billion versus 3.51 billion expected

The social network kept user growth steady at 12% for monthly active users across its apps, but the results come as the Facebook grapples with a new avalanche of stories resulting from a whistleblower’s account of how it targets users, and the ripple effect of Apple changing its user data policies.

Facebook's stock, which rallied during Monday's regular session, was momentarily whipsawed as traders digested the earnings report but turned decisively higher, buoyed in part by broad strength in blue-chip and technology shares. The company's shares rose by 2% in after-hours trading.

Investors are also eyeing a potential rebranding that could see the company change its name as it leans into the metaverse, according to recent reports. The company also announced that it is breaking out its Facebook Reality Labs as a new reporting segment that will focus on the social media giant's virtual and augmented reality efforts.

Facebook’s results follow competitor Snap’s Oct. 21 earnings report, where the company revealed that Apple’s App Transparency Tracking, which was introduced in April as part of iOS 14.5, was impacting advertisers’ ability to track the effectiveness of their ad campaigns.

Facebook acknowledged issues with the iOS update in its Q4 estimates saying, "Our outlook reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple's iOS 14 changes, and macroeconomic and COVID-related factors."

Facebook previously warned about the impact Apple’s App Transparency Tracking could have on advertisers during its Q2 earnings call. And in a September blog post, Facebook’s VP of product marketing Graham Mudd said the company was underreporting ad performance on iOS by as much as 15%, adding that advertisers are already feeling the squeeze from Apple’s changes.

Apple provides iOS users with the ability to choose whether they want apps, like Facebook or Snapchat, to track their usage across the web via their device’s unique identifier for advertising. Opting out prevents app developers from getting a look at how users interact with ads.

To address this, Apple introduced a more private alternative to typical tracking, called the SKAdNetwork, or SKAN. While SKAN provides advertising measurements. But Snap said the offering wasn’t providing advertisers with detailed information related to their campaigns, and that the information that SKAN did provide appeared inaccurate.

If advertisers can’t see how well their campaigns are performing, they may end up looking for other places to spend their ad dollars outside of social media platforms like Facebook.

It’s not just App Transparency Tracking that’s impacting advertisers, though. The ongoing supply chain crisis has forced some companies to trim their marketing budgets.

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