Facebook Q3 earnings: Investors eye fallout from whistleblower, Apple privacy changes
Facebook will report its third quarter earnings after the bell on Monday, as the company 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.
Here’s what analysts are expecting from the company’s Q3 report, as compiled by Bloomberg:
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Revenue: $29.45 billion expected versus $21.47 billion in Q3 2020
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Earnings per share: $3.17 expected versus $2.71 in Q3 2020
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Family daily active users: 2.76 billion versus 2.54 billion in Q3 2020
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Family monthly active users: 3.51 billion versus 3.21 billion in Q3 2020
Among the issues confronting Facebook are Frances Haugen’s bombshell disclosures, and how Apple’s recent privacy changes. Both of these could have a drag on the social network’s vast advertising revenue. In addition, investors are eyeing a potential rebranding that could see the company change its name as it leans into the metaverse, according to recent reports.
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.
“Advertisers are no longer able to understand the impact of their unique campaigns based on things like the time between viewing an ad and taking an action or the time spent viewing an ad,” Snap chief business officer Jeremi Gorman explained during the company’s Oct. 21 call.
During its Q2 earnings call, Facebook previously warned about the impact Apple’s App Transparency Tracking could have on advertisers. 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, which could directly impact Facebook, not to mention competitors like Google and Twitter.
And while Facebook’s stock price has weathered the whistleblower controversies, App Transparency Tracking could be the one thing that ends up hurting the company’s shares.
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