Facebook Inc on Tuesday said that the COVID-19 outbreak was undercutting sales of the advertising that accounts for nearly all of its revenue, even as more users spend time on the social network during virus-related lockdowns.
“We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” the company said in a statement.
Facebook shares fell about 1 percent after hours following an 8.7 percent rise in regular trade.
The company said messaging across its platforms had increased more than 50 percent over the past month in many of the worst-affected countries.
In Italy specifically, users have been spending 70 percent more time in its apps.
Group calling with three or more participants increased by more than 1,000 percent in Italy in the past month, it said.
Online voice and video calls at Facebook-owned Messenger and WhatsApp have more than doubled in places hit hard by the coronavirus, according to a post by vice president of analytics Alex Schultz and Jay Parikh, vice president of engineering.
“As the pandemic expands and more people practice physically distancing themselves from one another, this has also meant that many more people are using our apps,” Parikh and Schultz said.
Much of the increased use has been at Facebook’s free messaging services, which do not generate ad revenue, the executives said.
“We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” they said.
Soaring use at Facebook’s “family” of services and across the Internet industry have been unprecedented, they added.
Facebook declined a request for comment on precisely which of its markets were experiencing adverse business impact or the magnitude of that impact.
The company’s statement echoed similar industry guidance the day before from Twitter Inc, which reported a boost in active users, but pulled its first-quarter revenue outlook and forecast an operating loss due to the outbreak.
Many advertisers have pulled marketing budgets to rein in costs because of virus-related uncertainty.
Some are also apparently hesitant to advertise alongside coronavirus discussions for fear of associating their brands with the sensitive topic.
Additional reporting by AFP
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