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Meta Platforms (META) Q4 Earnings Beat, Revenues Dip Y/Y
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Meta Platforms (META - Free Report) reported fourth-quarter 2022 earnings of $3 per share, which beat the Zacks Consensus Estimate by 41.51%. Excluding $1.24 per share related to restructuring charges, earnings were $1.76 per share, down 52% year over year.
Revenues of $32.17 billion beat the Zacks Consensus Estimate by 2.74% but decreased 4.5% year over year. At constant currency (cc), the top line improved 2%.
Top-Line Details
Geographically, the Rest of the World (RoW) revenues grew 5.7% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada revenues declined 3.1%, 15.6% and 1.2% year over year, respectively.
Revenues from Family of Apps (97.7% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, decreased 4.1% year over year to $31.44 billion.
Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger and/or WhatsApp) on a given day, were 2.96 billion, up 5% year over year.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
Family Monthly Active People or MAP increased 4.2% year over year to 3.74 billion.
Advertising revenues (99.4% of Family of Apps revenues) decreased 4.2% year over year to $31.25 billion and accounted for 97.2% of fourth-quarter revenues.
RoW advertising revenues grew 4.9% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada advertising revenues declined 3.5%, 15.5% and 0.4% year over year, respectively.
Ad impressions delivered across Family of Apps increased 23% year over year and the average price per ad decreased 22% year over year in the reported quarter.
Meta’s fourth-quarter results suffered from sluggish ad demand, particularly in the financial services and technology verticals. Online commerce and CPG remained weak while the travel and healthcare verticals improved on a year-over-year basis.
Family of Apps’ other revenues increased 18.7% year over year to $184 million.
Reality Labs revenues (2.3% of total revenues) plunged 17.1% year over year to $727 million.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.96 billion, up 2% year over year.
MAUs in the Asia-Pacific, RoW, and the United States & Canada grew 2.7%, 3.6% and 1.5% year over year, respectively. Europe MAUs declined 4.7% year over year.
Daily Active Users (DAUs) were 2 billion, which increased 4% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 6% year over year. DAUs in RoW and the United States & Canada grew 3.9% and 2.1%, respectively. DAUs in Europe declined 1.6% year over year.
Average Revenues per User in RoW grew 2.6% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada declined 5.7%, 12.1%, and 3%, year over year, respectively.
Operating Details
In the fourth quarter, total costs and expenses increased 22.2% year over year to $25.77 billion. As a percentage of revenues, total costs and expenses were 80.1%, significantly up from the year-ago quarter’s 62.6%.
In the reported quarter, Family of Apps expenses were $20.8 billion, accounting for 81% of Meta’s overall expenses. FoA expenses grew 23% year over year.
Reality Labs’ expenses were $5 billion, up 20%, driven by employee-related costs and technology development expenses.
As a percentage of revenues, while marketing & sales expenses increased 120 basis points (bps), general & administrative expenses decreased 20 bps on a year-over-year basis.
Research & development expenses, as a percentage of revenues, were 30.4%, significantly up from 20.9% reported in the year-ago quarter.
Meta’s employee base was 86,482 at the end of the fourth quarter, up 20% year over year.
Operating income of $6.40 billion decreased 49.2% year over year. The operating margin was 19.9%, significantly down from the 37.4% reported in the year-ago quarter.
Family of Apps’ operating income declined 32.8% year over year to $10.68 billion. Reality Labs reported a loss of $4.28 billion compared with the year-ago quarter’s loss of $3.30 billion.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents, and marketable securities were $40.74 billion compared with $41.78 billion as of Sep 30, 2022.
Capital expenditure was $9.22 billion in the fourth quarter compared with $9.52 billion in the previous quarter. Free cash flow was $5.29 billion compared with the $173 million reported in the previous quarter.
Meta repurchased $6.91 billion of its Class A common stock in the reported quarter. As of Dec 31, 2022, the company had $10.87 billion available and authorized for repurchases.
Meta also announced a $40-billion increase in its share repurchase authorization.
Guidance
Meta expects total revenues between $26 billion and $28.5 billion for the first quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by 2%.
For 2023, Meta anticipates total expenses for the current year between $89 billion and $95 billion, including an estimated $1 billion in additional charges related to the consolidation of office facilities.
For the ongoing year, Meta expects capital expenditure between $30 billion and $33 billion.
Zacks Rank & Stocks to Consider
Currently, Meta has a Zacks Rank #3 (Hold).
Meta shares have underperformed the Zacks Computer & Technology sector in the past year. While Meta shares have lost 35.6%, the Computer & Technology sector declined 20.3%.
Image: Bigstock
Meta Platforms (META) Q4 Earnings Beat, Revenues Dip Y/Y
Meta Platforms (META - Free Report) reported fourth-quarter 2022 earnings of $3 per share, which beat the Zacks Consensus Estimate by 41.51%. Excluding $1.24 per share related to restructuring charges, earnings were $1.76 per share, down 52% year over year.
Revenues of $32.17 billion beat the Zacks Consensus Estimate by 2.74% but decreased 4.5% year over year. At constant currency (cc), the top line improved 2%.
Top-Line Details
Geographically, the Rest of the World (RoW) revenues grew 5.7% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada revenues declined 3.1%, 15.6% and 1.2% year over year, respectively.
Revenues from Family of Apps (97.7% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, decreased 4.1% year over year to $31.44 billion.
Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger and/or WhatsApp) on a given day, were 2.96 billion, up 5% year over year.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
Meta Platforms, Inc. price-consensus-eps-surprise-chart | Meta Platforms, Inc. Quote
Family Monthly Active People or MAP increased 4.2% year over year to 3.74 billion.
Advertising revenues (99.4% of Family of Apps revenues) decreased 4.2% year over year to $31.25 billion and accounted for 97.2% of fourth-quarter revenues.
RoW advertising revenues grew 4.9% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada advertising revenues declined 3.5%, 15.5% and 0.4% year over year, respectively.
Ad impressions delivered across Family of Apps increased 23% year over year and the average price per ad decreased 22% year over year in the reported quarter.
Meta’s fourth-quarter results suffered from sluggish ad demand, particularly in the financial services and technology verticals. Online commerce and CPG remained weak while the travel and healthcare verticals improved on a year-over-year basis.
Family of Apps’ other revenues increased 18.7% year over year to $184 million.
Reality Labs revenues (2.3% of total revenues) plunged 17.1% year over year to $727 million.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.96 billion, up 2% year over year.
MAUs in the Asia-Pacific, RoW, and the United States & Canada grew 2.7%, 3.6% and 1.5% year over year, respectively. Europe MAUs declined 4.7% year over year.
Daily Active Users (DAUs) were 2 billion, which increased 4% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 6% year over year. DAUs in RoW and the United States & Canada grew 3.9% and 2.1%, respectively. DAUs in Europe declined 1.6% year over year.
Average Revenues per User in RoW grew 2.6% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada declined 5.7%, 12.1%, and 3%, year over year, respectively.
Operating Details
In the fourth quarter, total costs and expenses increased 22.2% year over year to $25.77 billion. As a percentage of revenues, total costs and expenses were 80.1%, significantly up from the year-ago quarter’s 62.6%.
In the reported quarter, Family of Apps expenses were $20.8 billion, accounting for 81% of Meta’s overall expenses. FoA expenses grew 23% year over year.
Reality Labs’ expenses were $5 billion, up 20%, driven by employee-related costs and technology development expenses.
As a percentage of revenues, while marketing & sales expenses increased 120 basis points (bps), general & administrative expenses decreased 20 bps on a year-over-year basis.
Research & development expenses, as a percentage of revenues, were 30.4%, significantly up from 20.9% reported in the year-ago quarter.
Meta’s employee base was 86,482 at the end of the fourth quarter, up 20% year over year.
Operating income of $6.40 billion decreased 49.2% year over year. The operating margin was 19.9%, significantly down from the 37.4% reported in the year-ago quarter.
Family of Apps’ operating income declined 32.8% year over year to $10.68 billion. Reality Labs reported a loss of $4.28 billion compared with the year-ago quarter’s loss of $3.30 billion.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash and cash equivalents, and marketable securities were $40.74 billion compared with $41.78 billion as of Sep 30, 2022.
Capital expenditure was $9.22 billion in the fourth quarter compared with $9.52 billion in the previous quarter. Free cash flow was $5.29 billion compared with the $173 million reported in the previous quarter.
Meta repurchased $6.91 billion of its Class A common stock in the reported quarter. As of Dec 31, 2022, the company had $10.87 billion available and authorized for repurchases.
Meta also announced a $40-billion increase in its share repurchase authorization.
Guidance
Meta expects total revenues between $26 billion and $28.5 billion for the first quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by 2%.
For 2023, Meta anticipates total expenses for the current year between $89 billion and $95 billion, including an estimated $1 billion in additional charges related to the consolidation of office facilities.
For the ongoing year, Meta expects capital expenditure between $30 billion and $33 billion.
Zacks Rank & Stocks to Consider
Currently, Meta has a Zacks Rank #3 (Hold).
Meta shares have underperformed the Zacks Computer & Technology sector in the past year. While Meta shares have lost 35.6%, the Computer & Technology sector declined 20.3%.
Cambium Networks (CMBM - Free Report) , Amtech (ASYS - Free Report) and RingCentral (RNG - Free Report) are some better-ranked stocks that investors can consider in the broader sector. While Cambium currently sports a Zacks Rank #1 (Strong Buy), both Amtech and RingCentral carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cambium shares have declined 12.3% in the past year. CMBM is set to report its fourth-quarter 2022 results on Feb 16.
Amtech shares have gained 26.4% in the past year. ASYS is set to report its first-quarter fiscal 2023 results on Feb 8.
RingCentral shares have declined 72.9% in the past year. RNG is set to report its fourth-quarter 2022 results on Feb 15.