It has been about a month since the last earnings report for Facebook . Shares have added about 1.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Facebook due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Facebook Q2 Earnings Beat Estimates, Revenues Up Y/Y
Facebook's second-quarter 2021 earnings of $3.61 per share beat the Zacks Consensus Estimate by 19.1% and surged 100.6% year over year.
Revenues of $29.08 billion surpassed the Zacks Consensus Estimate by 4.1% and soared 55.6% year over year. At constant currency (cc), the top line improved 50%.
Other revenues surged 35.8% year over year to $497 million.
Geographically, Asia-Pacific, Europe, the United States & Canada, and Rest of World (RoW) revenues grew 55.3%, 61.5%, 47.9% and 85.4%, on a year-over-year basis, respectively.
Average Revenue per User (ARPU) in Europe, the United States & Canada, Asia-Pacific and RoW grew 56.2%, 45.3%, 39.1% and 71.3%, on a year-over-year basis, respectively.
Facebook’s second-quarter advertising revenues increased 56% year over year (51% at cc) to $28.58 billion.
The tech giant’s Asia-Pacific, Europe, the United States & Canada, and RoW advertising revenues grew 55.6%, 63.3%, 47.5% and 85.6%, on a year-over-year basis, respectively.
Ad impressions served rose 6% and average price per ad increased 47% from the year-ago quarter.
Monthly active users (MAUs) were 2.895 billion, up 7.2% year over year. Daily Active Users (DAUs) were 1.908 billion, which increased 6.9% year over year and represented 66% of MAUs.
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 2.76 billion, up 11.7% year over year.
Family Monthly Active People (MAP) increased 11.8% year over year to 3.51 billion.
Asia-Pacific DAUs were up 12.7% year over year to 788 million. DAUs in RoW and Europe grew 6% and 0.7% to 618 million and 307 million, respectively. The United States & Canada DAUs declined 1.5% to 195 million.
MAUs in Asia-Pacific, RoW, Europe, and the United States & Canada grew 10.8%, 6.6%, 2.4% and 1.2% to 1.27 billion, 951 million, 420 million and 259 million, respectively.
In the second quarter, total costs and expenses increased 31.3% year over year to $16.71 billion. As percentage of revenues, total costs and expenses were 57.5%, down from the year-ago quarter’s 68.1%.
As percentage of revenues, marketing & sales (M&S), and general & administrative expenses (G&A) decreased 400 bps and 180 bps, on a year-over-year basis, respectively. Moreover, research & development (R&D) expenses decreased 290 bps from the year-ago quarter.
Facebook’s employee base was 63,404 at the end of the second quarter, up 21% year over year.
Operating income of $12.37 billion surged 107.4% year over year. Operating margin was 42.5% compared with 31.9% in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2021, cash & cash equivalents and marketable securities were $64.08 billion compared with $64.22 billion as of Mar 31, 2021.
Capital expenditures were $4.74 billion in the second quarter compared with $4.82 billion in the previous quarter. Free cash flow was $8.51 billion compared with $7.82 billion reported in the previous quarter.
Facebook expects revenue growth rate for the third and fourth quarters of 2021 to decelerate significantly on a sequential basis. The company expects changes made in iOS 14.5 update to limit its ability to track user-activity trend.
Facebook anticipates total expenses for the current year to be between $70 billion and $73 billion.
In the ongoing year, Facebook expects capital expenditures between $19 billion and $21 billion, driven by higher spending on data centers, servers, network infrastructure and office facilities.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 9.08% due to these changes.
Currently, Facebook has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Facebook has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.