A month has gone by since the last earnings report for Meta Platforms . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Meta Platforms due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Meta Platforms' Q1 Earnings Beat Mark, Revenues Up Y/Y
Meta Platforms’ first-quarter 2022 earnings of $2.72 per share beat the Zacks Consensus Estimate by 7.09% and decreased 17.6% year over year.
Revenues of $27.91 billion lagged the Zacks Consensus Estimate by 1.08% but increased 6.6% year over year. At constant currency (cc), the top line improved 10%.
Top-Line Details
Geographically, Asia-Pacific, the United States & Canada, and Rest of World (RoW) revenues grew 20.3%, 2.1% and 21.9%, on a year-over-year basis, respectively. Europe revenues declined 0.6% year over year to $6.49 billion.
Family of Apps revenues (97.4% of total revenues) increased 6.1% year over year to $27.21 billion. Family of Apps includes Facebook, Instagram, Messenger, WhatsApp and other services.
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 2.87 billion, up 5.5% year over year.
Family Monthly Active People or MAP increased 5.5% year over year to 3.64 billion.
Advertising revenues (99.2% of Family of Apps revenues) increased 6.1% year over year to $27 billion and accounted for 96.7% of first-quarter revenues.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Moreover, measuring these outcomes has also become difficult. The Russia-Ukriane conflict, as well as a slowdown in e-commerce, further hurt top-line growth in the reported quarter.
The social network giant’s RoW, the United States & Canada, and Asia-Pacific advertising revenues grew 21.2%, 19.6% and 1.1%, on a year-over-year basis, respectively. Europe advertising revenues declined 0.1% year over year to $6.36 billion, reflecting lower ad spending in the region.
Ad impressions served rose 15%, and average price per ad decreased 8% from the year-ago quarter. Impression growth was primarily driven by Asia Pacific and RoW.
Family of Apps’ other revenues increased 8.6% year over year to $215 million.
Reality Labs revenues (2.5% of total revenues) increased 30.1% year over year to $695 million. Reality Labs includes augmented- and virtual-reality-related consumer hardware, software and content.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.936 billion, up 2.9% year over year.
MAUs in Asia-Pacific, RoW and the United States & Canada grew 5.4%, 1.8% and 1.5% to 1.297 billion, 957 million and 263 million, respectively. Europe MAUs declined 1.2% to 418 million due to the block in Russia.
Daily Active Users (DAUs) were 1.960 billion, which increased 4.4% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 8.8% year over year to 827 million. DAUs in RoW and the United States & Canada grew 2.6% and 0.5% to 629 million and 196 million, respectively. DAUs in Europe declined 0.6% year over year to307 million.
Average Revenue per User (ARPU) in RoW, the United States & Canada, and Asia-Pacific grew 18.9%, 0.5% and 13.5%, on a year-over-year basis, respectively.
Quarter Details
In the first quarter, total costs and expenses increased 31% year over year to $19.38 billion. As a percentage of revenues, total costs and expenses were 69.5%, significantly up from the year-ago quarter’s 56.5%.
As a percentage of revenues, marketing & sales (M&S), and research & development (R&D) increased 100 bps and 780 bps, on a year-over-year basis, respectively.
General & administrative (G&A) expenses increased 230 bps from the year-ago quarter.
Meta’s employee base was 77,805 at the end of the first quarter, up 28% year over year.
Operating income of $8.52 billion decreased 25.1% year over year. Operating margin was 30.5%, significantly down from 43.5% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash & cash equivalents and marketable securities were $43.89 billion compared with $48 billion as of Dec 31, 2021.
Capital expenditures were $5.55 billion in the first quarter compared with $5.54 billion in the previous quarter. Free cash flow was $8.53 billion compared with $9.55 billion reported in the previous quarter.
Meta repurchased $9.39 billion of its Class A common stock in the reported quarter. As of Mar 31, 2022, the company had $29.41 billion available and authorized for repurchases.
Guidance
Meta expects total revenues between $28 billion and $30 billion for the second quarter of 2022. Unfavorable forex is expected to hurt year-over-year top-line growth by 3%.
Meta anticipates total expenses for the current year to be between $87 billion and $92 billion, primarily driven by the Family of Apps segment, followed by Reality Labs.
In the ongoing year, Meta expects capital expenditures to be between $29 billion and $34 billion, driven by investments in data centers, servers, network infrastructure and office facilities.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -8.05% due to these changes.
VGM Scores
Currently, Meta Platforms has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Image: Bigstock
Meta Platforms (FB) Down 6.9% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Meta Platforms . Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Meta Platforms due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Meta Platforms' Q1 Earnings Beat Mark, Revenues Up Y/Y
Meta Platforms’ first-quarter 2022 earnings of $2.72 per share beat the Zacks Consensus Estimate by 7.09% and decreased 17.6% year over year.
Revenues of $27.91 billion lagged the Zacks Consensus Estimate by 1.08% but increased 6.6% year over year. At constant currency (cc), the top line improved 10%.
Top-Line Details
Geographically, Asia-Pacific, the United States & Canada, and Rest of World (RoW) revenues grew 20.3%, 2.1% and 21.9%, on a year-over-year basis, respectively. Europe revenues declined 0.6% year over year to $6.49 billion.
Family of Apps revenues (97.4% of total revenues) increased 6.1% year over year to $27.21 billion. Family of Apps includes Facebook, Instagram, Messenger, WhatsApp and other services.
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 2.87 billion, up 5.5% year over year.
Family Monthly Active People or MAP increased 5.5% year over year to 3.64 billion.
Advertising revenues (99.2% of Family of Apps revenues) increased 6.1% year over year to $27 billion and accounted for 96.7% of first-quarter revenues.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Moreover, measuring these outcomes has also become difficult. The Russia-Ukriane conflict, as well as a slowdown in e-commerce, further hurt top-line growth in the reported quarter.
The social network giant’s RoW, the United States & Canada, and Asia-Pacific advertising revenues grew 21.2%, 19.6% and 1.1%, on a year-over-year basis, respectively. Europe advertising revenues declined 0.1% year over year to $6.36 billion, reflecting lower ad spending in the region.
Ad impressions served rose 15%, and average price per ad decreased 8% from the year-ago quarter. Impression growth was primarily driven by Asia Pacific and RoW.
Family of Apps’ other revenues increased 8.6% year over year to $215 million.
Reality Labs revenues (2.5% of total revenues) increased 30.1% year over year to $695 million. Reality Labs includes augmented- and virtual-reality-related consumer hardware, software and content.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.936 billion, up 2.9% year over year.
MAUs in Asia-Pacific, RoW and the United States & Canada grew 5.4%, 1.8% and 1.5% to 1.297 billion, 957 million and 263 million, respectively. Europe MAUs declined 1.2% to 418 million due to the block in Russia.
Daily Active Users (DAUs) were 1.960 billion, which increased 4.4% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 8.8% year over year to 827 million. DAUs in RoW and the United States & Canada grew 2.6% and 0.5% to 629 million and 196 million, respectively. DAUs in Europe declined 0.6% year over year to307 million.
Average Revenue per User (ARPU) in RoW, the United States & Canada, and Asia-Pacific grew 18.9%, 0.5% and 13.5%, on a year-over-year basis, respectively.
Quarter Details
In the first quarter, total costs and expenses increased 31% year over year to $19.38 billion. As a percentage of revenues, total costs and expenses were 69.5%, significantly up from the year-ago quarter’s 56.5%.
As a percentage of revenues, marketing & sales (M&S), and research & development (R&D) increased 100 bps and 780 bps, on a year-over-year basis, respectively.
General & administrative (G&A) expenses increased 230 bps from the year-ago quarter.
Meta’s employee base was 77,805 at the end of the first quarter, up 28% year over year.
Operating income of $8.52 billion decreased 25.1% year over year. Operating margin was 30.5%, significantly down from 43.5% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Mar 31, 2022, cash & cash equivalents and marketable securities were $43.89 billion compared with $48 billion as of Dec 31, 2021.
Capital expenditures were $5.55 billion in the first quarter compared with $5.54 billion in the previous quarter. Free cash flow was $8.53 billion compared with $9.55 billion reported in the previous quarter.
Meta repurchased $9.39 billion of its Class A common stock in the reported quarter. As of Mar 31, 2022, the company had $29.41 billion available and authorized for repurchases.
Guidance
Meta expects total revenues between $28 billion and $30 billion for the second quarter of 2022. Unfavorable forex is expected to hurt year-over-year top-line growth by 3%.
Meta anticipates total expenses for the current year to be between $87 billion and $92 billion, primarily driven by the Family of Apps segment, followed by Reality Labs.
In the ongoing year, Meta expects capital expenditures to be between $29 billion and $34 billion, driven by investments in data centers, servers, network infrastructure and office facilities.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -8.05% due to these changes.
VGM Scores
Currently, Meta Platforms has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.