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Meta expects total revenues between $26 billion and $28.5 billion for the quarter.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $27.44 billion, indicating a decrease of 5.41% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $1.82 per share, which has remained unchanged over the past 30 days, suggesting a decline of 43.48% from the figure reported in the year-ago quarter.
The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 0.80%.
Let’s see how things have shaped up for the upcoming announcement.
Meta’s third-quarter top line is expected to have been affected by geopolitical tensions like the Russia-Ukraine war, which reduced its monthly active users across its family of apps, namely Facebook and Instagram.
Rising inflation is likely to have negatively impacted the ad spending budgets of enterprises, which might have weighed on the ad revenues of Meta in the to-be-reported quarter.
In the second quarter of 2022, Meta’s ad revenues represented 99.2% of total revenues and were used to fund the company’s Reality Labs initiatives, which may have taken a severe hit in the to-be-reported quarter.
Meta’s ad revenue business is facing declining growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is tough, and Meta expects these factors to hurt advertising growth in the third quarter of 2022.
Meta’s advertisement revenues decreased 1.5% year over year to $28.15 billion and accounted for 99.2% of second-quarter revenues. The declining revenue trend is expected to have continued in the third quarter.
In the third quarter of 2022, Meta expects a 6% headwind in foreign currency exchange rates, which reflects volatility in the market.
As a result, Meta slowed down its investments in certain Reality Labs projects responsible for creating the metaverse. These projects were costing the company a lot of capital as revenues from its primary source have been decreasing.
Meta, which currently carries Zacks Rank #4 (Sell), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse. It is created by the use of virtual and augmented reality.
Also, intensifying competition from the likes of Snap (SNAP - Free Report) and Twitter is another major headwind that is expected to have affected the third quarter’s revenue growth.
Snap is benefiting from improving user engagement, particularly in the 13-34-year-old demography, which is expanding its advertiser base. SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters, globally.
Even as Meta is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
However, Meta has been diversifying the investments in developing certain AI infrastructure, which will drive revenue growth across ad business and the metaverse in the long run. This is expected to have aided in reducing operating expenses and might have favored the bottom-line growth in the third quarter.
Key Q3 Developments
In the third quarter, Meta announced the launch of new features to drive user growth in its family of apps - Facebook and Instagram. Meta’s new features will allow both Facebook and Instagram users to switch between the two social media profiles through the same Accounts Center, and people can view their Facebook and Instagram profiles in one place.
To deal with rising security concerns, Meta has also concentrated on developing its privacy and security factors. In addition to its two-factor notification, which will still apply to the new updates, users will be updated if new Instagram and Facebook accounts are created using their existing accounts.
Meta’s legal woes are still consistent as the company was slapped with a €405 million fine by Ireland’s data regulators for violating the European Union’s General Data Protection Regulation and failing to protect children’s information.
Image: Bigstock
Meta Platforms (META) to Report Q3 Earnings: What to Expect
Meta Platforms (META - Free Report) is set to report third-quarter 2022 results on Oct 26.
Meta expects total revenues between $26 billion and $28.5 billion for the quarter.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $27.44 billion, indicating a decrease of 5.41% from the year-ago quarter’s reported figure.
The consensus mark for earnings stands at $1.82 per share, which has remained unchanged over the past 30 days, suggesting a decline of 43.48% from the figure reported in the year-ago quarter.
The company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 0.80%.
Let’s see how things have shaped up for the upcoming announcement.
Meta Platforms, Inc. Price and EPS Surprise
Meta Platforms, Inc. price-eps-surprise | Meta Platforms, Inc. Quote
Factors to Note
Meta’s third-quarter top line is expected to have been affected by geopolitical tensions like the Russia-Ukraine war, which reduced its monthly active users across its family of apps, namely Facebook and Instagram.
Rising inflation is likely to have negatively impacted the ad spending budgets of enterprises, which might have weighed on the ad revenues of Meta in the to-be-reported quarter.
In the second quarter of 2022, Meta’s ad revenues represented 99.2% of total revenues and were used to fund the company’s Reality Labs initiatives, which may have taken a severe hit in the to-be-reported quarter.
Meta’s ad revenue business is facing declining growth due to ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is tough, and Meta expects these factors to hurt advertising growth in the third quarter of 2022.
Meta’s advertisement revenues decreased 1.5% year over year to $28.15 billion and accounted for 99.2% of second-quarter revenues. The declining revenue trend is expected to have continued in the third quarter.
In the third quarter of 2022, Meta expects a 6% headwind in foreign currency exchange rates, which reflects volatility in the market.
As a result, Meta slowed down its investments in certain Reality Labs projects responsible for creating the metaverse. These projects were costing the company a lot of capital as revenues from its primary source have been decreasing.
Meta, which currently carries Zacks Rank #4 (Sell), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse. It is created by the use of virtual and augmented reality.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Also, intensifying competition from the likes of Snap (SNAP - Free Report) and Twitter is another major headwind that is expected to have affected the third quarter’s revenue growth.
Snap is benefiting from improving user engagement, particularly in the 13-34-year-old demography, which is expanding its advertiser base. SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters, globally.
Even as Meta is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
However, Meta has been diversifying the investments in developing certain AI infrastructure, which will drive revenue growth across ad business and the metaverse in the long run. This is expected to have aided in reducing operating expenses and might have favored the bottom-line growth in the third quarter.
Key Q3 Developments
In the third quarter, Meta announced the launch of new features to drive user growth in its family of apps - Facebook and Instagram. Meta’s new features will allow both Facebook and Instagram users to switch between the two social media profiles through the same Accounts Center, and people can view their Facebook and Instagram profiles in one place.
To deal with rising security concerns, Meta has also concentrated on developing its privacy and security factors. In addition to its two-factor notification, which will still apply to the new updates, users will be updated if new Instagram and Facebook accounts are created using their existing accounts.
Meta’s legal woes are still consistent as the company was slapped with a €405 million fine by Ireland’s data regulators for violating the European Union’s General Data Protection Regulation and failing to protect children’s information.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.