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Our model estimate for second-quarter advertising revenues is pegged at $28.95 billion, indicating growth of 2.8% year over year.
In the first quarter of 2023, advertising revenues (99.3% of Family of Apps revenues) increased 4.1% year over year to $28.10 billion and accounted for 98.1% of revenues.
Meta’s focus on improving ad ranking and measurement by leveraging artificial intelligence (AI) has been a key catalyst driving advertisers’ return on investment. The increasing level of automation supported by AI is expected to have driven adoption for its solutions like Advantage+ and Shopping in the to-be-reported quarter.
Moreover, an increased level of investment in automation is expected to have expanded the usage of click-to-message ads among large advertisers. Click-to-message ads are particularly popular with small advertisers in Southeast Asia and Latin America.
Advertising revenues in Asia-Pacific are likely to grow 1.4% in the second quarter of 2023, per our model. United States and Canada advertising revenues are expected to grow 4.5% while Rest of the World is anticipated to climb 2.5% year over year, per our estimate.
Meta’s plan to tackle ad targeting-related headwinds is expected to have positively impacted the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes has also become difficult, thereby hurting its ad revenue growth.
Click here to know how Meta’s overall second-quarter performance is likely to be.
AI, ML & Metaverse Driving Prospects
Meta, which currently carries a Zacks Rank #2 (Buy), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse created using virtual and augmented reality.
Moreover, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos, Reels on Instagram.
Reels have been attracting Gen-Z to the platform amid competition from Snapchat, Twitter and TikTok. AI has helped in improving recommendations, which drove a more than 24% increase in time spent on Instagram.
To increase revenues, Meta has been growing video monetization, especially in short-form videos like Reels using AI and machine learning.
Meta has also shown commitment to prioritizing user safety and well-being through initiatives aimed at enhancing parental supervision, messaging privacy, and time management on its platforms. These factors are expected to have driven user base growth in second-quarter 2023.
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 or WhatsApp) on a given day, is expected to be 3.044 billion, indicating growth of 5.7% year over year, per our model.
Family Monthly Active People or MAP is expected to increase 5.1% year over year to 3.837 billion, per our model.
What Do the Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.87 per share, up a couple of cents over the past 30 days and indicating 16.67% growth from the figure reported in the year-ago quarter.
Meta expects total revenues between $29.5 billion and $32 billion for the second quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by less than 1%.
The consensus estimate for second-quarter revenues is currently pegged at $30.91 billion, indicating growth of 7.26% from the figure reported in the year-ago quarter.
Upcoming Earnings to Watch For
Meta belongs to the Zacks Internet Software industry. Investors are eagerly waiting for the upcoming earnings of Fortinet (FTNT - Free Report) and BILL Holdings (BILL - Free Report) , two other top-ranked stocks in the same industry.
Image: Bigstock
Will Higher Ad Revenues Aid Meta Platforms (META) Q2 Earnings?
Meta Platforms’ (META - Free Report) second-quarter 2023 results, set to be reported on Jul 26, are expected to reflect the benefits of higher advertising revenues.
Our model estimate for second-quarter advertising revenues is pegged at $28.95 billion, indicating growth of 2.8% year over year.
In the first quarter of 2023, advertising revenues (99.3% of Family of Apps revenues) increased 4.1% year over year to $28.10 billion and accounted for 98.1% of revenues.
Meta’s focus on improving ad ranking and measurement by leveraging artificial intelligence (AI) has been a key catalyst driving advertisers’ return on investment. The increasing level of automation supported by AI is expected to have driven adoption for its solutions like Advantage+ and Shopping in the to-be-reported quarter.
Moreover, an increased level of investment in automation is expected to have expanded the usage of click-to-message ads among large advertisers. Click-to-message ads are particularly popular with small advertisers in Southeast Asia and Latin America.
Meta Platforms, Inc. Revenue (TTM)
Meta Platforms, Inc. revenue-ttm | Meta Platforms, Inc. Quote
Advertising revenues in Asia-Pacific are likely to grow 1.4% in the second quarter of 2023, per our model. United States and Canada advertising revenues are expected to grow 4.5% while Rest of the World is anticipated to climb 2.5% year over year, per our estimate.
Meta’s plan to tackle ad targeting-related headwinds is expected to have positively impacted the ad-revenue growth rate in the to-be-reported quarter. It is worth mentioning that changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes has also become difficult, thereby hurting its ad revenue growth.
Click here to know how Meta’s overall second-quarter performance is likely to be.
AI, ML & Metaverse Driving Prospects
Meta, which currently carries a Zacks Rank #2 (Buy), is banking its future on building the metaverse, which is a shared virtual 3D world, or multiverse created using virtual and augmented reality.
Moreover, Instagram’s growing popularity in international markets, particularly in Asia, has been helping Meta expand its user base. Much of it can be attributed to the growing popularity of short-form videos, Reels on Instagram.
Reels have been attracting Gen-Z to the platform amid competition from Snapchat, Twitter and TikTok. AI has helped in improving recommendations, which drove a more than 24% increase in time spent on Instagram.
To increase revenues, Meta has been growing video monetization, especially in short-form videos like Reels using AI and machine learning.
Meta has also shown commitment to prioritizing user safety and well-being through initiatives aimed at enhancing parental supervision, messaging privacy, and time management on its platforms. These factors are expected to have driven user base growth in second-quarter 2023.
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 or WhatsApp) on a given day, is expected to be 3.044 billion, indicating growth of 5.7% year over year, per our model.
Family Monthly Active People or MAP is expected to increase 5.1% year over year to 3.837 billion, per our model.
What Do the Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.87 per share, up a couple of cents over the past 30 days and indicating 16.67% growth from the figure reported in the year-ago quarter.
Meta expects total revenues between $29.5 billion and $32 billion for the second quarter of 2023. Unfavorable forex is expected to hurt year-over-year top-line growth by less than 1%.
The consensus estimate for second-quarter revenues is currently pegged at $30.91 billion, indicating growth of 7.26% from the figure reported in the year-ago quarter.
Upcoming Earnings to Watch For
Meta belongs to the Zacks Internet Software industry. Investors are eagerly waiting for the upcoming earnings of Fortinet (FTNT - Free Report) and BILL Holdings (BILL - Free Report) , two other top-ranked stocks in the same industry.
Fortinet and BILL sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
While Fortinet is set to report its quarterly earnings on Aug 3, BILL is scheduled to report on Aug 17.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.