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Meta Platforms' (META) Q2 Earnings Lag Mark, Revenues Down Y/Y
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Meta Platforms’ (META - Free Report) second-quarter 2022 earnings of $2.46 per share lagged the Zacks Consensus Estimate by 1.60% and decreased 32% year over year.
Revenues of $28.82 billion beat the Zacks Consensus Estimate by 0.44% but decreased 0.9% year over year. At constant currency (cc), the top line improved 3%.
Top-Line Details
Geographically, Asia-Pacific and Rest of World (RoW) revenues grew 24.3% and 11.6%, respectively, on a year-over-year basis. Europe and the United States & Canada revenues declined 11.3% and 3.6% year over year, respectively.
Revenues of Family of Apps (98.4% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, decreased 1.4% year over year to $28.37 billion.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
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, were 2.88 billion, up 4.3% year over year.
Family Monthly Active People or MAP increased 4% year over year to 3.65 billion.
Advertising revenues (99.2% of Family of Apps revenues) decreased 1.5% year over year to $28.15 billion and accounted for 97.7% of second-quarter revenues.
The social network giant’s RoW and Asia-Pacific advertising revenues grew 10.9% and 13.3%, respectively, on a year-over-year basis. Europe and the United States & Canada advertising revenues declined 11.7% and 4.3% year over year, respectively.
Family of Apps’ other revenues increased 13.5% year over year to $218 million.
Reality Labs revenues (1.6% of total revenues) increased 48.2% year over year to $452 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 2.934 billion, up 1.3% year over year.
MAUs in Asia-Pacific, RoW and the United States & Canada grew 3.2%, 0.8% and 1.9% year over year, respectively. Europe MAUs declined 3.1% year over year.
Daily Active Users (DAUs) were 1.968 billion, which increased 3.1% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 6.1% year over year. DAUs in RoW and the United States & Canada grew 2.1% and 1%, respectively. DAUs in Europe declined 1.3% year over year.
Average Revenue per User (ARPU) in RoW and Asia-Pacific grew 9.8% and 9.1%, on a year-over-year basis, respectively. Europe and the United States & Canada declined 9.2% and 5.2%, year over year, respectively.
Quarter Details
In the second quarter, total costs and expenses increased 22.5% year over year to $20.46 billion. As a percentage of revenues, total costs and expenses were 71%, significantly up from the year-ago quarter’s 57.5%.
As a percentage of revenues, marketing & sales (M&S), and research & development (R&D) increased 130 bps and 920 bps, respectively, on a year-over-year basis.
General & administrative (G&A) expenses increased 360 bps from the year-ago quarter.
Meta’s employee base was 83,553 at the end of the second quarter, up 32% year over year.
Operating income of $8.36 billion decreased 32.4% year over year. The operating margin was 29%, significantly down from 42.5% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash & cash equivalents and marketable securities were $40.49 billion compared with $43.89 billion as of Mar 31, 2022.
Capital expenditures were $7.75 billion in the second quarter compared with $5.55 billion in the previous quarter. Free cash flow was $4.45 billion compared with $8.51 billion reported in the previous quarter.
Meta repurchased $5.08 billion of its Class A common stock in the reported quarter. As of Jun 30, 2022, the company had $24.32 billion available and authorized for repurchases.
Guidance
Meta expects total revenues between $26 billion and $28.5 billion for the third quarter of 2022. Unfavorable forex is expected to hurt year-over-year top-line growth by 6%.
Meta also anticipates third quarter Reality Labs revenues to be lower than second quarter revenues.
Meta anticipates total expenses for the current year to be between $85 billion and $88 billion.
In the ongoing year, Meta expects capital expenditures to be between $30 billion and $34 billion.
Zacks Rank & Stocks to Consider
Currently, Meta has a Zacks Rank #4 (Sell).
Meta shares have underperformed the Zacks Computer & Technology sector year to date. While Meta shares have lost 49.6%, the Computer & Technology sector decreased 49.7%.
Image: Bigstock
Meta Platforms' (META) Q2 Earnings Lag Mark, Revenues Down Y/Y
Meta Platforms’ (META - Free Report) second-quarter 2022 earnings of $2.46 per share lagged the Zacks Consensus Estimate by 1.60% and decreased 32% year over year.
Revenues of $28.82 billion beat the Zacks Consensus Estimate by 0.44% but decreased 0.9% year over year. At constant currency (cc), the top line improved 3%.
Top-Line Details
Geographically, Asia-Pacific and Rest of World (RoW) revenues grew 24.3% and 11.6%, respectively, on a year-over-year basis. Europe and the United States & Canada revenues declined 11.3% and 3.6% year over year, respectively.
Revenues of Family of Apps (98.4% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, decreased 1.4% year over year to $28.37 billion.
Meta Platforms, Inc. Price, Consensus and EPS Surprise
Meta Platforms, Inc. price-consensus-eps-surprise-chart | Meta Platforms, Inc. Quote
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, were 2.88 billion, up 4.3% year over year.
Family Monthly Active People or MAP increased 4% year over year to 3.65 billion.
Advertising revenues (99.2% of Family of Apps revenues) decreased 1.5% year over year to $28.15 billion and accounted for 97.7% of second-quarter revenues.
The social network giant’s RoW and Asia-Pacific advertising revenues grew 10.9% and 13.3%, respectively, on a year-over-year basis. Europe and the United States & Canada advertising revenues declined 11.7% and 4.3% year over year, respectively.
Family of Apps’ other revenues increased 13.5% year over year to $218 million.
Reality Labs revenues (1.6% of total revenues) increased 48.2% year over year to $452 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 2.934 billion, up 1.3% year over year.
MAUs in Asia-Pacific, RoW and the United States & Canada grew 3.2%, 0.8% and 1.9% year over year, respectively. Europe MAUs declined 3.1% year over year.
Daily Active Users (DAUs) were 1.968 billion, which increased 3.1% year over year and represented 67% of MAUs.
Asia-Pacific DAUs were up 6.1% year over year. DAUs in RoW and the United States & Canada grew 2.1% and 1%, respectively. DAUs in Europe declined 1.3% year over year.
Average Revenue per User (ARPU) in RoW and Asia-Pacific grew 9.8% and 9.1%, on a year-over-year basis, respectively. Europe and the United States & Canada declined 9.2% and 5.2%, year over year, respectively.
Quarter Details
In the second quarter, total costs and expenses increased 22.5% year over year to $20.46 billion. As a percentage of revenues, total costs and expenses were 71%, significantly up from the year-ago quarter’s 57.5%.
As a percentage of revenues, marketing & sales (M&S), and research & development (R&D) increased 130 bps and 920 bps, respectively, on a year-over-year basis.
General & administrative (G&A) expenses increased 360 bps from the year-ago quarter.
Meta’s employee base was 83,553 at the end of the second quarter, up 32% year over year.
Operating income of $8.36 billion decreased 32.4% year over year. The operating margin was 29%, significantly down from 42.5% reported in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2022, cash & cash equivalents and marketable securities were $40.49 billion compared with $43.89 billion as of Mar 31, 2022.
Capital expenditures were $7.75 billion in the second quarter compared with $5.55 billion in the previous quarter. Free cash flow was $4.45 billion compared with $8.51 billion reported in the previous quarter.
Meta repurchased $5.08 billion of its Class A common stock in the reported quarter. As of Jun 30, 2022, the company had $24.32 billion available and authorized for repurchases.
Guidance
Meta expects total revenues between $26 billion and $28.5 billion for the third quarter of 2022. Unfavorable forex is expected to hurt year-over-year top-line growth by 6%.
Meta also anticipates third quarter Reality Labs revenues to be lower than second quarter revenues.
Meta anticipates total expenses for the current year to be between $85 billion and $88 billion.
In the ongoing year, Meta expects capital expenditures to be between $30 billion and $34 billion.
Zacks Rank & Stocks to Consider
Currently, Meta has a Zacks Rank #4 (Sell).
Meta shares have underperformed the Zacks Computer & Technology sector year to date. While Meta shares have lost 49.6%, the Computer & Technology sector decreased 49.7%.
Airbnb (ABNB - Free Report) , Aspen Technology (AZPN - Free Report) , and Fastly (FSLY - Free Report) are some better-ranked stocks that investors can consider in the broader sector. All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Airbnb shares are down 35.5% year to date. ABNB is set to report second-quarter 2022 results on Aug 2.
Aspen shares are up 28.8% year to date. AZPN is set to report fourth-quarter fiscal 2022 results on Aug 8.
Fastly shares are down 68.7% year to date. FSLY is set to report second-quarter 2022 results on Aug 3.