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Meta Platforms (META) Q1 Earnings Beat, Revenues Rise Y/Y
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Meta Platforms (META - Free Report) reported first-quarter 2023 earnings of $2.20 per share, beating the Zacks Consensus Estimate by 34.69%.
Revenues of $28.65 billion beat the Zacks Consensus Estimate by 4.21% and increased 2.6% year over year. At constant currency (cc), the top line improved 6%.
Top-Line Details
Geographically, the Rest of the World (RoW) revenues grew 10% on a year-over-year basis. The Asia-Pacific and the United States & Canada revenues increased 3.5% and 3% year over year, respectively. However, Europe revenues declined 2.2% year over year.
Revenues from Family of Apps (98.8% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, increased 4% year over year to $28.31 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 and/or WhatsApp) on a given day, were 3.02 billion, up 5.2% year over year.
Family Monthly Active People or MAP increased 4.2% year over year to 3.74 billion.
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 first-quarter revenues.
RoW advertising revenues grew 9.5% on a year-over-year basis. The Asia-Pacific and the United States & Canada advertising revenues increased 4.1% and 5.7% year over year, respectively. However, Europe advertising revenues declined 1.5% year over year.
Ad impressions delivered across Family of Apps increased 26% year over year and the average price per ad decreased 17% year over year in the reported quarter.
Family of Apps’ other revenues decreased 4.7% year over year to $205 million.
Reality Labs’ revenues (1.2% of the total revenues) plunged 51.2% year over year to $339 million.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.99 billion, up 1.8% year over year.
MAUs in the Asia-Pacific, RoW and the United States & Canada grew 3%, 2.1% and 2.3% year over year, respectively. Europe MAUs declined 1.7% year over year.
Daily Active Users (DAUs) were 2.04 billion, which increased 3.9% year over year and represented 67% of MAUs.
The Asia-Pacific DAUs were up 5.6% year over year. DAUs in RoW and the United States & Canada grew 4.5% and 2%, respectively. DAUs in Europe were unchanged year over year.
Average Revenues per User in RoW grew 6.7% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada increased 1.1%, 1%, and 1.2%, year over year, respectively.
Operating Details
In the first quarter, total costs and expenses increased 10.5% year over year to $21.42 billion. As a percentage of revenues, total costs and expenses were 74.8%, significantly up from the year-ago quarter’s 69.5%.
In the reported quarter, Family of Apps expenses were $20.8 billion, accounting for 81% of Meta’s overall expenses. FoA expenses grew 23% year over year.
Reality Labs’ expenses were $5 billion, up 20%, driven by employee-related costs and technology development expenses.
As a percentage of revenues, while marketing and sales expenses decreased 120 basis points (bps), general and administrative expenses increased 160 bps on a year-over-year basis.
Research and development expenses, as a percentage of revenues, were 32.7%, significantly up from 27.6% reported in the year-ago quarter.
Meta’s employee base was 86,482 at the end of the first quarter, up 20% year over year.
Operating income of $7.23 billion decreased 15.2% year over year. The operating margin was 25.2%, down 530 bps on a year-over-year basis.
Family of Apps’ operating income declined 2.3% year over year to $11.22 billion. Reality Labs reported a loss of $3.99 billion compared with the year-ago quarter’s loss of $2.96 billion.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and cash equivalents, and marketable securities were $37.44 billion compared with $40.74 billion as of Dec 31, 2022.
Long-term debt was $9.92 billion as of Mar 31, 2023.
Capital expenditure was $7.09 billion in the first quarter compared with $9.22 billion in the previous quarter. Free cash flow was $6.91 billion compared with the $5.29 billion reported in the previous quarter.
Meta repurchased $9.22 billion of its Class A common stock in the reported quarter. As of Mar 31, 2023, the company had $41.73 billion available and authorized for repurchases.
Guidance
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%.
For 2023, the company anticipates total expenses for the current year between $86 billion and $90 billion, including $3-$5 billion of restructuring charges.
It expects Reality Labs operating losses to increase year over year in 2023.
In the ongoing year, Meta expects capital expenditure between $30 billion and $33 billion.
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While Meta shares have gained 94.2%, the Computer & Technology sector grew 16.4%.
Asure Software (ASUR - Free Report) , Fortinet (FTNT - Free Report) and Cambium Networks (CMBM - Free Report) are some other same-ranked stocks that investors can consider in the broader sector.
Asure shares have gained 45% year to date. ASUR is set to report its first-quarter 2023 results on May 8.
Fortinet shares have gained 29.7% year to date. FTNT is set to report its first-quarter 2023 results on May 4.
Cambium shares have declined 33.6% year to date. CMBM is set to report its first-quarter 2023 results on May 8.
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Meta Platforms (META) Q1 Earnings Beat, Revenues Rise Y/Y
Meta Platforms (META - Free Report) reported first-quarter 2023 earnings of $2.20 per share, beating the Zacks Consensus Estimate by 34.69%.
Revenues of $28.65 billion beat the Zacks Consensus Estimate by 4.21% and increased 2.6% year over year. At constant currency (cc), the top line improved 6%.
Top-Line Details
Geographically, the Rest of the World (RoW) revenues grew 10% on a year-over-year basis. The Asia-Pacific and the United States & Canada revenues increased 3.5% and 3% year over year, respectively. However, Europe revenues declined 2.2% year over year.
Revenues from Family of Apps (98.8% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, increased 4% year over year to $28.31 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 and/or WhatsApp) on a given day, were 3.02 billion, up 5.2% year over year.
Family Monthly Active People or MAP increased 4.2% year over year to 3.74 billion.
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 first-quarter revenues.
RoW advertising revenues grew 9.5% on a year-over-year basis. The Asia-Pacific and the United States & Canada advertising revenues increased 4.1% and 5.7% year over year, respectively. However, Europe advertising revenues declined 1.5% year over year.
Ad impressions delivered across Family of Apps increased 26% year over year and the average price per ad decreased 17% year over year in the reported quarter.
Family of Apps’ other revenues decreased 4.7% year over year to $205 million.
Reality Labs’ revenues (1.2% of the total revenues) plunged 51.2% year over year to $339 million.
Facebook’s User Base Remains Strong
Monthly active users (MAUs) were 2.99 billion, up 1.8% year over year.
MAUs in the Asia-Pacific, RoW and the United States & Canada grew 3%, 2.1% and 2.3% year over year, respectively. Europe MAUs declined 1.7% year over year.
Daily Active Users (DAUs) were 2.04 billion, which increased 3.9% year over year and represented 67% of MAUs.
The Asia-Pacific DAUs were up 5.6% year over year. DAUs in RoW and the United States & Canada grew 4.5% and 2%, respectively. DAUs in Europe were unchanged year over year.
Average Revenues per User in RoW grew 6.7% on a year-over-year basis. The Asia-Pacific, Europe, and the United States & Canada increased 1.1%, 1%, and 1.2%, year over year, respectively.
Operating Details
In the first quarter, total costs and expenses increased 10.5% year over year to $21.42 billion. As a percentage of revenues, total costs and expenses were 74.8%, significantly up from the year-ago quarter’s 69.5%.
In the reported quarter, Family of Apps expenses were $20.8 billion, accounting for 81% of Meta’s overall expenses. FoA expenses grew 23% year over year.
Reality Labs’ expenses were $5 billion, up 20%, driven by employee-related costs and technology development expenses.
As a percentage of revenues, while marketing and sales expenses decreased 120 basis points (bps), general and administrative expenses increased 160 bps on a year-over-year basis.
Research and development expenses, as a percentage of revenues, were 32.7%, significantly up from 27.6% reported in the year-ago quarter.
Meta’s employee base was 86,482 at the end of the first quarter, up 20% year over year.
Operating income of $7.23 billion decreased 15.2% year over year. The operating margin was 25.2%, down 530 bps on a year-over-year basis.
Family of Apps’ operating income declined 2.3% year over year to $11.22 billion. Reality Labs reported a loss of $3.99 billion compared with the year-ago quarter’s loss of $2.96 billion.
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and cash equivalents, and marketable securities were $37.44 billion compared with $40.74 billion as of Dec 31, 2022.
Long-term debt was $9.92 billion as of Mar 31, 2023.
Capital expenditure was $7.09 billion in the first quarter compared with $9.22 billion in the previous quarter. Free cash flow was $6.91 billion compared with the $5.29 billion reported in the previous quarter.
Meta repurchased $9.22 billion of its Class A common stock in the reported quarter. As of Mar 31, 2023, the company had $41.73 billion available and authorized for repurchases.
Guidance
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%.
For 2023, the company anticipates total expenses for the current year between $86 billion and $90 billion, including $3-$5 billion of restructuring charges.
It expects Reality Labs operating losses to increase year over year in 2023.
In the ongoing year, Meta expects capital expenditure between $30 billion and $33 billion.
Zacks Rank & Other Stocks to Consider
Currently, Meta sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. While Meta shares have gained 94.2%, the Computer & Technology sector grew 16.4%.
Asure Software (ASUR - Free Report) , Fortinet (FTNT - Free Report) and Cambium Networks (CMBM - Free Report) are some other same-ranked stocks that investors can consider in the broader sector.
Asure shares have gained 45% year to date. ASUR is set to report its first-quarter 2023 results on May 8.
Fortinet shares have gained 29.7% year to date. FTNT is set to report its first-quarter 2023 results on May 4.
Cambium shares have declined 33.6% year to date. CMBM is set to report its first-quarter 2023 results on May 8.