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Why Is Meta Platforms (META) Up 4.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Meta Platforms (META - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Meta Platforms due for a pullback? 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 Q2 Earnings & Revenues Beat Estimates
Meta Platforms reported second-quarter 2024 earnings of $5.16 per share, beating the Zacks Consensus Estimate by 9.79%. The figure surged 73.2% year over year.
Revenues of $39.07 billion beat the Zacks Consensus Estimate by 1.91% and increased 22.1% year over year. At constant currency (cc), revenues soared 23% year over year.
User growth remained solid in the United States, with WhatsApp reaching more than 100 million monthly users and Thread approaching 200 million milestone.
Top-Line Details
Meta Platforms is leveraging AI to improve the quality of recommendations that helped drive user engagement across Facebook and Instagram in the reported quarter.
Geographically, revenues from the United States & Canada, Asia-Pacific, Europe and the Rest of the World (RoW) surged 16.8%, 21.1%, 27% and 34.7% on a year-over-year basis, respectively.
Revenues from Family of Apps (99.1% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, increased 22.1% year over year to $38.72 billion.
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, was 3.27 billion, up 6.5% year over year.
Advertising revenues (99% of Family of Apps revenues) increased 21.7% year over year to $38.33 billion and accounted for 97.9% of second-quarter revenues. At cc, revenues increased 23% year over year.
Advertising revenues from the United States & Canada, Asia-Pacific, Europe and the RoW surged 17.4%, 20%, 25.7% and 33.2% on a year-over-year basis, respectively.
Ad impressions delivered across Family of Apps increased 10% year over year, and the average price per ad jumped 10% in the reported quarter. Impression growth from Asia-Pacific, the RoW, the United States & Canada and Europe was 15%, 8%, 8% and 6%, respectively.
Online commerce was the largest contributor to year-over-year growth, followed by gaming and entertainment and media.
Family of Apps’ other revenues soared 73% year over year to $389 million, primarily driven by higher business messaging revenue growth from META’s WhatsApp Business platform.
Reality Labs’ revenues (0.9% of total revenues) increased 28% year over year to $353 million, driven by higher sales of Quest headset.
Operating Details
In the second quarter, total costs and expenses increased 7.2% year over year to $24.22 billion. As a percentage of revenues, total costs and expenses were 62%, significantly down from 70.6% in the year-ago quarter.
In the reported quarter, Family of Apps expenses were $19.4 billion, accounting for 80% of Meta Platforms’ overall expenses. FoA expenses were up 4% year over year, primarily due to higher infrastructure and headcount-related costs.
Reality Labs’ expenses were $4.8 billion, up 21% year over year.
As a percentage of revenues, marketing & sales expenses decreased 290 basis points (bps), while general & administrative expenses fell 370 bps on a year-over-year basis.
Research & development expenses, as a percentage of revenues, were 27%, down 220 bps on a year-over-year basis.
Meta Platforms’ employee base was 70,799 at the end of the second quarter, down 1% year over year.
Operating income of $14.85 billion jumped 58.1% year over year. The operating margin was 38%, expanding significantly from 29.4% in the year-ago quarter.
Family of Apps’ operating income surged 47.2% year over year to $19.34 billion. Reality Labs reported a loss of $4.49 billion compared with the year-ago quarter’s loss of $3.74 billion.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash & cash equivalents and marketable securities were $58.08 billion compared with $58.12 billion as of Mar 31, 2024.
Long-term debt was $18.39 billion as of Jun 30, 2024, unchanged sequentially.
Capital expenditures were $19.37 billion in the second quarter compared with $6.72 billion in the previous quarter. Free cash flow was $10.9 billion compared with $12.53 billion reported in the previous quarter.
The company repurchased $6.32 billion of its Class A common stock in the reported quarter and paid a dividend worth $1.27 billion.
Guidance
Meta Platforms expects total revenues between $38.5 billion and $41 billion for the third quarter of 2024, assuming an unfavorable forex impact of 2% to year-over-year revenue growth.
For 2024, the company still anticipates total expenses between $96 billion and $99 billion. It continues to expect Reality Labs’ operating losses to increase year over year in 2024.
META expects 2024 capital expenditure in the range of $37-$40 billion, higher than previous guidance of $35-$40 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 5.14% due to these changes.
VGM Scores
At this time, Meta Platforms has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Meta Platforms belongs to the Zacks Internet - Software industry. Another stock from the same industry, Paypal (PYPL - Free Report) , has gained 12% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Paypal reported revenues of $7.89 billion in the last reported quarter, representing a year-over-year change of +8.2%. EPS of $1.19 for the same period compares with $1.16 a year ago.
For the current quarter, Paypal is expected to post earnings of $1.06 per share, indicating a change of -18.5% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
Paypal has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Meta Platforms (META) Up 4.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Meta Platforms (META - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Meta Platforms due for a pullback? 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 Q2 Earnings & Revenues Beat Estimates
Meta Platforms reported second-quarter 2024 earnings of $5.16 per share, beating the Zacks Consensus Estimate by 9.79%. The figure surged 73.2% year over year.
Revenues of $39.07 billion beat the Zacks Consensus Estimate by 1.91% and increased 22.1% year over year. At constant currency (cc), revenues soared 23% year over year.
User growth remained solid in the United States, with WhatsApp reaching more than 100 million monthly users and Thread approaching 200 million milestone.
Top-Line Details
Meta Platforms is leveraging AI to improve the quality of recommendations that helped drive user engagement across Facebook and Instagram in the reported quarter.
Geographically, revenues from the United States & Canada, Asia-Pacific, Europe and the Rest of the World (RoW) surged 16.8%, 21.1%, 27% and 34.7% on a year-over-year basis, respectively.
Revenues from Family of Apps (99.1% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, increased 22.1% year over year to $38.72 billion.
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, was 3.27 billion, up 6.5% year over year.
Advertising revenues (99% of Family of Apps revenues) increased 21.7% year over year to $38.33 billion and accounted for 97.9% of second-quarter revenues. At cc, revenues increased 23% year over year.
Advertising revenues from the United States & Canada, Asia-Pacific, Europe and the RoW surged 17.4%, 20%, 25.7% and 33.2% on a year-over-year basis, respectively.
Ad impressions delivered across Family of Apps increased 10% year over year, and the average price per ad jumped 10% in the reported quarter. Impression growth from Asia-Pacific, the RoW, the United States & Canada and Europe was 15%, 8%, 8% and 6%, respectively.
Online commerce was the largest contributor to year-over-year growth, followed by gaming and entertainment and media.
Family of Apps’ other revenues soared 73% year over year to $389 million, primarily driven by higher business messaging revenue growth from META’s WhatsApp Business platform.
Reality Labs’ revenues (0.9% of total revenues) increased 28% year over year to $353 million, driven by higher sales of Quest headset.
Operating Details
In the second quarter, total costs and expenses increased 7.2% year over year to $24.22 billion. As a percentage of revenues, total costs and expenses were 62%, significantly down from 70.6% in the year-ago quarter.
In the reported quarter, Family of Apps expenses were $19.4 billion, accounting for 80% of Meta Platforms’ overall expenses. FoA expenses were up 4% year over year, primarily due to higher infrastructure and headcount-related costs.
Reality Labs’ expenses were $4.8 billion, up 21% year over year.
As a percentage of revenues, marketing & sales expenses decreased 290 basis points (bps), while general & administrative expenses fell 370 bps on a year-over-year basis.
Research & development expenses, as a percentage of revenues, were 27%, down 220 bps on a year-over-year basis.
Meta Platforms’ employee base was 70,799 at the end of the second quarter, down 1% year over year.
Operating income of $14.85 billion jumped 58.1% year over year. The operating margin was 38%, expanding significantly from 29.4% in the year-ago quarter.
Family of Apps’ operating income surged 47.2% year over year to $19.34 billion. Reality Labs reported a loss of $4.49 billion compared with the year-ago quarter’s loss of $3.74 billion.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash & cash equivalents and marketable securities were $58.08 billion compared with $58.12 billion as of Mar 31, 2024.
Long-term debt was $18.39 billion as of Jun 30, 2024, unchanged sequentially.
Capital expenditures were $19.37 billion in the second quarter compared with $6.72 billion in the previous quarter. Free cash flow was $10.9 billion compared with $12.53 billion reported in the previous quarter.
The company repurchased $6.32 billion of its Class A common stock in the reported quarter and paid a dividend worth $1.27 billion.
Guidance
Meta Platforms expects total revenues between $38.5 billion and $41 billion for the third quarter of 2024, assuming an unfavorable forex impact of 2% to year-over-year revenue growth.
For 2024, the company still anticipates total expenses between $96 billion and $99 billion. It continues to expect Reality Labs’ operating losses to increase year over year in 2024.
META expects 2024 capital expenditure in the range of $37-$40 billion, higher than previous guidance of $35-$40 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 5.14% due to these changes.
VGM Scores
At this time, Meta Platforms has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Meta Platforms belongs to the Zacks Internet - Software industry. Another stock from the same industry, Paypal (PYPL - Free Report) , has gained 12% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Paypal reported revenues of $7.89 billion in the last reported quarter, representing a year-over-year change of +8.2%. EPS of $1.19 for the same period compares with $1.16 a year ago.
For the current quarter, Paypal is expected to post earnings of $1.06 per share, indicating a change of -18.5% from the year-ago quarter. The Zacks Consensus Estimate has changed 0% over the last 30 days.
Paypal has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.