meta earnings presentation q3 2022

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Russell 2000, bitcoin usd, cmc crypto 200, recap: meta reports strong q3 earnings beat, mark zuckerberg talks ai, threads, and hiring faster next year.

Meta Platforms reported third-quarter earnings that beat analysts' revenue and profit estimates.

In the earnings call, Mark Zuckerberg discussed AI, how Threads is doing, and plans to hire faster in 2024.

Meta's CFO said the company is seeing "softer" ad spend in the fourth quarter coinciding with the Israel-Hamas war.

Meta Platforms reported third-quarter earnings after the closing bell Wednesday that beat analysts' revenue and profit estimates.

The beat was driven by a continued rebound in Meta's advertising business following a sharp slowdown throughout 2022. Meta's guidance on its 2023 and 2024 expenses also hit the sweet spot for investors, as it signaled that it can balance its "year of efficiency" cost cutting efforts while it continues to invest in the metaverse and artificial intelligence.

Shares initially jumped in after-hours trading, but dipped into the red as the earnings call progressed. Meta's stock was trading down more than 3% following the end of the call. Meta CFO Susan Li said the company has seen "softer" ad spend so far in the fourth quarter coinciding with the Israel-Hamas war. Li warned that 2024 will be volatile in terms of the broader economy, and the company is exposed to that as an advertising giant.

Zuckerberg closes out the call saying AI will 'transform' how people use Meta's apps.

The executive says that, over time, Meta will be able to use artificial intelligence to create content for people on its family of apps based on their interests.

Meta's stock dips into red in after-hours trading near the end of the call.

The stock was trading down nearly 1% going into the last analyst question after initially popping on Meta's earnings results.

Meta CFO says Meta is seeing more volatility early in Q4, including softer ad spend.

Susan Li says the company is seeing less ad spending in part due to the Israel-Hamas war. The executive says the company saw a similar impact from the war in Ukraine.

Snap issued a similar warning in its earnings on Tuesday.

Zuckerberg pitches his open-source strategy for AI models.

The Meta CEO says that when his engineers create open AI models  that are used by other engineers, it works as free advertising for bringing in top talent in the field.

Meta CFO lays out 4 hiring priorities for 2024.

Next year, the company will be hiring most in AI, monetization, metaverse and reality labs, and regulatory compliance needs.

Much of the hiring budgeted for in 2023 will happen in 2024, Susan Li says.

Zuckerberg is still happy with Threads.

"From what we can tell, people love it so far," Zuckerberg says.

The Meta CEO says the app has just under 100 million monthly active users and he hopes to create an app that would encompass one billion users.

Threads was launched earlier this year and has become an alternative to X, formerly known as Twitter.

Zuckerberg says Meta is deprioritizing some non-AI projects to focus on the big prize.

The CEO said AI will be one of the company's biggest investment areas. Meta is racing to compete in the AI arms race with Google and Microsoft.

Meta might be hiring faster next year to work through a sizable 'hiring backlog,' Zuckerberg says.

The company executed a series of layoffs this year, eliminating tens of thousands of roles.

Mark Zuckerberg's Year of Efficiency 'is morphing into the Years of Efficiency,' ISI Evercore analyst Mark Mahaney says.

The company has made a series of cutbacks, including layoffs and cutbacks on office space and perks, since Zuckerberg announced the "year of efficiency" earlier this year.

In an overall positive third quarter earnings report, Meta notes it is currently in a fight with the Federal Trade Commission.

The FTC "is seeking to substantially modify our existing consent order and impose additional restrictions on our ability to operate," Meta says.

The company in 2020 entered into a consent decree with the FTC and agreed to pay a $5 billion civil penalty related to charges first made in 2012 over user privacy and data. Earlier this year , the FTC said it wanted Meta to expand its privacy protections for underage users of its virtual reality products, while limiting the company's use of facial recognition technology.

"We are contesting this matter, but if we are unsuccessful it would have an adverse impact on our business," Meta says Wednesday.

Mark Zuckerberg will speak for the first time since 33 states sued the company.

A bipartisan group of US state attorneys general announced on Tuesday that they are suing Meta, alleging Facebook and Instagram are harming young people's mental health by designing intentionally addictive features on the platforms.

At the time, a Meta spokesperson said the company has introduced dozens of tools to help support teens.

"We're disappointed that instead of working productively with companies across the industry to create clear, age-appropriate standards for the many apps teens use, the attorneys general have chosen this path," the company said.

Zuckerberg could be asked about the lawsuit during the earnings call.

Meta 'may be starting to come out of the woods,' Investing.com's Jesse Cohen says.

"All in all, it was a blowout quarter with Meta reporting its most profitable quarter in years," Cohen says in a note following the earnings release. "Investors have been encouraged by aggressive cost-cutting initiatives implemented by CEO Mark Zuckerberg in recent months."

Meta stock pops 4% after earnings beat.

Meta stock popped about 4% after it reported better than expected third-quarter earnings results. The gain essentially wiped out the stock's loss of about 4% during Wednesday's regular trading session. That rise has since been whittled down to about 2% as investors await the earnings conference call.

Meta reports profit and revenue that beat estimates.

3rd quarter results

Revenue: $34.15 billion, vs $33.52 billion estimate

Earnings per share: $4.39, vs $3.70 estimate

Facebook daily active users: 2.09 billion, vs 2.07 billion estimate

Facebook monthly active users: 3.05 billion, vs 3.05 billion estimate

Family of apps revenue: $33.94 billion, vs $33.08 billion estimate

4th quarter guidance

Revenue: $36.5 billion to $40 billion, vs estimate of $38.76 billion

Full-year 2023 guidance

Total expenses: $87 billion to $89 billion, vs $89.76 billion estimate

Full-year 2024 guidance

Total expenses: $94 billion to $99 billion

Estimate Source: Bloomberg

Goldman Sachs says Meta stock is a buy before earnings

Meta offers a positive risk/reward profile heading into earnings, and its "revenue growth remains on a re-acceleration trajectory," according to a recent note from Goldman Sachs.

"The stock is inexpensive on forward price-to-earnings multiples and management has reset the cost base to align with a mixture of compounded earnings growth while also maintaining a robust investment cadence in long-term initiatives such as AI and the metaverse," it said.

The bank rates Meta at "Buy" with a $384 price target, representing potential upside of 22%.

Meta stock slides 4% heading into earnings.

Meta stock is down about 4% heading into its third-quarter earnings report this afternoon.

The decline is nearly double the Nasdaq 100's decline of about 2.2% and is in-line with the 4% decline seen in the communications sector, of which Meta and Alphabet are the biggest components.

Alphabet's 10% decline today after its earnings results has dragged down the entire sector. But Deepwater Asset Management managing partner Gene Munster said Alphabet's solid advertising results are a "slight positive" for Meta heading into its earnings report.

Despite today's decline, Meta stock is still up 151% year-to-date and is up 243% from its 52-week low, making it one of the best-performing mega-cap stocks since the bear market bottom in October 2022.

All eyes on Meta's 2024 expense guidance as Wall Street sees $100 billion.

Analysts at Bank of America said in a recent note that Meta's 2024 forecast for its expenses will be closely watched by investors.

The bank expects the social media company to guide expenses at $100 billion, which is in line with JPMorgan's 2024 estimate of $96 billion-$102 billion.

Additionally, Bank of America said that solid fourth-quarter guidance and positive management commentary on Reels could drive further upside to Meta's stock.

"Our checks suggest Meta is benefitting from improving digital ad market, ramping Reels monetization and improving AI driven ad measurement," analysts said. "Reels and AI should fuel third-quarter growth."

JPMorgan says advertising trends have been improving.

Solid advertising revenues should enable Meta to beat analysts' revenue and profit estimates, according to a recent note from JPMorgan.

The bank expects third-quarter revenue to jump 22% year over year to $33.8 billion, and for the company to forecast 2024 total expenses at $96 billion-$102 billion.

"We like Meta and believe valuation remains compelling... For Q3 specifically, ad checks have been positive, both from a macro perspective and in terms of Meta-specific initiatives like Advantage+, Reels, and Click-to-Message ads," JPMorgan said.

JPMorgan rates Meta at "Overweight" with a $324 price target, representing potential upside of 7% from current levels.

Meta has to delicately balance its 'year of efficiency' with investments in AI.

Meta's disastrous 2022, in which its stock price plunged more than 70%, led CEO Mark Zuckerberg to announce a "year of efficiency," in which the company would significantly cut back on costs.

But with the arrival of generative artificial intelligence, Meta has to increase its investments in order to remain competitive.

According to Morningstar, management has to delicately balance its cost cutting plans with the need to invest heavily in AI.

"We'd like the firm to discuss its latest plans for the metaverse , and whether it will relaunch with its aggressive investments on that front. We think artificial intelligence is an important component of the metaverse," Morningstar said in a recent note.

UBS says Reels on Instagram is outperforming TikTok.

According to a recent note from UBS, channel checks by the bank indicate that "Reels is outperforming TikTok with lower CPMs and much improved engagement."

That's great news for Meta, given that TikTok has been viewed as one of the company's top risks in the competition for more eyeballs.

The bank said the apps' share of downloads have been rising for Instagram and Facebook , to 18% and 19% respectively, while TikTok has seen its download share fall to 22% from above 25% last year.

In Meta's post-earnings conference call, UBS also wants the social media giant to offer more details about its initiatives in artificial intelligence, including how and when it plans to make money off of the new technology.

"We think the GenAI consumer app bull case is still under-appreciated and not priced into shares. We think more disclosure on GenAI product uptake and eventual monetization could bolster confidence in the durability of top line growth, driving multiple expansion," UBS said.

Meta's consensus third-quarter revenue estimate is $33.52 billion.

3rd quarter

Revenue estimate $33.52 billion (Bloomberg Consensus)

Advertising rev. estimate $32.94 billion

Family of Apps revenue estimate $33.08 billion

Reality Labs revenue estimate $313.4 million

Other revenue estimate $211.7 million

Facebook daily active users estimate 2.07 billion

Facebook monthly active users estimate 3.05 billion

Ad impressions estimate +29.6%

Average price per ad estimate -8.94%

Family of Apps operating income estimate $15.23 billion

Reality Labs operating loss estimate $3.94 billion

Average Family service users per day estimate 3.09 billion

Average Family service users per month estimate 3.88 billion

EPS estimate $3.60

Operating margin estimate 33.9%

Full-year 2023

Total expenses estimate $89.76 billion

Capital expenditure estimate $29.31 billion

Source: Bloomberg

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Meta’s Profit Slides by More Than 50 Percent as Challenges Mount

The social networking company, which is trying to shift into the so-called metaverse, posted falling sales and said it was “making significant changes” to operate more efficiently.

By Ryan Mac

Ryan Mac is a technology reporter in Los Angeles.

A year ago, Mark Zuckerberg changed Facebook’s name to Meta and said he was going all in on the immersive digital world of the so-called metaverse.

Since then, Meta has plowed billions of dollars into, and restructured itself around, the emerging technology — just as the global economy has slowed, inflation has soared and investors have begun paying more attention to costs.

The combination has been nothing short of disastrous . This year, Meta’s earnings have been hit hard by its spending on the metaverse and its slowing growth in social networking and digital advertising. In July, the Silicon Valley company posted its first sales decline as a public company. Its stock has plunged more than 60 percent this year.

On Wednesday, Meta continued that trajectory and indicated that the decline would not end anytime soon. It said it would be “making significant changes across the board to operate more efficiently,” including by shrinking some teams and by hiring only in its areas of highest priority.

The company reported a 4 percent drop in revenue for its third quarter — to $27.7 billion, from $29 billion a year earlier. Net income was $4.4 billion, down 52 percent from a year earlier. Spending soared by 19 percent.

The company’s metaverse investments remained troubled. Meta said its Reality Labs division, which is responsible for the virtual reality and augmented reality efforts that are central to the metaverse, had lost $3.7 billion compared with $2.6 billion a year earlier. It said operating losses for the division would grow “significantly” next year.

For the current quarter, Meta forecast revenue of $30 billion to $32.5 billion, which would be down from a year ago. The company’s shares fell more than 19 percent in after-hours trading.

The results exacerbate what has been one of the most tumultuous years for Mr. Zuckerberg and his company since Facebook remade itself as a mobile-oriented company a decade ago. Over the past few months, Meta has frozen most hiring , reduced budgets and begun identifying low-performing employees, indicating the possibility of layoffs. In June, Mr. Zuckerberg said on a call with employees that “there are probably a bunch of people at the company who shouldn’t be here.” Meta had 87,314 employees at the end of September, up 28 percent from a year ago.

Mr. Zuckerberg has had trouble getting even his own employees to buy into his metaverse vision. The company’s new focus has been confusing , employees have said, with disagreements between executives, frequent strategy shifts and a little-used flagship virtual reality game, Horizon Worlds.

Mr. Zuckerberg was defiant on a call with analysts on Wednesday. He said people would “look back decades from now” and “talk about the importance of the work that was done here” regarding the metaverse, virtual reality and augmented reality.

“Look I get that a lot of people might disagree with this investment,” he said. “But from what I can tell, I think this is going to be a very important thing and I think it would be a mistake for us to not focus on any of these areas, which I think are going to be fundamentally important to the future.”

Meta’s financial difficulties stand out because of its size and its position as one of the world’s foremost tech companies. Its woes also reflect a difficult environment that has engulfed other social media companies. Digital advertising has been hurt by global economic jitters as brands reassess their budgets. The companies are also continuing to deal with privacy changes by Apple that have made it harder for them to target their digital advertising.

Last week, Snap, the maker of Snapchat, reported its slowest-ever quarterly growth , and its stock has fallen more than 75 percent this year. Twitter is in what may be the final throes of an acquisition by Elon Musk, the world’s richest man, which is likely to radically change the company as it goes private.

Meta faces other challenges, including tough regulatory scrutiny. This month, the company said it would sell Giphy , an online repository of animated clips known as GIFs, after British antitrust regulators said Meta’s $315 million deal for the company had reduced competition in social media and digital advertising. Meta’s acquisition of Within, the maker of a virtual reality fitness app, has also been halted by the Federal Trade Commission over antitrust concerns.

It’s unclear how Meta’s metaverse investment will pan out given low user numbers, said Mike Proulx, a research director at Forrester, even as the company cedes young users to rivals like TikTok.

“It truly warrants a conversation around what is Meta’s core business at present,” he said.

Despite the challenges, Meta increased its numbers of users. The number of people who use its apps such as Facebook, Instagram, WhatsApp or Messenger daily increased to 2.93 billion users in the quarter, up 4 percent from a year earlier.

On Wednesday’s earnings call, Mr. Zuckerberg praised the user growth for Facebook and WhatsApp and talked about how people were spending more time on Instagram’s Reels. But he spent much of the call focused on his vision for the metaverse.

“It’s just not clear, if we weren’t driving this forward that anyone else would be,” he said.

Ryan Mac is a technology reporter focused on corporate accountability across the global tech industry. He won a 2020 George Polk award for his coverage of Facebook and is based in Los Angeles. More about Ryan Mac

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Facebook (META) Q3 2022 earnings results beat revenue expectations, miss on EPS

Meta came out ahead of expectations on total revenue, but it fell short on EPS as the company continues to invest deeply in VR and the metaverse.

As we continue to move through the latest season of fiscal quarterly closes, Meta (formerly known as Facebook) is the latest major company on the block reporting its Q3 2022 finish. The company shared its earnings results today and came out just ahead of expectations on total revenue. Unfortunately, it looks like Meta was not able to overcome either consensus or whisper number expectations on earnings-per-share (EPS).

Meta shared the full report of its Q3 2022 earnings results on its investor relations website on October 26, 2022. In said report, Meta reported a total revenue of $27.7 billion. This was up against expectation of around $27.38 billion, as estimated by Refinitiv . However, the company’s EPS for Q3 2022 only landed at $1.64 per share. This was down against the consensus expectation of $1.89 per share and whisper number expectation of $1.74 per share.

Meta has poured a massive amount of money into the advancement of virtual reality technology, as well as software and networking endeavors in metaverse applications such as the Meta Quest Pro and Horizon Worlds . That said, there is arguably still a lot of work to be done from software and hardware standpoints before any of it is practical. Oculus founder and former developer Palmer Luckey shared that he believes the current Horizon Worlds is “terrible today,” but it has the potential to be something amazing in the future.

Nonetheless, it looks like Instagram and Facebook are still driving enough business to make Meta the money it needs to keep moving forward with these projects. With Meta’s Q3 2022 in the books, stay tuned for more major tech companies reporting on their fiscal quarter finishes throughout the weeks ahead.

TJ Denzer is a player and writer with a passion for games that has dominated a lifetime. He found his way to the Shacknews roster in late 2019 and has worked his way to Senior News Editor since. Between news coverage, he also aides notably in livestream projects like the indie game-focused Indie-licious, the Shacknews Stimulus Games, and the Shacknews Dump. You can reach him at [email protected] and also find him on Twitter @JohnnyChugs .

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Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint

Revenue fell in Q3; investment in AI, VR to grow next year

Key Takeaways

• Meta's Q3 FY 2022 earnings per share (EPS) of $1.64 fell short of expectations.
• Revenue for Meta slipped year-over-year, while spending soared in Q3.
• Meta's shares plummeted 20% their lowest price since early 2016 in after-hours trading Oct. 26; they remained down more than 20% in pre-market trading Oct. 27.
• Meta says it's making essential long-term investments in artificial intelligence, data centers, and virtual reality.
• Mark Zuckerberg's control of the company through a special class of supervoting shares leaves the founder free to ignore calls to cut costs quickly.

Source: Predictions based on analysts’ consensus from Visible Alpha

Meta (Facebook) Financial Results: Analysis

Meta Platforms Inc. ( META ) shares plunged 20% to their lowest in almost seven years in after-hours trading on Oct. 26 after the social media giant's third-quarter results fell short of expectations amid mounting spending. The shares remained down more than 20% in pre-market trading Oct. 27.

The operator of Facebook , Instagram, WhatsApp, and Messenger posted Q3 diluted earnings of $1.64 per share. Analysts tracked by Visible Alpha had estimated $1.87 per share on average. While revenue topped the consensus estimate by 1%, it was down 4% year-over-year. Meta's expenses rose 19% from a year earlier, and its headcount increased 28% over the same span. As a result, free cash flow has all but evaporated: Over the past four quarters it has ebbed from $12.6 billion to $8.5 billion, $4.5 billion, and finally to $173 million in the most recent period.

Meta's Revenue, Spending Outlook

Meta projected Q4 revenue of $30 billion to $32.5 billion, compared with analyst expectations of $32.2 billion. CEO Mark Zuckerberg acknowledged "near-term challenges on revenue" in the statement reporting the results. European advertising revenue weakened notably, declining 10% sequentially from Q2.

Despite the downbeat results and outlook, the company is proceeding with investments in infrastructure and virtual reality (VR) hardware. In FY 2023, expenses are expected to rise another 15% or so from FY 2022, based on the midpoints of the ranges the company provided. Capital spending is set to increase as well, from about $32.5 billion in this fiscal year to a range of $34 billion to $39 billion in FY 2023.

Investments Under Fire as Stock Slumps

One widely followed observer on Twitter noted that over the last two quarters, Meta's capital spending has eclipsed that of Alphabet Inc. ( GOOGL , GOOG ) and Microsoft Corp. ( MSFT ). "You're spending 30% more in capex than the folks building self-driving cars, beaming internet to penguins in the Galapagos, and also doing Youtube Shorts as a side hustle. It's breathtaking," tweeted @modestproposal1. Google parent Alphabet shut down Loon, a project to provide Internet connectivity from balloons in the stratosphere, in 2021.

Investors' unease with Meta's heavy spending plans as revenue declines had already left the stock down more than 61% in 2022 before the Q3 earnings report. Earlier in the week, a fund manager published an open letter calling on the company to curb costs and capital spending.

Zuckerberg can ignore such criticism without fear of a shareholder revolt . Facebook's founder controls Meta because he owns a special class of shares , with each Class B share conferring 10 votes versus 1 for Meta's common stock.

Meta (Facebook) Earnings Call Recap

The company's rapidly growing spending drew the most questions from the analysts on the Q3 conference call, with some seeking details on the investments' potential returns and others asking whether Meta is neglecting competitive threats to its core business in prioritizing metaverse development.

" I think kind of summing up how investors are feeling right now is that there are just too many experimental bets versus proven bets on the core," said Jefferies analyst Brent Thill on the call. "I think everyone would love to hear why you think this pays off."

Zuckerberg said Meta faces so many challenges it can't afford to focus on just one. "Look, there are a lot of things going on right now in the business and in the world," he responded. "And so it's hard to have, like, a simple 'We're going to do this one thing, and that's going to solve all the issues.' I mean, there's macroeconomic issues. There's a lot of competition. There's ads challenges, especially coming from Apple. And then there's some of the longer-term things that we're taking on expenses because we believe that they're going to provide greater returns over time. And I think we're going to resolve each of these things over different periods of time. And I appreciate the patience. And I think that those who are patient and invest with us will end up being rewarded."

Zuckerberg and other Meta executives on the call said the planned 2023 spending increases will go primarily toward expanding the artificial intelligence (AI) capacity powering Meta's customized content recommendations engine, including for its Reels feature designed to compete against TikTok's videos. The hardware required to run the AI algorithms is leading Meta to upgrade its data centers as well, they said. At the same time, the planned launch of a new Quest virtual reality headset for consumers will cause the loss at Meta's Reality Labs unit to widen significantly next year, according to the company.

Meta. " Meta Reports Third Quarter 2022 Results ," Page 1.

Meta. " Meta Earnings Presentation Q3 2022 ," Page 17.

Meta. " Meta Reports Third Quarter 2022 Results ," Page 2.

Meta. " Meta Earnings Presentation Q3 2022 ," Page 2.

@modestproposal1 on Twitter. " Tweet ."

X Company Blog. " Loon’s Final Flight ."

Brad Gerstner on Medium. " Time to Get Fit—an Open Letter From Altimeter to Mark Zuckerberg (and the Meta Board of Directors) ."

Meta. " Q3 2022 Earnings Call Transcript ," Page 17.

Meta. " Q3 2022 Earnings Call Transcript ," Page 18.

Meta. " Q3 2022 Earnings Call Transcript ," pp. 6-7.

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Meta's Q3 2022 revenue dips, AR/VR losses widen amid Quest Pro launch

Meta's usage is up, ad spending is down, and AR/VR expenses are rising.

What you need to know

• Meta announced Q3 2022 earnings on Wednesday, with $27.7 billion in revenue.
• This represents a 4% year-over-year decrease, which Meta partially attributes to foreign exchange rates.
• Reality Labs lost nearly $4 billion, with higher expenses expected in 2023 leading up to the launch of its next consumer VR headset.
• Meta says it will continue to focus on efficiency and expects its total headcount to remain roughly the same through next year.

Earnings season continues as Meta announces its Q3 2022 financial report. The company brought in $27.7 billion in revenue during the three months ending in September, which represents a 4% decrease from the same period last year.

Despite that, Meta's usage has increased on all accounts, with a 17% increase in ad impressions. However, the company saw an 18% decrease in price-per-ads which undoubtedly contributed to its revenue woes.

Meta also attributes the lower revenue to foreign exchange rates, saying that revenue could have been "$1.79 billion higher" if exchange rates had remained consistent with Q3 2021.

"Our community continues to grow and I'm pleased with the strong engagement we're seeing driven by progress on our discovery engine and products like Reels," said Meta CEO Mark Zuckerberg in a statement . "While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We're approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company."

Like many other Big Tech companies, Meta has been focused on keeping the company efficient and slowing hiring. As a result, Meta says its headcount by the end of 2023 "will be approximately in-line with third quarter 2022 levels."

Meta's Reality Labs, which is responsible for the company's virtual and augmented reality efforts like the newly launched Quest Pro , is expected to continue bleeding money. The division lost $3.67 billion during the quarter, compared to a $2.63 billion loss during the same quarter last year. Furthermore, Meta expects expenses to "increase meaningfully" in 2023 as the company prepares to bring the Quest 3 to market.

Given the large expense coming from Reality Labs, Zuckerberg also touched on the company's investments in the Metaverse, which continues to come under scrutiny. During the earnings call on Wednesday, he explained how the company is focused on four major platforms: the social Metaverse platform with products like Horizon and the avatar system, VR with consumer devices like the Quest 2 , augmented reality, and finally, "neural interfaces," which sounds a lot like Meta's vision for consumer wearables and interfacing with computing platforms in a discreet and natural way.

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"I get that a lot of people might disagree with this investment, but from what I can tell, I think that this is going to be a very important thing, and I think it would be a mistake for us to not focus on any of these areas, which I think are going to be fundamentally important in the future. So we're gonna try to do this in a way that is responsible and matches the ways the rest of the business is growing over time."

Derrek is a long-time Nokia and LG fanboy who loves astronomy, videography, and sci-fi movies. When he's not working, he's most likely working out or smoldering at the camera.

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The 2024 Q1 Earnings Season Gets Underway

April 09, 2024 — 07:00 pm EDT

Written by Sheraz Mian for Zacks  ->

Note: The following is an excerpt from this week’s Earnings Trends  report. You can access the full report that contains detailed historical actual and estimates for the current and following periods,  please click here>>>

Here are the key points:

• Total S&P 500 earnings for the first quarter of 2024 are expected to be up +2.2% from the same period last year on +3.4% higher revenues. This follows the +6.8% earnings growth on +3.9% higher revenues in 2023 Q4.
• As was the case in the preceding two quarters, the Tech sector remains a key growth driver in 2024 Q1. Had it not been for the robust Tech sector earnings growth, total earnings for the rest of the index would be modestly in negative territory.
• For the Finance sector, total Q1 earnings are expected to be up +3.3% on +2.4% higher revenues. This would follow the sector’s +12.4% earnings growth on +8.4% higher revenues in 2023 Q4.
• For 2024 Q1, ‘Magnificent 7’ earnings are expected to increase +33.0% on +13.0% higher revenues. Excluding the Mag 7 contribution, 2024 Q1 earnings for the rest of the index would be down -3.5% from the year-earlier period (vs. +2.2% growth otherwise).

The March-quarter reporting cycle will really get going once JPMorgan JPM , Citigroup C , and Wells Fargo WFC release their results on Friday. However, early results from companies with fiscal quarters ending in February have been coming out in recent days. Through April 9th, we have seen such early Q1 results from 20 S&P 500 members.

These early results appear to reconfirm the trends we have been seeing in recent quarters, with growth modestly accelerating and positive surprises relatively hard to come by. Overall, there are no major surprises at this early stage in the reporting cycle.

JPMorgan, Citigroup, and Wells Fargo are part of the Finance sector, whose Q1 earnings are expected to be up +3.3% from the same period last year on +2.4% higher revenues. This would follow the sector’s +12.4% earnings growth on +8.4% higher revenues in 2023 Q4.

Finance sector earnings estimates have largely remained stable since the quarter got underway, as we can see in the revisions trend for JPMorgan and Wells Fargo. Citigroup estimates have modestly come down, reflecting recent management commentary about higher costs.

The outlook for the core net interest income part of the business has modestly improved as the quarter progressed, with the continued growth in loan portfolios offsetting the modest margin squeeze. The stable to improving macro backdrop, as reflected in the positive stock-market momentum coupled with expectations of Fed easing going forward, has the potential to surprise us to the upside here, particularly concerning loan volume.

Beyond the core commercial banking business, we have been hearing about ‘green shoots’ on the M&A side for some time now, though the actual numbers on that front will be flat to modestly down in Q1. We will most likely see the same with respect to trading activities as well. The one relatively bright spot on the investment banking side has been on the equity and debt capital markets, and we will see good growth numbers from those businesses.

All in all, bank earnings should be good enough; not great, but not bad either, given the seemingly higher-for-longer Fed outlook.

Looking past the banks, total Q1 earnings for the S&P 500 index are expected to be up +2.2% from the same period last year on +3.4% higher revenues. The chart below shows current Q1 earnings and revenue growth expectations in the context of what has been actually achieved over the preceding four quarters and what is currently expected from the following three periods.

You can see in this chart that earnings growth turned positive in the 2023 Q3 after remaining modestly in negative territory for the three quarters before that period. Two notable developments helped push the aggregate growth picture into positive territory – the Tech sector resumed its traditional growth-driver status, and net margins turned positive.

Expectations for 2024 Q1 and beyond show that the Tech sector is expected to remain a core growth driver, and the margin outlook will continue to improve.

The chart below shows how estimates for 2024 Q1 have evolved in recent months.

Please note that the magnitude of negative revisions to Q1 estimates compared favorably to what we had seen in the comparable period for 2023 Q4.

Since the start of Q1, estimates came down for 9 of the 16 Zacks sectors. The sectors suffering the biggest estimate cuts include Energy, Basic Materials, Transportation, Autos, and Aerospace.

On the positive side, estimates have been raised for 6 of the 16 Zacks sectors since the quarter got underway, with the Retail, Tech, and Utilities sectors enjoying notable positive revisions.

The revisions trend noted here for 2024 Q1 also represents what’s happening to full-year 2024 estimates. While estimates in the aggregate are coming down, several major sectors, including the Tech sector, are still enjoying positive estimate revisions.

The chart below shows how estimates for full-year 2024 have evolved.

The chart below shows how full-year earnings expectations for the Tech sector have evolved over this period.

This favorable earnings outlook for the Tech sector should reassure us all of the fundamental underpinnings of the group’s stock-market momentum.

For the Tech sector as a whole, 2024 Q1 earnings are expected to be up +19.4% on +8.3% higher revenues. This would follow the sector’s +27.5% higher earnings in 2023 Q4 on +8.8% revenue growth. A big part of the Tech sector’s strong Q1 earnings growth and the group’s favorable revisions trend is due to the ‘Mag 7’ members, not all of whom are part of our Tech sector.

Take, for example, Meta META and Nvidia NVDA , whose Q1 earnings are expected to be up +58.8% and +487.5% from the year-earlier period, respectively. Excluding contributions from Meta and Nivida, Q1 earnings for the Tech sector would only increase by +7.0% instead of the +19.4% growth otherwise.

We also see an improving earnings outlook for Meta and Nvidia, with estimates steadily increasing. For example, the current 2024 Zacks Consensus EPS for Meta of $19.94 is up +13.6% over the last three months. The consensus EPS estimate for Nvidia has increased +20.6% over the same time period.

Below, we show the overall earnings picture for the S&P 500 index on an annual basis.

A big part of this year’s earnings growth is expected to come from margins reversing last year’s declines and starting to expand again. The expectation is that aggregate net margins this year get back to the 2022 level, with the Tech sector driving most of the gains.

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• Meta Platforms-stock
• News for Meta Platforms

Meta Reports Third Quarter 2022 Results

MENLO PARK, Calif. , Oct. 26, 2022 /PRNewswire/ -- Meta Platforms, Inc. (Nasdaq: META) today reported financial results for the quarter ended September 30, 2022.

"Our community continues to grow and I'm pleased with the strong engagement we're seeing driven by progress on our discovery engine and products like Reels," said Mark Zuckerberg , Meta founder and CEO.  "While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We're approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company."

• Family daily active people (DAP) – DAP was 2.93 billion on average for September 2022 , an increase of 4% year-over-year.
• Family monthly active people (MAP) – MAP was 3.71 billion as of September 30, 2022 , an increase of 4% year-over-year.
• Facebook daily active users (DAUs) – DAUs were 1.98 billion on average for September 2022 , an increase of 3% year-over-year.
• Facebook monthly active users (MAUs) – MAUs were 2.96 billion as of September 30, 2022 , an increase of 2% year-over-year.
• Ad impressions and price per ad – In the third quarter of 2022, ad impressions delivered across our Family of Apps increased by 17% year-over-year and the average price per ad decreased by 18% year-over-year. 
• Revenue – Revenue was $27.71 billion , a decrease of 4% year-over-year, and an increase of 2% year-over-year on a constant currency basis. Had foreign exchange rates remained constant with the third quarter of 2021, revenue would have been $1.79 billion higher.
• Costs and expenses – Total costs and expenses were $22.05 billion , an increase of 19% year-over-year. This includes an impairment loss of $413 million for certain operating leases as part of our ongoing work to align our office facilities footprint with our anticipated operating needs. 
• Capital expenditures – Capital expenditures, including principal payments on finance leases, were $9.52 billion for the third quarter of 2022.
• Share repurchases – We repurchased $6.55 billion of our Class A common stock in the third quarter of 2022. As of September 30, 2022 , we had $17.78 billion available and authorized for repurchases.
• Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $41.78 billion as of September 30 , 2022. 
• Long-term debt – Long-term debt was $9.92 billion as of September 30, 2022 .
• Headcount – Headcount was 87,314 as of September 30, 2022 , an increase of 28% year-over-year.

We expect fourth quarter 2022 total revenue to be in the range of $30 -32.5 billion. Our guidance assumes foreign currency will be an approximately 7% headwind to year-over-year total revenue growth in the fourth quarter, based on current exchange rates. 

To provide some context on the approach we are taking towards setting our 2023 budget, we are making significant changes across the board to operate more efficiently. We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities. As a result, we expect headcount at the end of 2023 will be approximately in-line with third quarter 2022 levels.

We have increased scrutiny on all areas of operating expenses. However, these moves follow a substantial investment cycle so they will take time to play out in terms of our overall expense trajectory. Some steps, like the ongoing rationalization of our office footprint, will lead to incremental costs in the near term. This should set us up well for future years, when we expect to return to higher rates of revenue growth.

We expect 2022 total expenses to be in the range of $85 -87 billion, updated from our prior outlook of $85 -88 billion. This includes an estimated $900 million in additional charges related to consolidating our office facilities footprint that we expect to record in the fourth quarter of 2022. We anticipate our full-year 2023 total expenses will be in the range of $96 -101 billion. This includes an estimated $2 billion in charges related to consolidating our office facilities footprint. 

We expect the slight majority of our 2023 expense dollar growth to be driven by operating expenses, with the remaining growth coming from cost of revenue. We expect the percentage growth rate of 2023 operating expenses to decelerate meaningfully as we curtail non-headcount related expense growth and keep 2023 headcount roughly flat with current levels. Conversely, our growth in cost of revenue is expected to accelerate, driven by infrastructure-related expenses and, to a lesser extent, Reality Labs hardware costs driven by the launch of our next generation of our consumer Quest headset later next year.

Reality Labs expenses are included in our total expense guidance. We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.

We expect 2022 capital expenditures, including principal payments on finance leases, to be in the range of $32 -33 billion, updated from our prior range of $30 -34 billion. For 2023, we expect capital expenditures to be in the range of $34 -39 billion, driven by our investments in data centers, servers, and network infrastructure. An increase in AI capacity is driving substantially all of our capital expenditure growth in 2023. 

Absent any changes to U.S. tax law, we expect our fourth quarter 2022 and our full-year 2023 tax rate to be similar to the third quarter 2022 rate.

In addition, as previously noted, we continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations.

Meta will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at investor.fb.com , along with the earnings press release, financial tables, and slide presentation. Meta uses the investor.fb.com and about.fb.com/news/  websites as well as Mark Zuckerberg's Facebook Page ( facebook.com/zuck ) and Instagram account ( instagram.com/zuck ) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (800) 633-8284 or +1 (402) 977-9140, conference ID 22020741.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com  website.

Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.

Investors: Deborah Crawford [email protected] / investor.fb.com

Press: Ryan Moore [email protected] / about.fb.com/news/

This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of the ongoing COVID-19 pandemic and geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; and our ability to manage our scale and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on July 28, 2022 , which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov . Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. In addition, please note that the date of this press release is October 26, 2022, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

We exclude the following items from our non-GAAP financial measures:

Foreign exchange effect on revenue . We translated revenue for the three and nine months ended September 30, 2022 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

Purchases of property and equipment; Principal payments on finance leases.  We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release. 

Segment Results

We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual reality related consumer hardware, software, and content.

The following table presents our segment information of revenue and income (loss) from operations. For comparative purposes, amounts in the prior period have been recast:

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