With Meta Platforms’ stock down more than 60% on the year and fellow digital ad giant Alphabet having missed estimates yesterday, it’s safe to say expectations are fairly low heading into Meta’s latest earnings report.
Among analysts polled by FactSet, the consensus is for the social-media giant to report third-quarter revenue of $27.44 billion (down 5% annually) and GAAP EPS of $1.90 (down 41%).
Meta typically provides quarterly sales guidance in its earnings report. The company’s revenue consensus for the seasonally big fourth quarter stands at $32.3 billion (down 9% annually).
Eric Jhonsa, Real Money’s tech columnist, will be live-blogging Meta’s earnings report, along with a conference call with management that’s scheduled for 5 P.M. Eastern Time.
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4:36 PM ET: Notably, whereas the tech sector in general sold off yesterday afternoon following Microsoft and Alphabet’s reports, the shares of fellow tech giants are largely unchanged following Meta’s report.
In addition, some chip and hardware firms are getting a lift from Meta’s capex guidance. Arista Networks is up 6.5% AH, Nvidia is up 4%, AMD is up 2.2% and Marvell is up 3.2%.
4:33 PM ET: $6.55B was spent on stock buybacks in Q3 (at levels higher than what Meta’s currently trades at), up from $5.08B in Q2.
With Meta issuing debt to help finance its buybacks, the company ended Q3 with $41.8B in cash and $9.9B in debt.
4:29 PM ET: Meta’s Family of Apps segment (it covers Facebook/Instagram/Messenger/WhatsApp) posted GAAP op. income of $9.34B, down 29% Y/Y.
The Reality Labs segment (covers AR/VR efforts) posted a $3.67B GAAP op. loss, up from $2.63B a year ago.
Notably, Meta forecasts Reality Labs’ op. losses “will grow significantly” in 2023. Beyond 2023, Meta says it expects to “pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”
4:24 PM ET: Meta is now down 11% AH to $115.52. Shares have made new 52-week lows and are at levels last seen in 2016.
4:22 PM ET: Total revenue declined 4% Y/Y, with forex acting as a 6-point headwind to growth.
Ad revenue (pressured by macro headwinds, Apple policy changes, and for now shifting content consumption towards Reels) fell 4% to $27.24B.
Reality Labs revenue (mostly VR headset-related) fell 49% to $285M. All other revenue rose 9% to $192M.
4:17 PM ET: Daily active people for Meta’s app family totaled 2.93B in September, up 2% Q/Q and 4% Y/Y.
Monthly active people totaled 3.71B, also up 2% Q/Q and 4% Y/Y.
4:14 PM ET: Meta: “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.”
Not quite what markets wanted to hear amid growing investor calls to aggressively cut spending.
4:12 PM ET: Likewise, Meta is guiding for 2023 capex of $34B-$39B. That’s above a 2022 capex guidance range of $32B-$33B (narrowed from a prior $30B-$34B).
Shares are now down 6.8% AH.
4:11 PM ET: Meta’s spending guidance is likely weighing on the stock. The company just slightly trimmed its 2022 cost/expense guidance to $85B-$87B from $85B-$88B. And more importantly, Meta is guiding for costs/expenses to rise to $96B-$101B in 2023.
4:07 PM ET: Meta’s stock has quickly reversed course: Shares are now down 5.3% AH.
4:06 PM ET: Results are out. Q3 revenue of $27.71B beats a $27.44B consensus. GAAP EPS of $1.64 misses a $1.90 consensus.
Meta guides for Q4 revenue of $30B-$32.5B vs. a $32.3B consensus.
Shares are up 5.8% after-hours.
4:01 PM ET: Meta closed down 5.6%. The Q3 report should be out shortly.
3:57 PM ET: Along with its sales/earnings, Meta’s full-year spending guidance will get attention, as will any comments it shares about planned spending cuts. Recently, investment firm Altimeter Capital sent an open letter to Mark Zuckerberg calling for him to (among other things) cut Meta’s headcount by at least 20%.
3:53 PM ET: Thanks in part to Alphabet’s Q3 miss, Meta’s stock is down 5.9% today going into earnings. Shares are down 62% YTD and at levels first reached in 2016.
3:52 PM ET: The FactSet consensus is for Meta to report Q3 revenue of $27.44B and GAAP EPS of $1.90. The Q4 revenue consensus stands at $32.3B.
From the looks of things, investor expectations are often below these numbers, particularly following Snap and Alphabet’s Q3 reports.
3:46 PM ET: Hi, this is Eric Jhonsa. I’ll be live-blogging Meta’s earnings report and call.
