META
$115.33
Meta Platforms
$1.40
1.23%
Earnings Details
3rd Quarter September 2022
Wednesday, October 26, 2022 4:05:00 PM
Tweet Share Watch
Summary

Meta Platforms Misses

Meta Platforms (META) reported 3rd Quarter September 2022 earnings of $1.64 per share on revenue of $27.7 billion. The consensus earnings estimate was $1.88 per share on revenue of $27.9 billion. The Earnings Whisper number was $1.74 per share. Revenue fell 4.5% compared to the same quarter a year ago.

The company said it expects fourth quarter revenue of $30.00 billion to $32.50 billion. The current consensus revenue estimate is $33.27 billion for the quarter ending December 31, 2022.

Meta builds technologies that help people connect, find communities, and grow businesses.

Results
Reported Earnings
$1.64
Earnings Whisper
$1.74
Consensus Estimate
$1.88
Reported Revenue
$27.71 Bil
Revenue Estimate
$27.87 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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."

Third Quarter 2022 Financial Highlights

Three Months Ended September 30,


% Change

 

In millions, except percentages and per share amounts

2022


2021


Revenue

$                   27,714


$                   29,010


(4) %

Costs and expenses

22,050


18,587


19 %

Income from operations

$                     5,664


$                   10,423


(46) %

Operating margin

20 %


36 %



Provision for income taxes

$                     1,181


$                     1,371


(14) %

Effective tax rate

21 %


13 %



Net income

$                     4,395


$                     9,194


(52) %

Diluted earnings per share (EPS)

$                       1.64


$                       3.22


(49) %

Third Quarter 2022 Operational and Other Financial Highlights
  • 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.
CFO Outlook Commentary

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.

Webcast and Conference Call Information

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.

About Meta

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.

Contacts

Investors:
Deborah Crawford
investor@meta.com / investor.fb.com

Press:
Ryan Moore
press@meta.com / about.fb.com/news/

Forward-Looking Statements

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.

Non-GAAP Financial Measures

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. 

 

META PLATFORMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)


Three Months Ended September 30,


Nine Months Ended September 30,


2022


2021


2022


2021

Revenue

$           27,714


$           29,010


$           84,444


$           84,258

Costs and expenses:








Cost of revenue

5,716


5,771


16,913


16,301

Research and development

9,170


6,316


25,567


17,609

Marketing and sales

3,780


3,554


10,688


9,656

General and administrative

3,384


2,946


8,731


6,524

Total costs and expenses

22,050


18,587


61,899


50,090

Income from operations

5,664


10,423


22,545


34,168

Interest and other income (expense), net

(88)


142


125


413

Income before provision for income taxes

5,576


10,565


22,670


34,581

Provision for income taxes

1,181


1,371


4,123


5,496

Net income

$              4,395


$              9,194


$         18,547


$           29,085

Earnings per share attributable to Class A and Class
B common stockholders:








Basic

$                1.64


$                3.27


$             6.86


$             10.27

Diluted

$                1.64


$                3.22


$             6.82


$             10.11

Weighted-average shares used to compute earnings
per share attributable to Class A and Class B
common stockholders:








Basic

2,682


2,814


2,703


2,832

Diluted

2,687


2,859


2,718


2,876

Share-based compensation expense included in costs
and expenses:








Cost of revenue

$                 209


$                 147


$              582


$               428

Research and development

2,447


1,849


6,995


5,224

Marketing and sales

260


218


766


631

General and administrative

218


165


641


474

Total share-based compensation expense

$              3,134


$              2,379


$           8,984


$            6,757

 

META PLATFORMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)


September 30, 2022


December 31, 2021

Assets




Current assets:




Cash and cash equivalents

$                  14,308


$                  16,601

Marketable securities

27,468


31,397

Accounts receivable, net

11,227


14,039

Prepaid expenses and other current assets

5,312


4,629

Total current assets

58,315


66,666

Non-marketable equity securities

6,528


6,775

Property and equipment, net

73,738


57,809

Operating lease right-of-use assets

13,641


12,155

Intangible assets, net

875


634

Goodwill

20,268


19,197

Other assets

5,529


2,751

Total assets

$                178,894


$                165,987





Liabilities and stockholders' equity




Current liabilities:




Accounts payable

$                    3,871


$                    4,083

Partners payable

975


1,052

Operating lease liabilities, current

1,291


1,127

Accrued expenses and other current liabilities

16,036


14,312

Deferred revenue and deposits

514


561

Total current liabilities

22,687


21,135

Operating lease liabilities, non-current

14,687


12,746

Long-term debt

9,922


Other liabilities

7,504


7,227

Total liabilities

54,800


41,108

Commitments and contingencies




Stockholders' equity:




Common stock and additional paid-in capital

62,092


55,811

Accumulated other comprehensive loss

(5,054)


(693)

Retained earnings

67,056


69,761

Total stockholders' equity

124,094


124,879

Total liabilities and stockholders' equity

$                178,894


$                165,987

 

META PLATFORMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


Three Months Ended
September 30,


Nine Months Ended
September 30,


2022


2021


2022


2021

Cash flows from operating activities








Net income

$        4,395


$        9,194


$      18,547


$      29,085

Adjustments to reconcile net income to net cash provided by operating activities:








Depreciation and amortization

2,175


1,995


6,310


5,953

Share-based compensation

3,134


2,379


8,984


6,757

Deferred income taxes

(1,097)


(786)


(2,113)


(139)

Impairment related to leases and leasehold improvements

413



413


Other

104


(73)


71


(161)

Changes in assets and liabilities:








Accounts receivable

(105)


(555)


1,930


(1,072)

Prepaid expenses and other current assets

(830)


(253)


(693)


(2,566)

Other assets

(27)


11


(160)


(184)

Accounts payable

(22)


694


(666)


560

Partners payable

20


(30)


(12)


(163)

Accrued expenses and other current liabilities

998


1,094


2,942


895

Deferred revenue and deposits

(7)


78


(35)


87

Other liabilities

540


343


446


527

Net cash provided by operating activities

9,691


14,091


35,964


39,579

Cash flows from investing activities








Purchases of property and equipment

(9,375)


(4,345)


(22,388)


(13,290)

Proceeds relating to property and equipment

20


32


190


92

Purchases of marketable debt securities

(2,597)


(7,786)


(8,885)


(24,314)

Sales of marketable debt securities

1,620


8,993


9,333


15,331

Maturities of marketable debt securities

649


2,991


1,562


9,318

Acquisitions of businesses and intangible assets

(34)


(71)


(1,250)


(330)

Other investing activities

16


(144)


(1)


(206)

Net cash used in investing activities

(9,701)


(330)


(21,439)


(13,399)

Cash flows from financing activities








Taxes paid related to net share settlement of equity awards

(1,011)


(1,576)


(2,938)


(4,007)

Repurchases of Class A common stock

(6,354)


(13,457)


(21,093)


(24,476)

Proceeds from issuance of long-term debt, net

9,921



9,921


Principal payments on finance leases

(163)


(231)


(615)


(505)

Net change in overdraft in cash pooling entities

(191)


11


(250)


15

Other financing activities

(55)



(101)


(13)

Net cash provided by (used in) financing activities

2,147


(15,253)


(15,076)


(28,986)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(364)


(215)


(1,063)


(344)

Net increase (decrease) in cash, cash equivalents, and restricted cash

1,773


(1,707)


(1,614)


(3,150)

Cash, cash equivalents, and restricted cash at beginning of the period

13,478


16,511


16,865


17,954

Cash, cash equivalents, and restricted cash at end of the period

$      15,251


$      14,804


$      15,251


$      14,804









Reconciliation of cash, cash equivalents, and restricted cash to
the condensed consolidated balance sheets








Cash and cash equivalents

$      14,308


$      14,496


$      14,308


$      14,496

Restricted cash, included in prepaid expenses and other current assets

232


195


232


195

Restricted cash, included in other assets

711


113


711


113

Total cash, cash equivalents, and restricted cash

$      15,251


$      14,804


$      15,251


$      14,804



META PLATFORMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


Three Months Ended
September 30,


Nine Months Ended
September 30,


2022


2021


2022


2021

Supplemental cash flow data








Cash paid for income taxes, net

$         2,006


$         1,625


$         4,647


$         7,919

Non-cash investing and financing activities:








Property and equipment in accounts payable and accrued
expenses and other current liabilities

$         4,130


$         2,635


$         4,130


$         2,635

Acquisition of businesses in accrued expenses and other current
liabilities and other liabilities

$            294


$              73


$            294


$              73

Other current assets through financing arrangement in accrued
expenses and other current liabilities

$              18


$            491


$              18


$            491

Repurchases of Class A common stock in accrued expenses and
other current liabilities

$            265


$         1,223


$            265


$         1,223

 

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:

Segment Information

(In millions)

(Unaudited)


Three Months Ended
September 30,


Nine Months Ended
September 30,


2022


2021


2022


2021

Revenue:








Advertising

$      27,237


$      28,276


$      82,387


$      82,294

Other revenue

192


176


624


567

Family of Apps

27,429


28,452


83,011


82,861

Reality Labs

285


558


1,433


1,397

Total revenue

$      27,714


$      29,010


$      84,444


$      84,258









Income (loss) from operations:








Family of Apps

$        9,336


$      13,054


$      31,983


$      41,058

Reality Labs

(3,672)


(2,631)


(9,438)


(6,890)

Total income from operations

$        5,664


$      10,423


$      22,545


$      34,168

 

Reconciliation of GAAP to Non-GAAP Results

(In millions, except percentages)

(Unaudited)


Three Months Ended
September 30,


Nine Months Ended
September 30,


2022



2021


2022



2021

GAAP revenue

$      27,714



$      29,010


$      84,444



$      84,258

Foreign exchange effect on 2022 revenue using 2021 rates

1,789





3,944




Revenue excluding foreign exchange effect

$      29,503





$      88,388




GAAP revenue year-over-year change %

(4)

%




%



Revenue excluding foreign exchange effect year-over-year change %

2

%




5

%



GAAP advertising revenue

$      27,237



$      28,276


$      82,387



$      82,294

Foreign exchange effect on 2022 advertising revenue using 2021 rates

1,776





3,919




Advertising revenue excluding foreign exchange effect

$      29,013





$      86,306




GAAP advertising revenue year-over-year change %

(4)

%




%



Advertising revenue excluding foreign exchange effect year-over-year change %

3

%




5

%













Net cash provided by operating activities

$        9,691



$      14,091


$      35,964



$      39,579

Purchases of property and equipment, net

(9,355)



(4,313)


(22,198)



(13,198)

Principal payments on finance leases

(163)



(231)


(615)



(505)

Free cash flow

$            173



$        9,547


$      13,151



$      25,876

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/meta-reports-third-quarter-2022-results-301660429.html

SOURCE Meta