Although Meta (FB)’s first quarterly earnings results of 2022 fell short of forecasts, this hasn’t diminished investors’ excitement for the company. On Wednesday, Facebook’s parent business underperformed Wall Street sales projections for the first three months of 2022, posting the weakest revenue increase in years.
It also fell just short of experts’ expectations in terms of daily and monthly active members. While profits exceeded estimates, they were down 21% from the same time a year earlier. Despite this, investors were able to find a reason to rejoice. Meta stock rose more than 18% in after-hours trading following Wednesday’s earnings release.
What more should we keep in mind, particularly FB shareholders? Get more details in the full article:
Investors were presumably satisfied mostly with FB‘s user numbers, which grew despite being slightly lower than planned. Monthly active users increased by 3%, while daily active users increased by 4% year-over-year. Monthly and daily active users on Meta’s family of applications both increased by 6%. This is a significant change from the previous quarter’s unusual standstill in user counts.
FB also decreased its annual spending forecasts, lowering the maximum limit of its projected spending from $95 billion to $92 billion. Investors skeptical of how much the firm is spending on its aspirations for an augmented- and virtual-reality-enabled future were likely relieved by the change.
Total quarterly revenue increased 7% year-over-year to $27.9 billion, with a net income of about $7.5 billion, or $2.72 per share. Percentage-wise, it beat EPS projections by 8.21% and missed on revenue by 1.11%. In a statement, CEO Mark Zuckerberg said, “We made progress this quarter across a number of key company priorities, and we remain confident in the long-term opportunities and growth that our product roadmap will unlock.”
Still, there are some red flags for FB, which is competing with TikTok, failing to commercialize popular video content, and facing disruption in its core ad business due to Apple’s new privacy policies. FB recorded an 8% drop in average price per ad compared to the same quarter last year; nevertheless, the average cost per ad increased by 6% in the preceding quarter. Meta also pointed out that Russia’s war in Ukraine has impacted its business, with its Facebook and Instagram platforms being blocked in Russia last month. It expects similar issues to continue in the current quarter.
Meta began separating its Reality Labs section, including Augmented and Virtual Reality projects, from its bigger family of applications in the fourth quarter of 2021. The Reality Labs division lost over $3 billion in the first quarter of 2022. On Wednesday’s results call, Zuckerberg warned analysts to expect further obstacles. He went on to say, “Based on the strong revenue growth we saw in 2021, we kicked off a number of multi-year products to accelerate some of our longer-term investments. But with our current business growth levels, we are now planning to slow the pace of some of our investments.”
According to Zuckerberg, FB intends to produce enough operational revenue growth from its family of applications in the following years to finance its new project investments while also improving the company’s overall profitability.
