Meta reports 11% jump in revenue and issues optimistic guidance for third quarter

11 months ago 10

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., left, arrives at federal court in San Jose, California, US, on Tuesday, Dec. 20, 2022. 

David Paul Morris | Bloomberg | Getty Images

Meta reported earnings after the bell. Here are the results.

  • Earnings: $2.98 per share. That may not compare with the $2.91 per share expected by Refinitiv.
  • Revenue: $32.0 billion. That may not compare with the $31.12 billion expected by Refinitiv.

Wall Street is also watching several other numbers on the report:

  • Daily Active Users (DAUs):  2.04 billion expected, according to StreetAccount.
  • Monthly Active Users (MAUs): 3 billion expected, according to StreetAccount.
  • Average Revenue per User (ARPU): $10.22 expected, according to StreetAccount.

In April, Facebook parent Meta put an end to three straight quarterly revenue declines, reporting modest sales growth for the first quarter. Investors will be looking to see whether Mark Zuckerberg's company is seeing longer-term indications of a recovery in the digital advertising market.

Revenue growth in the second quarter is expected to climb to about 8% and then pop up into the double digits in the second half of the year, based on analysts' estimates.

Meta's online ad business has been hurt by a confluence of factors, including the ongoing Ukraine war, a shaky economy and the lasting impact of Apple's 2021 iOS privacy change. That update made it more difficult for companies like Meta, Snap and Twitter to track users across the web, limiting the effectiveness of many of their customers' ad campaigns.

On Tuesday, Snap issued third-quarter guidance that missed analysts' expectations, sending the shares down almost 20% in extended trading and underscoring the company's continuing struggle to overcome Apple's update. Meanwhile, Alphabet reported better-than-expected second-quarter results, driven by the company's cloud computing business. Google's ad revenue only rose 3.3% from a year earlier.

Meta's attempts to improve its ad system following the iOS privacy change appear to be showing some signs of success. The company's recently released Advantage+ service, for example, is finding increased interest among retailers looking to spend more money on Meta in the hopes that their online advertising campaigns can be more effective.  

A recent survey from William Blair showed that companies are considering increasing their online marketing budgets, albeit modestly, for the rest of the year.

Brad Erickson, an analyst at RBC Capital Markets, told CNBC last week that, based on his recent industry channel checks, small businesses remain concerned about the economy and are generally more reluctant than big companies to increase digital ad spending. That's a potential concern for Meta, which derives much of its overall sales from smaller and medium-sized businesses.

Company executives will discuss the results with analysts on a call starting at 5 p.m. ET.

Correction: On Tuesday, Snap issued third-quarter guidance that missed analysts' expectations. An earlier version misstated the quarter.

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