Facebook (Meta) Q2 2022: First ever quarterly revenue decline recorded

Meta reported its Q2 numbers this week and the top line and bottom line were below analysts' expectations. Meta share price closed at $159.10 per share on Friday. The share has fallen more than 50% YTD. 

Meta Q2 Earnings 2022: Key Highlights

• Revenue: $28.82 billion, up 1% YoY
• Profit: EPS of $2.46 against an estimate of $2.59
• Guidance: Revenue of $87 billion to $92 billion for Q3

Meta Q2 Earnings 2022: Revenues

Meta reported revenue of $28.82 billion in Q2 compared to analysts' expectation of $28.94 billion. The revenue was down by 1% year-on-year. Advertising revenue in the quarter was $28.2 billion, down from $28.6 billion in the year-ago period. Revenue from Reality Labs was $452 million, down from $695 million in the first quarter but up from $305 million a year ago.

Meta Q2 Results: Operating Income

Meta’s s Family of Apps including Instagram, Messenger, and WhatsApp reported an operating income of $11.2 billion, down 24.5% from the year ago. Reality Lab, which deals with virtual reality, augmented reality, etc. reported an operating loss of $2.8 billion, compared to a $2.4 billion loss in the same quarter last year, but narrowing from a $3 billion loss in the first quarter.

Meta Q2 Earnings 2022: User Numbers

The Daily Active Users (DAUs) came at 1.97 billion in Q2 above analysts' expectation of 1.96 billion. Daily Active Users (DAUs) on Facebook were slightly higher in the second quarter compared to the previous quarter's DAUs of 1.96 billion.

Meta Q2 Earnings: Monthly Active Users (MAUs) 

MAUs came at 2.93 billion below analysts' expectation of 2.94 billion. The Average Revenue per User (ARPU) was slightly lower than analysts' expectation of $9.83 and stood at $9.82.

Meta Q2 Results: Share Repurchases

Meta repurchased $5.08 billion of stock in the June quarter. The company now has $40.49 billion in cash, equivalents, and marketable securities.

Meta Q2 Earnings 2022: Future Guidance

The company reduced its expectations for full-year expenses to between $85 billion and $87 billion. It has previously forecasted revenue of $87 billion to $92 billion. For the third quarter, the projected revenue is $26 billion to $28.5 billion, trailing the $30.5 billion average analyst estimate. It has also narrowed its forecast for full-year capital spending to between $30 billion and $34 billion. The previous range was $29 billion to $34 billion.

Reels continue to struggle: Facebook's Instagram Reels offering has reached $1 billion in annualized revenue. However, it does not generate revenue as efficiently as Instagram Stories and the main news feed.

Headcount: Meta's headcount increased 32% from a year earlier to 83,553 but the company indicated that it plans to slow the pace of hiring, echoing the sentiment from many of its tech peers. 

Meta Q2 Earnings 2022: Analysts' Views

Based on 41 analysts' data, the average target price of Meta share is $243.08, the lowest being $140 and the highest target price is $460 per share. Out of 41 analysts, 19 have given Strong Buy, 8 analysts have given Buy, 12 Hold, 1 Sell, and 1 Strong Sell.