Meta (Facebook) Q2 results: Robust revenue expectations from AI-driven ad sales

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Meta Q2 2023 Earnings

Meta (Facebook) share prices soared about 7% on July 27 2023 after the social media firm reported robust earnings for the quarter ended June 2023. Meta expects revenues for the upcoming quarter to be strong, driven by its generative AI sales.

For a detailed view on Meta shares and its key business attributes, click here.

Meta expects its revenues for the quarter ending September 2023 to be around $34 billion, which is higher than analyst expectations which stand at around $32 billion, leading share prices higher.

Advertisers globally seem to be pumping money into platforms owned by Meta and Google and ignoring smaller players like Snapchat as the global economic scenario worsens amid recession and inflationary concerns.

With Meta’s results, the majority of technology shares earnings are in the rear view with only Amazon left to report quarterly earnings. Alphabet, Tesla and Netflix reported robust results, however Microsoft lagged its peers with its earnings performance failing to meet analyst expectations.  

The Instagram and Threads owner added about $60 billion to its market capitalization after strong second-quarter earnings encouraged major brokerages on Wall Street to lift their share price target on the stock. 

Meta shares have already soared 156% so far this year. 

Meta Results: Key Highlights

  • Revenue grew 11% to $32 billion in the quarter ended June 30, compared with analysts' average estimate of $31.12 billion.
  • Ad revenue rose 12%, at a much faster pace than its technology peer Google which reported a 3% rise in ad revenues. 
  • Meta cut its capital expenditure forecast for 2023, as it pushes capex plans regarding AI to 2024.
  • The Reality Labs unit, which is responsible for developing metaverse-oriented technology like augmented reality glasses, reported sales of $276 million, down from $452 million

Meta Q2 Results: Revenue

Meta's revenue gained 3% primarily on account of higher ad sales in Facebook amid a steady rise in daily active users. Advertising revenues soared, however, income from its Reality Labs business which makes its VR glasses, dropped. 

 Q2FY23Q2FY22% change
Total Revenue$32billion$28.8 billion+11%

Meta Q2 Results: Net Profit

Meta's net profit jumped 16%, a novel jump from its performance in the previous quarter when the company reported a 24% drop in net profits. Meta beat profit expectations by a mile and its expectation beating forecast for the September quarter revenues and profits led shares higher. 

 Q2FY23Q2FY22% change
Net Profit       $7.8 billion$6.7 billion+16%

Meta Q2 Results: Daily Active Users

 Q2FY23Q2FY22% change
DAU               2.1 billion1.9 billion+5%

Meta Q2 Results: Average Revenue per Person (ARPP)

 Q2FY23Q2FY22% change

Meta Q2 Results: Analyst View

  • Renowned brokerage Baird has a 'outperform' rating on the firm and a share price target of $355
  • Brokerage Canaccord Genuity has a ‘buy’ rating on the firm and a share price target of $375.
  • Jefferies has a ‘buy’ rating on the firm and a share price target of $400.
  • TD Cowen has a ‘buy’ rating on the firm and a share price target of $365.