On Wednesday after the bell, Meta Platforms (NASDAQ:META) reported double-digit revenue growth for the first time 2021’s fourth quarter while also guiding for better than expected third quarter guidance. Unlike Snap Inc (NASDAQ:SNAP), Meta showed it has rebounded after being hit by a weakened economy and Apple Inc (NASDAQ:AAPL) iOS privacy changes that damaged the company’s ad targeting abilities. Upon the report, Meta stock rose 7% in extended trading while Snap stock plunged 17% upon its earnings report.
Second Quarter Highlights
While Snap only managed to narrow its loss, Meta’s net income rose from 2022’s comparable quarter ($6.69 billion) to $7.79 billion with earnings per share amounting to $2.98 per share, topping $2.91 expected by Refinitiv on the back of $32 billion in revenue that rose 11% YoY, which also exceeded Refinitiv’s expectation of $31.12 billion. Total costs and expenses rose 10% YoY to $22.61 billion.
The Metaverse is still only an expensive dream in the making
The Reality Labs unis still struggling. It generated $276 million in sales while posting a loss of $3.7 billion, after already costing Meta $13.7 billion in 2022. Meta warned that this unit’s loss will be increasing meaningfully YoY due development efforts and investments to scale its ecosystem.
Stronger Than Expected Third Quarter Guidance
Meta guided for revenue in the range between $32 billion to $34.5 billion, topping Refinitiv’s consensus estimate of $31.3 billion, and implying atleast 15% YoY growth.
Meta CEO MArk Zuckerberg has initiated several cost-savings efforts, including 21,000 job cuts. Total headcount declined 14% YoY to 71,469 with“approximately half of the employees impacted by the 2023 layoffs being included in the reported headcount as of June 30th, 2023. As a result of these efforts, 2023 full year capital expenditures are now expected in the range between $27 billion and $30 billion, down from the prior range of $30 billion to $33 billion.
Meta Has Officially Rebounded
Along with its first quarter, second quarter results confirm that Meta has rebounded from three consecutive periods of revenue declines.
Unlike Snap, Meta’s monetization revenue run rate has skyrocketed from $3 billion in the fall to $10 billion. Zuckerberg stated a strong engagement has been observed across the company’s apps without hiding his excitement with the company’s new developments, namely Llama 2, Twitter-competitor Threads that got to a great start, Reels that have reached 200 billion daily plays across Instagram and Facebook, new AI products in the pipeline, and the launch of Quest 3 that is due in the fall. The social media company had one of its best quarters since before it changed its name from Facebook. But, the Metaverse still remains from (virtual) reality.
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