13750

Meta (NASDAQ:FB) Misses Q1 Revenue Estimates, But Stock Soars 12.1%


Radek Strnad /
2022/04/27 4:18 pm EDT
Add to Watchlist

Social network operator Meta Platforms (NASDAQ: FB) fell short of analyst expectations in Q1 FY2022 quarter, with revenue up 6.63% year on year to $27.9 billion. Guidance for the next quarter also missed analyst expectations with revenues guided to $29 billion at the midpoint, or 5.5% below analyst estimates. Meta made a GAAP profit of $7.46 billion, down on its profit of $9.49 billion, in the same quarter last year.

Is now the time to buy Meta? Access our full analysis of the earnings results here, it's free.

Meta (FB) Q1 FY2022 Highlights:

  • Revenue: $27.9 billion vs analyst estimates of $28.2 billion (1.11% miss)
  • EPS (GAAP): $2.72 vs analyst estimates of $2.55 (6.6% beat)
  • Revenue guidance for Q2 2022 is $29 billion at the midpoint, below analyst estimates of $30.6 billion
  • Free cash flow of $8.52 billion, down 32.1% from previous quarter
  • Gross Margin (GAAP): 78.4%, down from 80.3% same quarter last year
  • Family Monthly Active People: 3.64 billion, up 190 million year on year

"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," said Mark Zuckerberg, Meta founder and CEO.

Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ: FB) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Facebook Reality Labs.

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

Sales Growth

Meta's revenue growth over the last three years has been strong, averaging 27.4% annually.

Meta Total Revenue

This quarter, Meta reported an mediocre 6.63% year on year revenue growth, and this result fell short of what analysts were expecting.

Meta is guiding for revenue to decline next quarter 0.26% year on year to $29 billion, a further deceleration on the 55.6% year-over-year decrease in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 13.5% over the next twelve months.

There are others doing even better than Meta. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.

Usage Growth

As a social network, Meta can generate revenue growth by increasing user numbers, and by charging more for the ads each user is exposed to.

Over the last two years the number of Meta's monthly active users, a key usage metric for the company, grew 12.2% annually to 3.64 billion users. This is decent growth for a consumer internet company.

Meta Family Monthly Active People

In Q1 the company added 190 million monthly active users, translating to a 5.5% growth year on year.

Key Takeaways from Meta's Q1 Results

Sporting a market capitalization of $491 billion, more than $43.8 billion in cash and with positive free cash flow over the last twelve months, we're confident that Meta has the resources it needs to pursue a high growth business strategy.

Meta delivered a solid beat on the bottom line. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations and it missed analysts' revenue expectations. Overall, this quarter's results were not the best we've seen from Meta. The company is up 12.1% on the results and currently trades at $196.07 per share.

Meta may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.