Meta (NASDAQ:FB) Reports Q4 In Line With Expectations But Stock Drops 15% On Weak Guidance

Adam Hejl /
2022/02/02 4:10 pm EST
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Social network operator Meta Platforms (NASDAQ: FB) reported results in line with analyst expectations in Q4 FY2021 quarter, with revenue up 19.9% year on year to $33.6 billion. However, guidance for the next quarter was less impressive, coming in at $28 billion at the midpoint, being 7.48% below analyst estimates. Meta made a GAAP profit of $10.2 billion, down on its profit of $11.2 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) Q4 FY2021 Highlights:

  • Revenue: $33.6 billion vs analyst estimates of $33.4 billion (small beat)
  • EPS (GAAP): $3.67
  • Revenue guidance for Q1 2022 is $28 billion at the midpoint, below analyst estimates of $30.2 billion
  • Free cash flow of $12.5 billion, up 31.5% from previous quarter
  • Gross Margin (GAAP): 81.1%, in line with same quarter last year
  • Family Monthly Active People: 3.59 billion, up 290 million year on year

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 29% annually. Meta's revenue took a hit when the pandemic first hit, but it has since rebounded strongly, as you can see below.

Meta Total Revenue

This quarter, Meta reported a mediocre 19.9% year on year revenue growth, roughly in line with what analysts expected.

Guidance for the next quarter indicates Meta is expecting revenue to grow 6.98% year on year to $28 billion, slowing down from the 47.5% year-over-year increase in revenue the company had recorded in the same quarter last year.

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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 12.9% annually to 3.59 billion users. This is decent growth for a consumer internet company.

Meta Family Monthly Active People

In Q4 the company added 290 million monthly active users, translating to a more moderate 8.78% growth year on year.

Key Takeaways from Meta's Q4 Results

With a market capitalization of $887 billion, more than $47.9 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was good to see that Meta’s added new users. That feature of these results really stood out as a positive. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations and user growth slowed down. Overall, it seems to us that this was a complicated quarter for Meta. The company is down 15.6% on the results and currently trades at $272.41 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.

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