Meta Platforms (NASDAQ:META) is poised to release its third-quarter 2023 results on October 25. The company has projected total revenues in the range of $32 billion to $34.5 billion for this quarter, with favorable foreign exchange rates expected to contribute to a 3% year-over-year growth in its top line.
According to the Zacks Consensus Estimate, third-quarter revenues are anticipated to reach $33.43 billion, reflecting a 20.62% increase compared to the figures reported in the same period last year. The consensus estimate for earnings is $3.57 per share, which has grown by 1.13% over the past 30 days, suggesting a remarkable 117.68% growth compared to the previous year’s earnings.
Meta has demonstrated a track record of beating the Zacks Consensus Estimate for earnings in three of the last four quarters, with an average surprise of 18.99%.
Key Factors to Consider
The anticipated growth in Meta’s third-quarter revenue can be attributed to the expansion of Facebook’s user base, which currently boasts over 3.03 billion daily active users. The increasing adoption of features like “reels” has also played a role in this expansion. Higher user engagement has led to steadier user growth across all regions, particularly in Asia Pacific.
Daily Active Users (DAUs) in Asia Pacific for the third quarter are estimated to reach 894 million, indicating a significant 5.8% year-over-year growth, which is the fastest among all regions. The Rest of the World region is expected to follow closely with a 4.1% growth, reaching 664 million DAUs.
Monthly Active Users (MAUs) in Asia Pacific are projected to reach 1.347 billion, reflecting a 2.7% year-over-year growth, while in the Rest of the World MAUs are expected to grow by 3.4% to reach 1.004 billion MAUs.
Increased engagement with Meta’s offerings such as Instagram, WhatsApp, Messenger, and Facebook has been a significant driver of growth. The company’s effective use of artificial intelligence has been instrumental in keeping users engaged. Worldwide DAUs are estimated to reach 2.060 billion, showing a 3.8% year-over-year growth, while MAUs are projected to reach 3.021 billion, indicating a 2.1% year-over-year increase.
However, it is anticipated that Meta’s top line will be affected by the challenging macroeconomic environment and high inflation, which could place pressure on ad spending budgets. This is likely to have an impact on ad revenues for the quarter.
Moreover, the company’s ad revenue business is facing challenges due to ad targeting-related issues stemming from Apple’s iOS changes. These changes have made ad targeting more difficult, driving up the cost of achieving desired outcomes, while also making it challenging to measure these outcomes.
In the second quarter of 2023, Meta’s ad revenues represented 99.3% of total revenues, increasing by 11.9% year over year to reach $31.5 billion. Ad revenues for the third quarter of 2023 are estimated to reach $32.37 billion, showing an 18.8% year-over-year growth.
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