What to Expect From Meta Platforms Q1 Earnings

Meta Stock

On April 26, 2023, META (NASDAQ:META) will release the financial results for the first quarter of 2023.

The company anticipates that its total revenues for the first quarter of 2023 would fall between $26 billion and $28.5 billion. It is anticipated that unfavorable forex will have a negative impact of 2% on top-line growth year over year.

The Consensus Estimate for first-quarter revenues is currently placed at $27.49 billion, which indicates a decline of 1.51% compared to the reported amount for the same period a year ago.

The current earnings estimate sits at $1.96 per share, which is down by one cent over the course of the previous 30 days. This indicates a decrease of 27.94% from the figure that was reported in the same quarter one year ago.

The Consensus Estimate for Meta’s earnings was either met or exceeded in two of the preceding four quarters, with the company’s average earnings surprise coming in at 8.56%.

Let’s take a look at how things have progressed in preparation for the forthcoming announcement.

Important Considerations

It is anticipated that a difficult macroeconomic environment, high inflation, and rising interest rates will have a negative impact on the advertising spending budgets of businesses, which will in turn have an adverse effect on Meta’s top line for the first quarter. It is anticipated that this will have a negative impact on ad sales in the forthcoming quarter.

The ad revenue business of the company is expected to experience a slowdown in growth as a result of ad targeting-related difficulties caused by modifications made by Apple (NASDAQ:AAPL) to its iOS platform.

The changes that Apple has made to its iOS have made it more difficult to target advertisements, which has led to an increase in the cost of driving outcomes. However, determining how to measure these outcomes is difficult.

The advertising segment of Meta’s business accounted for 97.2% of the company’s total sales in the fourth quarter of 2022, which were down 4.2% year over year to $31.25 billion. It is anticipated that the trend towards falling revenues persisted during the first quarter.

The company’s guidance for the first quarter reflects worries about the macroeconomic environment and the FX market. A headwind in this context is the weak demand for advertising. It is concerning since it anticipates that Reels will generate revenue far more slowly than feed or stories.

In spite of this, it is anticipated that Facebook’s growing user base, which currently stands at 2 billion daily active users, contributed to top-line growth in the quarter that will soon be published. The increasing popularity of reels is another important trend.

A significant factor in Meta’s expansion has been the increased engagement with its various offerings, which include Instagram, WhatsApp, Messenger, and Facebook. The company has been successful in maintaining its users’ engagement thanks in large part to the efficient application of artificial intelligence. A higher degree of interaction is helping to keep its user growth stable across all areas, notably in Asia and the Pacific.

Featured Image: Unsplash

Please See Disclaimer

About the author: Stephanie Bédard-Châteauneuf has over four years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on consumer stocks, cannabis stocks, tech stocks, and personal finance. She has an MBA in finance.