Facebook (Meta) Q4 2021 Earnings Report Recap

FB missed on earnings but beat on revenue

Key Takeaways

  • Monthly active users came in at 2.9 billion, matching analysts' forecasts.
  • Facebook (Meta) uses monthly active users to measure the size of its global active user base, which it monetizes through the sale of ad space on its social media platform.
  • The company says that cost inflation and supply chain disruptions are having an impact on advertisers' budgets.
Facebook (Meta) Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Miss $3.67 $3.84
Revenue Beat $33.7B $33.4B
Monthly Active Users Match 2.9B 2.9B

Source: Predictions based on analysts' consensus from Visible Alpha

Facebook (Meta) Financial Results: Analysis

Facebook, which was renamed Meta Platforms, Inc. (FB) in late October 2021, reported mixed Q4 FY 2021 earnings results on Feb. 2. Earnings per share (EPS) missed consensus estimates, down 5.4% from the year-ago quarter. Revenue came in above analyst forecasts, increasing 19.9% year over year (YOY). The Facebook platform's monthly active users (MAUs) matched expectations.

FB's Plunging Stock

Meta's shares fell as much as 25% in after-hours trading on Wednesday evening in response to the company's earnings release, and they were down as much as 24% as of 10:30am EST on Thursday.

Investors' big concern is that Facebook, the world's largest social network, lost daily users for the first time in its history. Facebook lost around 500,000 daily users in the last quarter of 2021, Meta’s quarterly earnings report showed. The losses illustrate how rivals such as TikTok and YouTube are eating into Facebook's growth. Investors also were concerned that Meta is forecasting weaker-than-expected revenue growth for the first quarter. Meta's revenue forecast of $27 billion to $29 billion fell below analyst expectations of $30.2 billion, according to Refinitiv.

FB Monthly Active Users

Meta's MAUs rose 4% compared to the year-ago quarter to reach just over 2.9 billion. MAUs are a key metric Meta uses to gauge the size of the global active user base on its Facebook social media platform. Meta defines MAUs as registered and logged-in users who visited Facebook through its website or a mobile device, or used its Messenger app, sometime during the 30 days of the measurement period.

Meta derives nearly all of its revenue through selling advertising space, based largely on the strength of MAUs, on its social media sites and apps. The bigger its user base, the more attractive its platform is to advertisers. A bigger user base also makes it easier to attract new users, as people want to be on Meta's social media platforms because their friends are on it—a classic example of the network effect.

FB New Financial Reporting Segment Structure

The fourth quarter was the first quarter for which Meta reported financial results in the following two segments: Family of Apps (FoA), which includes its main social media platform Facebook as well as Instagram, Messenger, WhatsApp, and other services; and Reality Labs (RL), which includes the company's augmented and virtual reality related consumer hardware, software, and content.

Despite the change in the company's name and reporting segment structure, Meta remains primarily a social media company. But the new reporting structure does highlight the new importance the company is putting on augmented and virtual reality, key technologies at the center of the virtual world the company hopes to build named the metaverse.

FB Outlook

Meta said that it expects total revenue to be somewhere between $27 billion and $29 billion in the first quarter of FY 2022, reflecting a YOY growth rate of between 3% and 11%. The company expects to face a number of headwinds, including increased competition for people's time, a shift in user engagement to products that generate income at lower rates, various platform and regulatory changes, the impact of cost inflation and supply chain disruptions on advertiser budgets, and other factors.

FB Earnings Call Recap

Chief Executive Officer (CEO) Mark Zuckerberg said Meta’s competitor to TikTok, Reels, is growing at a rapid pace. But he added that monetization has been slow, and he asked investors to be patient. “Over time we think that there is potential for a tremendous amount of overall engagement growth” with Reels, he said on a conference call after earnings were released. “We think it’s definitely the right thing to lean into this and push as hard to grow Reels as quickly as possible and not hold on the brakes at all, even though it may create some near-term slower growth than we would have wanted."

Meta's next earnings report (for Q1 FY 2022) is estimated to be released on April 26, 2022.

Article Sources
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  2. Visible Alpha. "Financial Data." Accessed Jan. 31, 2022.

  3. CNBC. "Facebook shares plummet 25% after reporting weak guidance." Accessed Feb. 3, 2022.

  4. Yahoo! Finance. "Facebook (Meta) Stock." Accessed Feb. 3, 2022.

  5. Forbes. "Facebook Loses Daily Active Users For The First Time – Here’s Where They're Going." Accessed Feb. 3, 2022.

  6. Meta Platforms Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Page 55. Accessed Feb. 1, 2022.

  7. Bloomberg. "Meta’s Shares Collapse After TikTok Steals Users From Facebook." Accessed Feb. 3, 2022.

  8. Yahoo! Finance. "Earnings Calendar: FB." Accessed Feb. 1, 2022.

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