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Meta's (NASDAQ:META) Q1 Earnings Results: Revenue In Line With Expectations But Stock Drops

Published 2024-04-24, 04:12 p/m
Meta's (NASDAQ:META) Q1 Earnings Results: Revenue In Line With Expectations But Stock Drops
META
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Social network operator Meta Platforms (NASDAQ:META) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 27.3% year on year to $36.46 billion. On the other hand, next quarter's revenue guidance of $37.75 billion was less impressive, coming in 1.5% below analysts' estimates. It made a GAAP profit of $4.71 per share, improving from its profit of $2.20 per share in the same quarter last year.

Is now the time to buy Meta? Find out by reading the original article on StockStory, it's free.

Meta (META) Q1 CY2024 Highlights:

  • Revenue: $36.46 billion vs analyst estimates of $36.22 billion (small beat)
  • EPS: $4.71 vs analyst estimates of $4.32 (8.9% beat)
  • Revenue Guidance for Q2 CY2024 is $37.75 billion at the midpoint, below analyst estimates of $38.32 billion
  • Gross Margin (GAAP): 81.8%, up from 78.3% in the same quarter last year
  • Free Cash Flow of $12.53 billion, similar to the previous quarter
  • Daily Active Users: 3.24 billion
  • Market Capitalization: $1.26 trillion

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

Social NetworkingBusinesses 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.

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Sales GrowthMeta's revenue growth over the last three years has been mediocre, averaging 16.4% annually. This quarter, Meta reported decent 27.3% year-on-year revenue growth, in line with analysts' expectations.

Guidance for the next quarter indicates Meta is expecting revenue to grow 18% year on year to $37.75 billion, improving from the 11% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 14.9% over the next 12 months.

Key Takeaways from Meta's Q1 Results It was great to see Meta deliver solid revenue, operating profit, and EPS growth this quarter, which beat analysts' estimates. That was driven by more daily active users than expected and 6% year-on-year growth in average ad prices. On the other hand, its revenue guidance for next quarter missed analysts' expectations and it took up its forecasted operating expenses and capital expenditures for the full year. The increased costs are related to the company's AI infrastructure.

During the quarter, Meta released its AI assistant, Meta AI. This product was rolled out across its family of apps and is powered by Llama 3, an open-source large language model that is a ChatGPT competitor. The product is quite exciting and we recommend readers to try it out.

Overall, this quarter's print was solid but the weaker expected revenue for next quarter and higher expenses for the full year are spooking investors. The company is down 9.4% on the results and currently trades at $447.52 per share.

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