10-QPeriod: Q1 FY2022

Meta Platforms, Inc. Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 28, 2022For Securities:META

Summary

Meta Platforms, Inc. (META) reported its first quarter 2022 results, showing a 7% year-over-year increase in total revenue to $27.9 billion. While the core 'Family of Apps' segment saw a 6% revenue increase, driven by advertising, the 'Reality Labs' segment experienced a substantial 30% revenue growth, albeit from a smaller base, and a widening operating loss. Despite revenue growth, profitability faced pressure, with total costs and expenses increasing by 31% year-over-year, leading to a 25% decrease in income from operations. This was largely driven by significant investments in research and development, up 48%, and general and administrative expenses, up 45%, reflecting increased headcount and ongoing strategic investments, particularly in Reality Labs. Diluted earnings per share declined to $2.72 from $3.30 in the prior year's quarter. The company also repurchased $9.39 billion of its Class A common stock during the quarter.

Financial Highlights

47 data points
Beta

Revenue

$27.91B

78.5% Gross Margin

Net Income

$7.46B

26.7% Net Margin

EPS (Diluted)

$2.72

Total Assets

$164.22B

Cash & Equivalents

$14.89B

Free Cash Flow

$8.63B

Financial Statements
Beta
Revenue$27.91B
Cost of Revenue$6.00B
Gross Profit$21.90B
R&D Expenses$7.71B
Operating Expenses$19.38B
Operating Income$8.52B
Net Income$7.46B
EPS (Basic)$2.74
EPS (Diluted)$2.72
Shares Outstanding (Basic)2.73B
Shares Outstanding (Diluted)2.74B

Key Highlights

  • 1Total revenue increased 7% year-over-year to $27.9 billion.
  • 2Family of Apps (FoA) revenue grew 6% to $27.2 billion, primarily driven by advertising.
  • 3Reality Labs (RL) revenue increased 30% to $695 million, but the segment's operating loss widened significantly.
  • 4Total costs and expenses rose 31% year-over-year to $19.4 billion, impacting profitability.
  • 5Research and Development (R&D) expenses surged 48% year-over-year, largely due to increased headcount.
  • 6Diluted Earnings Per Share (EPS) decreased to $2.72 from $3.30 in the prior year's quarter.
  • 7Meta repurchased $9.39 billion of its Class A common stock during the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by the Family of Apps segment, which saw a 6% increase to $27.2 billion, largely due to advertising revenue. This was supported by a 15% increase in ad impressions delivered across Meta's platforms, although the average price per ad decreased by 8%. Reality Labs also contributed with a 30% increase in revenue, reaching $695 million, primarily from increased sales of consumer hardware products.

Profitability was impacted by a significant increase in costs and expenses, which grew 31% year-over-year to $19.4 billion. This surge was largely attributed to substantial investments in research and development (up 48%) and general and administrative expenses (up 45%). These increases reflect higher employee headcount, particularly in engineering and technical roles supporting investments in both core products and Reality Labs, as well as increased legal-related costs.

The Reality Labs segment reported a 30% revenue increase to $695 million, indicating growth in its consumer hardware products. However, the segment's operating loss widened by 62% year-over-year to $2.96 billion. This significant loss highlights the substantial ongoing investment required for Meta's metaverse ambitions, which is pressuring overall company profitability. Investors should monitor the progress and investment levels in Reality Labs as it represents a key, but currently loss-making, strategic priority.

Meta reported continued growth in its 'Family of Apps' user metrics. Family Daily Active People (DAP) increased by 6% to 2.87 billion, and Family Monthly Active People (MAP) grew by 6% to 3.64 billion. Facebook's Daily Active Users (DAUs) increased by 4% to 1.96 billion, and Monthly Active Users (MAUs) grew by 3% to 2.94 billion. Despite this growth, the company noted that advertising revenue growth was adversely affected by limitations on ad targeting and measurement tools, as well as broader macroeconomic and geopolitical conditions, including the war in Ukraine.