META Q3 2022 Earnings

Call Details

• Call Title: Meta Platforms, Inc. Q3 2022 Earnings Call
• Date: October 26, 2022 at 9:00 PM UTC
• Management Team:
  • Mark Zuckerberg (Chief Executive Officer)
  • Dave Wehner (Chief Financial Officer)
  • Susan Li (Vice President of Finance and incoming Chief Financial Officer)
  • Marne Levine (Chief Business Officer)
  • Deborah Crawford (Vice President of Investor Relations)

Call Summary

Financial Performance

• Q3 total revenue was $27.7B, down 4% year-over-year and up 2% on a constant currency basis.
• Q3 total expenses were $22.1B, up 19% year-over-year and included a $413M impairment for certain operating leases.
• Q3 operating income was $5.7B, representing a 20% operating margin, and net income was $4.4B or $1.64 per share.
• Q3 capital expenditures were $9.5B, and pre-tax cash flow was $173M for the quarter.
• Family of Apps revenue was $27.4B, down 4% year-over-year, and family of apps ad revenue was $27.2B, down 4% and up 3% constant currency.
• Daily Active Users for Facebook were 1.98B, up 3% year-over-year (up 54M), and the family of apps had approximately 2.9B daily users and 3.7B monthly users.
• Family of Apps operating income was $9.3B, representing a 34% operating margin, while Family of Apps expenses were $18.1B and grew 18% year-over-year.
• Reality Labs revenue was $285M, down 49% year-over-year, Reality Labs expenses were $4.0B, up 24%, and Reality Labs operating loss was $3.7B.
• The company repurchased $6.5B of Class A common stock in Q3 and completed a $10.0B inaugural debt offering, ending the quarter with $41.8B in cash and marketable securities.

Guidance

• Q4 total revenue is guided to a range of $30.0B to $32.5B and assumes foreign exchange is an approximately 7% headwind to year-over-year total revenue growth.
• Updated 2022 total expense guidance is $85B to $87B, revised from prior $85B to $88B, and includes an estimated $900M in additional Q4 charges related to office consolidation.
• Full year 2023 total expense guidance is $96B to $101B and includes an estimated $2.0B of charges related to consolidating the office facilities footprint.
• 2022 capital expenditures are updated to $32B to $33B from prior $30B to $34B, and 2023 capital expenditures are expected to be $34B to $39B driven by data center, servers, and network infrastructure.
• The company expects to end 2023 with headcount approximately in line with Q3 2022 levels and expects the percentage growth rate of 2023 operating expenses to decelerate meaningfully.
• Reality Labs operating losses are expected to grow significantly in 2023, and CapEx growth in 2023 is primarily driven by increased AI capacity.
• Absent changes to U.S. tax law, Q4 2022 and full year 2023 tax rates are expected to be similar to Q3 2022 (approximately 21%).