Meta Platforms, Inc. today reported financial results for the quarter ended June 30, 2022.
“It was good to see positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in AI,” said Mark Zuckerberg, Meta founder and CEO. “We’re putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services.”
Second Quarter 2022 Financial Highlights
| Three Months Ended June 30, | % Change | ||||
| In millions, except percentages and per share amounts | 2022 | 2021 | |||
| Total revenue | $ 28,822 | $ 29,077 | (1) % | ||
| Total costs and expenses | 20,464 | 16,710 | 22 % | ||
| Income from operations | $ 8,358 | $ 12,367 | (32) % | ||
| Operating margin | 29 % | 43 % | |||
| Provision for income taxes | $ 1,499 | $ 2,119 | (29) % | ||
| Effective tax rate | 18 % | 17 % | |||
| Net income | $ 6,687 | $ 10,394 | (36) % | ||
| Diluted earnings per share (EPS) | $ 2.46 | $ 3.61 | (32) % |
Meta Second Quarter 2022 Operational and Other Financial Highlights
- Family daily active people (DAP) – DAP was 2.88 billion on average for June 2022, an increase of 4% year-over-year.
- Family monthly active people (MAP) – MAP was 3.65 billion as of June 30, 2022, an increase of 4% year-over-year.
- Facebook daily active users (DAUs) – DAUs were 1.97 billion on average for June 2022, an increase of 3% year-over-year.
- Facebook monthly active users (MAUs) – MAUs were 2.93 billion as of June 30, 2022, an increase of 1% year-over-year.
- Ad impressions and price per ad – In the second quarter of 2022, ad impressions delivered across our Family of Apps increased by 15% year-over-year and the average price per ad decreased by 14% year-over-year.
- Capital expenditures – Capital expenditures, including principal payments on finance leases, were $7.75 billion for the second quarter of 2022.
- Share repurchases – We repurchased $5.08 billion of our Class A common stock in the second quarter of 2022. As of June 30, 2022, we had $24.32 billion available and authorized for repurchases.
- Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $40.49 billion as of June 30, 2022.
- Headcount – Headcount was 83,553 as of June 30, 2022, an increase of 32% year-over-year.
CFO Outlook Commentary
We expect third quarter 2022 total revenue to be in the range of $26-28.5 billion. This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty. We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue. Our guidance assumes foreign currency will be an approximately 6% headwind to year-over-year total revenue growth in the third quarter, based on current exchange rates.
In addition, as noted on previous calls, we continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations.
We expect 2022 total expenses to be in the range of $85-88 billion, lowered from our prior outlook of $87-92 billion. We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities.
We expect 2022 capital expenditures, including principal payments on finance leases, to be in the range of $30-34 billion, narrowed from our prior range of $29-34 billion.
Absent any changes to U.S. tax law, we expect our full-year 2022 tax rate to be above the second quarter rate and in the high teens.
Chief Financial Officer Transition and Chief Strategy Officer Appointment
Effective November 1, 2022, current Chief Financial Officer David Wehner will take on a new role as Meta’s first Chief Strategy Officer, where he will oversee the company’s strategy and corporate development. Susan Li, Meta’s current Vice President of Finance, will be promoted and serve as Meta’s Chief Financial Officer.
Forward-Looking Statements
This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of the ongoing COVID-19 pandemic and geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy and regulatory concerns; risks associated with acquisitions; security breaches; and our ability to manage our scale and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption “Risk Factors” in our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2022, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. In addition, please note that the date of this press release is July 27, 2022, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of Meta’s financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. Meta compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.
We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.
We exclude the following items from our non-GAAP financial measures:
Foreign exchange effect on revenue. Meta translated revenue for the three and six months ended June 30, 2022 using the prior year’s monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.
Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.
For more information on our Meta non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Reconciliation of GAAP to Non-GAAP Results” table in this press release.
| META PLATFORMS, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
| (In millions, except per share amounts) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||
| Revenue | $ 28,822 | $ 29,077 | $ 56,729 | $ 55,248 | |||||
| Costs and expenses: | |||||||||
| Cost of revenue | 5,192 | 5,399 | 11,197 | 10,530 | |||||
| Research and development | 8,690 | 6,096 | 16,397 | 11,293 | |||||
| Marketing and sales | 3,595 | 3,259 | 6,907 | 6,102 | |||||
| General and administrative | 2,987 | 1,956 | 5,347 | 3,578 | |||||
| Total costs and expenses | 20,464 | 16,710 | 39,848 | 31,503 | |||||
| Income from operations | 8,358 | 12,367 | 16,881 | 23,745 | |||||
| Interest and other income (expense), net | (172) | 146 | 213 | 271 | |||||
| Income before provision for income taxes | 8,186 | 12,513 | 17,094 | 24,016 | |||||
| Provision for income taxes | 1,499 | 2,119 | 2,942 | 4,124 | |||||
| Net income | $ 6,687 | $ 10,394 | $ 14,152 | $ 19,892 | |||||
| Earnings per share attributable to Class A and Class B common stockholders: | |||||||||
| Basic | $ 2.47 | $ 3.67 | $ 5.21 | $ 7.00 | |||||
| Diluted | $ 2.46 | $ 3.61 | $ 5.19 | $ 6.90 | |||||
| Weighted-average shares used to compute earnings per share attributable to | |||||||||
| Class A and Class B common stockholders: | |||||||||
| Basic | 2,704 | 2,834 | 2,714 | 2,841 | |||||
| Diluted | 2,713 | 2,877 | 2,729 | 2,881 | |||||
| Share-based compensation expense included in costs | |||||||||
| and expenses: | |||||||||
| Cost of revenue | $ 213 | $ 163 | $ 373 | $ 281 | |||||
| Research and development | 2,606 | 1,967 | 4,547 | 3,376 | |||||
| Marketing and sales | 289 | 239 | 506 | 413 | |||||
| General and administrative | 243 | 179 | 424 | 309 | |||||
| Total share-based compensation expense | $ 3,351 | $ 2,548 | $ 5,850 | $ 4,379 |
| META PLATFORMS, INC. | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| (In millions) | ||||
| (Unaudited) | ||||
| June 30, 2022 | December 31, 2021 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ 12,681 | $ 16,601 | ||
| Marketable securities | 27,808 | 31,397 | ||
| Accounts receivable, net | 11,525 | 14,039 | ||
| Prepaid expenses and other current assets | 3,973 | 4,629 | ||
| Total current assets | 55,987 | 66,666 | ||
| Non-marketable equity securities | 6,536 | 6,775 | ||
| Property and equipment, net | 67,588 | 57,809 | ||
| Operating lease right-of-use assets | 14,130 | 12,155 | ||
| Intangible assets, net | 965 | 634 | ||
| Goodwill | 20,229 | 19,197 | ||
| Other assets | 4,344 | 2,751 | ||
| Total assets | $ 169,779 | $ 165,987 | ||
| Liabilities and stockholders’ equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ 4,008 | $ 4,083 | ||
| Partners payable | 982 | 1,052 | ||
| Operating lease liabilities, current | 1,275 | 1,127 | ||
| Accrued expenses and other current liabilities | 15,420 | 14,312 | ||
| Deferred revenue and deposits | 532 | 561 | ||
| Total current liabilities | 22,217 | 21,135 | ||
| Operating lease liabilities, non-current | 14,792 | 12,746 | ||
| Other liabilities | 7,003 | 7,227 | ||
| Total liabilities | 44,012 | 41,108 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Common stock and additional paid-in capital | 59,929 | 55,811 | ||
| Accumulated other comprehensive loss | (3,411) | (693) | ||
| Retained earnings | 69,249 | 69,761 | ||
| Total stockholders’ equity | 125,767 | 124,879 | ||
| Total liabilities and stockholders’ equity | $ 169,779 | $ 165,987 |
| META PLATFORMS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Cash flows from operating activities | ||||||||
| Net income | $ 6,687 | $ 10,394 | $ 14,152 | $ 19,892 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 1,979 | 1,985 | 4,135 | 3,958 | ||||
| Share-based compensation | 3,351 | 2,548 | 5,850 | 4,379 | ||||
| Deferred income taxes | (453) | 229 | (1,016) | 647 | ||||
| Other | 189 | (21) | (33) | (88) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (522) | (1,366) | 2,035 | (517) | ||||
| Prepaid expenses and other current assets | (435) | (1,852) | 138 | (2,313) | ||||
| Other assets | (25) | (185) | (132) | (195) | ||||
| Accounts payable | 237 | 116 | (645) | (134) | ||||
| Partners payable | 73 | (61) | (33) | (133) | ||||
| Accrued expenses and other current liabilities | 1,180 | 1,482 | 1,943 | (200) | ||||
| Deferred revenue and deposits | 24 | 3 | (28) | 9 | ||||
| Other liabilities | (88) | (26) | (94) | 184 | ||||
| Net cash provided by operating activities | 12,197 | 13,246 | 26,272 | 25,489 | ||||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (7,572) | (4,641) | (13,013) | (8,944) | ||||
| Proceeds relating to property and equipment | 44 | 29 | 170 | 60 | ||||
| Purchases of marketable debt securities | (2,220) | (10,297) | (6,288) | (16,528) | ||||
| Sales of marketable debt securities | 2,648 | 4,687 | 7,713 | 6,337 | ||||
| Maturities of marketable debt securities | 511 | 2,347 | 913 | 6,327 | ||||
| Acquisitions of businesses and intangible assets | (363) | (259) | (1,216) | (259) | ||||
| Other investing activities | (7) | (61) | (17) | (62) | ||||
| Net cash used in investing activities | (6,959) | (8,195) | (11,738) | (13,069) | ||||
| Cash flows from financing activities | ||||||||
| Taxes paid related to net share settlement of equity awards | (1,002) | (1,354) | (1,927) | (2,432) | ||||
| Repurchases of Class A common stock | (5,233) | (7,079) | (14,739) | (11,018) | ||||
| Principal payments on finance leases | (219) | (123) | (452) | (274) | ||||
| Net change in overdraft in cash pooling entities | (79) | 53 | (59) | 3 | ||||
| Other financing activities | (30) | (45) | (46) | (13) | ||||
| Net cash used in financing activities | (6,563) | (8,548) | (17,223) | (13,734) | ||||
| Effect of exchange rate changes on cash, cash equivalents, and | (550) | 117 | (698) | (129) | ||||
| restricted cash | ||||||||
| Net decrease in cash, cash equivalents, and restricted cash | (1,875) | (3,380) | (3,387) | (1,443) | ||||
| Cash, cash equivalents, and restricted cash at beginning of the period | 15,353 | 19,891 | 16,865 | 17,954 | ||||
| Cash, cash equivalents, and restricted cash at end of the period | $ 13,478 | $ 16,511 | $ 13,478 | $ 16,511 | ||||
| Reconciliation of cash, cash equivalents, and restricted cash to | ||||||||
| the condensed consolidated balance sheets | ||||||||
| Cash and cash equivalents | $ 12,681 | $ 16,186 | $ 12,681 | $ 16,186 | ||||
| Restricted cash, included in prepaid expenses and other current | 228 | 201 | 228 | 201 | ||||
| assets | ||||||||
| Restricted cash, included in other assets | 569 | 124 | 569 | 124 | ||||
| Total cash, cash equivalents, and restricted cash | $ 13,478 | $ 16,511 | $ 13,478 | $ 16,511 |
| META PLATFORMS, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Supplemental cash flow data | ||||||||
| Cash paid for income taxes, net | $ 2,139 | $ 3,387 | $ 2,641 | $ 6,294 | ||||
| Non-cash investing and financing activities: | ||||||||
| Property and equipment in accounts payable and accrued | $ 4,543 | $ 2,249 | $ 4,543 | $ 2,249 | ||||
| expenses and other current liabilities | ||||||||
| Settlement of convertible notes with marketable equity | $ 131 | $ — | $ 131 | $ — | ||||
| securities | ||||||||
| Other current assets through financing arrangement in accrued | $ 214 | $ 381 | $ 214 | $ 381 | ||||
| expenses and other current liabilities | ||||||||
| Repurchases of Class A common stock in accrued expenses and | $ 70 | $ 310 | $ 70 | $ 310 | ||||
| other current liabilities |
Segment Results
We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual reality related consumer hardware, software, and content.
The following table presents our segment information of revenue and income (loss) from operations. For comparative purposes, amounts in the prior period have been recast:
| Segment Information | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenue: | ||||||||
| Advertising | $ 28,152 | $ 28,580 | $ 55,150 | $ 54,018 | ||||
| Other revenue | 218 | 192 | 433 | 391 | ||||
| Family of Apps | 28,370 | 28,772 | 55,583 | 54,409 | ||||
| Reality Labs | 452 | 305 | 1,146 | 839 | ||||
| Total revenue | $ 28,822 | $ 29,077 | $ 56,729 | $ 55,248 | ||||
| Income (loss) from operations: | ||||||||
| Family of Apps | $ 11,164 | $ 14,799 | $ 22,647 | $ 28,004 | ||||
| Reality Labs | (2,806) | (2,432) | (5,766) | (4,259) | ||||
| Total income from operations | $ 8,358 | $ 12,367 | $ 16,881 | $ 23,745 |
| Reconciliation of GAAP to Non-GAAP Results | |||||||
| (In millions, except percentages) | |||||||
| (Unaudited) | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| 2022 | 2021 | 2022 | 2021 | ||||
| GAAP revenue | $ 28,822 | $ 29,077 | $ 56,729 | $ 55,248 | |||
| Foreign exchange effect on 2022 revenue using 2021 rates | 1,263 | 2,156 | |||||
| Revenue excluding foreign exchange effect | $ 30,085 | $ 58,885 | |||||
| GAAP revenue year-over-year change % | (1) % | 3 % | |||||
| Revenue excluding foreign exchange effect year-over-year change % | 3 % | 7 % | |||||
| GAAP advertising revenue | $ 28,152 | $ 28,580 | $ 55,150 | $ 54,018 | |||
| Foreign exchange effect on 2022 advertising revenue using 2021 | 1,255 | 2,143 | |||||
| rates | |||||||
| Advertising revenue excluding foreign exchange effect | $ 29,407 | $ 57,293 | |||||
| GAAP advertising revenue year-over-year change % | (1) % | 2 % | |||||
| Advertising revenue excluding foreign exchange effect year-over- | 3 % | 6 % | |||||
| year change % | |||||||
| Net cash provided by operating activities | $ 12,197 | $ 13,246 | $ 26,272 | $ 25,489 | |||
| Purchases of property and equipment, net | (7,528) | (4,612) | (12,843) | (8,884) | |||
| Principal payments on finance leases | (219) | (123) | (452) | (274) | |||
| Free cash flow | $ 4,450 | $ 8,511 | $ 12,977 | $ 16,331 |
SOURCE: Meta
