Meta (Facebook) Q4 2021 Earnings Summary: User Growth and Revenue Insights

Meta's Q4 earnings revealed a mixed performance, with revenue surpassing expectations while earnings per share fell short.

Highlights

• Monthly active users (MAUs) reached 2.9 billion, aligning with analyst predictions.
• Meta measures its global active user base through MAUs, which drives its advertising revenue across platforms.
• Inflation and supply chain challenges are affecting advertisers' budgets, impacting revenue growth.

Source: Analyst consensus from Visible Alpha

Financial Performance Overview

Rebranded as Meta Platforms, Inc. in late 2021, the company reported Q4 earnings on February 2 with earnings per share dropping 5.4% year-over-year, missing analyst forecasts. However, revenue rose 19.9% year-over-year, exceeding expectations. The Facebook platform maintained its user base as anticipated.

Stock Market Reaction

Meta's shares plunged up to 25% in after-hours trading following the earnings announcement and remained down by nearly 24% the next morning. Investor concerns centered on the decline in daily active users for the first time, losing approximately 500,000 daily users in Q4 2021, signaling growing competition from platforms like TikTok and YouTube. Additionally, Meta's Q1 revenue forecast of $27-$29 billion fell short of the $30.2 billion expected by analysts.

User Base Insights

Meta's MAUs grew by 4% year-over-year to just over 2.9 billion. This metric includes users who accessed Facebook, Messenger, or related apps within a 30-day period. A larger user base enhances the platform’s appeal to advertisers and fuels network effects, attracting more users through social connectivity.

New Reporting Segments

Q4 marked the first reporting period under Meta's new segment structure: Family of Apps (FoA), covering Facebook, Instagram, Messenger, WhatsApp, and other services; and Reality Labs (RL), focusing on augmented and virtual reality hardware, software, and content. This shift underscores Meta's strategic emphasis on building the metaverse through immersive technologies.

Future Outlook

Meta projects Q1 2022 revenue between $27 billion and $29 billion, indicating 3% to 11% year-over-year growth amid challenges such as increased competition for user attention, evolving user engagement patterns, regulatory changes, inflationary pressures, and supply chain disruptions affecting advertiser spending.

CEO Commentary

CEO Mark Zuckerberg highlighted rapid growth in Reels, Meta's TikTok competitor, while acknowledging slow monetization and urging investor patience. He emphasized the long-term potential for significant engagement growth and Meta's commitment to aggressively expanding Reels despite short-term growth trade-offs.

Meta's next earnings report for Q1 2022 is anticipated on April 26, 2022.

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