Meta Platforms (Facebook) Q2 FY2022 Earnings Preview: Key Insights to Watch

Focus on Meta’s Monthly Active People (MAP)

Important Highlights

• Analysts forecast adjusted EPS of $3.30, down from $4.32 in Q2 FY2021.
• Monthly active people (MAP) expected to grow year-over-year (YOY), but at the slowest rate in over three years.
• Revenue anticipated to decline for the first time in at least three years.

Meta Platforms Inc. (META), widely recognized for its Facebook brand and social networking services, has experienced a notable slowdown in its core social media growth recently. Amid mounting regulatory pressures, Meta is pivoting with innovative strategies to enhance user engagement. Notably, the company introduced a feature allowing users to create up to five profiles per Facebook account to encourage more sharing and content creation. Additionally, Meta is rolling out new monetization tools on Facebook and Instagram, empowering creators to earn revenue directly and showcase non-fungible tokens (NFTs).

Investors will closely examine how these initiatives impact Meta’s performance as the company reports its Q2 FY2022 earnings on July 27, 2022. Experts anticipate a significant decline in adjusted earnings per share (EPS) and the first YOY revenue drop in several years.

A critical metric under scrutiny is Meta’s monthly active people (MAP), which tracks the user base across all its platforms. While Meta is increasingly focusing on the metaverse, it remains primarily a social networking company operating Facebook, Instagram, Messenger, and WhatsApp. For Q2 FY2022, analysts expect MAP growth to be the slowest in at least three and a half years.

Meta’s stock has notably underperformed over the past year. After trading near the S&P 500 from July to September 2021, shares declined and moved sideways until February 2022. Following the Q4 FY2021 earnings announcement, the stock plunged and has struggled to recover. As of July 24, Meta’s one-year trailing total return stands at -51.8%, significantly lagging behind the S&P 500’s -9.3% return.

Meta (Facebook) Earnings Performance Overview

During the pandemic years of 2020 and 2021, Meta delivered strong adjusted EPS growth as global users increased social media usage dramatically. In FY2020, adjusted EPS growth surged from 13.2% YOY in Q2 to 46.0% in Q4. In FY2021, adjusted EPS nearly doubled in Q2 compared to the prior year. However, growth momentum has sharply decelerated since then. Adjusted EPS growth slowed to 33.0% in Q3 FY2021 and further to 3.5% in Q4. In Q1 FY2022, Meta reported its first quarterly adjusted EPS decline since FY2019, falling 11.2%. Analysts now expect a 23.6% YOY drop in Q2 adjusted EPS.

Meta’s revenue growth has also softened after years of robust increases. Revenue rose 26.6% in FY2019, 21.6% in FY2020, and accelerated to 37.2% in FY2021. Yet, recent quarters show a slowdown with only 6.6% YOY growth in Q1 FY2022. For Q2, analysts predict revenue will decline, marking the first decrease in over three years.

Source: Visible Alpha

Key Metric to Watch: Monthly Active People (MAP)

Investors will focus on Meta’s MAP, which quantifies the global active user base across Facebook, Instagram, Messenger, and WhatsApp. A MAP user is defined as a registered and logged-in individual who has accessed any of these platforms via mobile app, web, or browser within the last 30 days. This differs from the monthly active user (MAU) metric, which pertains specifically to Facebook and Messenger. Since Meta’s primary revenue stems from advertising sales on its social platforms, a larger user base enhances appeal to advertisers and supports network effects, where user growth attracts even more users.

During the early COVID-19 pandemic, Meta’s MAP growth accelerated as worldwide users increased social media engagement. MAP growth climbed from 10.4% in Q2 FY2019 to 13.8% in Q2 FY2020, peaking at 15.4% in Q1 FY2021. Since then, growth rates have steadily slowed, dropping from 8.8% in Q4 FY2021 to 5.5% in Q1 FY2022. Analysts now forecast a modest 4.6% YOY increase in MAP for Q2 FY2022—the slowest growth in over three years. By then, MAP is expected to reach 3.7 billion users, nearly half the global population.

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