Meta Reports Second Quarter 2022 Results

July 27, 2022

Announces Plans for Chief Financial Officer Transition and Chief Strategy Officer Appointment

MENLO PARK, Calif., July 27, 2022 /PRNewswire/ -- Meta Platforms, Inc. (Nasdaq: META) 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) %

 

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.

Webcast and Conference Call Information

Meta will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck) and Instagram account (instagram.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (402) 977-9140 or +1 (800) 633-8284, conference ID 22019375.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

About Meta

Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.

Contacts

Investors:
Deborah Crawford
[email protected] / investor.fb.com

Press:
Ryan Moore
[email protected] / about.fb.com/news/

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 these 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. We 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. We 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 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

 

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