1/18 $META 2Q'22
“…we seem to have entered an economic downturn that will have a broad impact on the digital advertising business. And it's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago.”
“…we seem to have entered an economic downturn that will have a broad impact on the digital advertising business. And it's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago.”
2/18 Users
While Meta globally had +8 Mn DAU QoQ, MAU was flat QoQ (as guided) which was driven by Europe (-11 Mn MAU QoQ) because of the loss of Russian users.
While Meta globally had +8 Mn DAU QoQ, MAU was flat QoQ (as guided) which was driven by Europe (-11 Mn MAU QoQ) because of the loss of Russian users.
3/18 DAU/MAU improved across the regions QoQ, so better engagement.
4/18 Revenue
Ad revenue growth continues to be anemic in North America and Europe.
# of ad impressions +15% whereas avg. price per ad -14%
Overall revenue declined 1% YoY, but +3% FX neutral
Ad revenue growth continues to be anemic in North America and Europe.
# of ad impressions +15% whereas avg. price per ad -14%
Overall revenue declined 1% YoY, but +3% FX neutral
5/18 Segment Reporting
FOA margins continue to slide from mid-50s in 4Q'20 to high 30s in 2Q'22. RL remains a money losing behemoth (and it could have been worse)!
FOA margins continue to slide from mid-50s in 4Q'20 to high 30s in 2Q'22. RL remains a money losing behemoth (and it could have been worse)!
6/18 Buyback
Meta repurchased $5 Bn shares, lowest in the last 4 quarters. While it's higher than FCF they generated, buyback as % of FCF was lower than last 3 quarters.
As much as I hate looking at the scaling back of buybacks after ~60% drawdown, I sympathize.
Meta repurchased $5 Bn shares, lowest in the last 4 quarters. While it's higher than FCF they generated, buyback as % of FCF was lower than last 3 quarters.
As much as I hate looking at the scaling back of buybacks after ~60% drawdown, I sympathize.
7/18 Meta's business is in tough spot. The stock will work with or without the buybacks if they can turn around FOA business (and vice versa). Dividend or buyback yield, unfortunately, cannot save shareholders.
8/18 Expense
Despite the planned slowdown in hiring, headcount growth will be substantial YoY next few quarters but will decline over time.
“Now this is a period that demands more intensity, and I expect us to get more done with fewer resources.”
Despite the planned slowdown in hiring, headcount growth will be substantial YoY next few quarters but will decline over time.
“Now this is a period that demands more intensity, and I expect us to get more done with fewer resources.”
9/18 Expense guide is predictably going downward.
10/18 Zuck repeatedly called out the significance of AI in the call.
“…there are 2 major technological waves that we're riding in our business. The first wave of driving our business today is AI, and then the second longer-term wave is the emergence of the metaverse.”
“…there are 2 major technological waves that we're riding in our business. The first wave of driving our business today is AI, and then the second longer-term wave is the emergence of the metaverse.”
11/18 Reels
Lots of interesting data and quotes on Reels.
Lots of interesting data and quotes on Reels.
12/18 Click to messaging ads
It is multibillion dollar business growing double digit; it’s the fastest ad format business for Meta. 40% advertisers already use this format.
It is multibillion dollar business growing double digit; it’s the fastest ad format business for Meta. 40% advertisers already use this format.
13/18 Transition
This was Sheryl’s last call, but she'll sit at Meta's board. Dave Wehner is taking a new role within Meta: Chief Strategy Officer. New CFO is Susan Li who was VP of Finance at Meta.
This was Sheryl’s last call, but she'll sit at Meta's board. Dave Wehner is taking a new role within Meta: Chief Strategy Officer. New CFO is Susan Li who was VP of Finance at Meta.
14/18 Outlook
Revenue guide is $26-28.5 Bn (mid-point is -6% YoY; since FX headwind is assumed to be 6%, guide is essentially flat). Capex $30-34 Bn (prior $29-34 Bn)
Revenue guide is $26-28.5 Bn (mid-point is -6% YoY; since FX headwind is assumed to be 6%, guide is essentially flat). Capex $30-34 Bn (prior $29-34 Bn)
15/18 To me, it’s a very disappointing guide given Q3 was supposed to be easy comp as we are lapping ATT next quarter. Meta mostly blamed macro and resultant softness in advertising market for this. Stock probably would be down lot more if it were already not in the gutter.
16/18 So what is Meta's competitive advantage?
“…culturally, we focus on moving and learning faster than everyone else. And I think that those are sustainable advantages.”
“…culturally, we focus on moving and learning faster than everyone else. And I think that those are sustainable advantages.”
17/18 As a long-term shareholder, I do think Meta left a lot to be desired in the last few quarters in terms of "moving and learning faster than everyone else".
I certainly hope they'll operate with much more intensity in the next few quarters.
I certainly hope they'll operate with much more intensity in the next few quarters.
18/18 I will cover $AMZN tomorrow. Sign up here to receive in your inbox for free: mbi-deepdives.com
Loading suggestions...