Meta Reports Second Quarter 2024 Results
Rhea-AI Summary
Meta Platforms, Inc. (Nasdaq: META) reported strong financial results for Q2 2024, with revenue increasing 22% year-over-year to $39.07 billion. Net income surged 73% to $13.465 billion, while diluted EPS also rose 73% to $5.16. The company's operating margin improved to 38% from 29% in the previous year.
Key operational highlights include:
- Family daily active people (DAP) increased 7% YoY to 3.27 billion
- Ad impressions across Family of Apps grew 10% YoY
- Average price per ad increased 10% YoY
Meta expects Q3 2024 revenue between $38.5-41 billion and maintains its full-year 2024 total expenses outlook of $96-99 billion. The company anticipates significant capital expenditures growth in 2025 to support AI research and product development.
Positive
- Revenue increased 22% year-over-year to $39.07 billion
- Net income surged 73% to $13.465 billion
- Diluted EPS rose 73% to $5.16
- Operating margin improved to 38% from 29% in the previous year
- Family daily active people (DAP) increased 7% YoY to 3.27 billion
- Ad impressions across Family of Apps grew 10% YoY
- Average price per ad increased 10% YoY
Negative
- Reality Labs operating losses expected to increase meaningfully year-over-year
- Anticipation of significant capital expenditures growth in 2025
- Increasing legal and regulatory headwinds in the EU and U.S. could significantly impact business and financial results
Insights
Meta's Q2 2024 results showcase impressive growth across key metrics, signaling robust performance in an evolving digital landscape. Revenue surged
Particularly noteworthy is the
The company's focus on AI, evidenced by Meta AI's growing popularity and the release of an open-source AI model, could be a significant driver of future growth. However, investors should note the projected increase in Reality Labs' operating losses and the anticipated surge in capital expenditures for 2025, primarily to support AI initiatives. While these investments may pressure short-term profitability, they could position Meta favorably in the long run.
The reduction in headcount by
Meta's Q2 2024 results reflect a company at the forefront of AI innovation and digital engagement. The assertion that Meta AI is on track to become the world's most used AI assistant by year-end is a bold claim, indicating Meta's aggressive push in the AI race. This, coupled with the release of the "first frontier-level open source AI model," positions Meta as a significant player in the democratization of AI technology.
The mention of "good traction" with Ray-Ban Meta AI glasses suggests Meta's continued commitment to augmented reality (AR) and wearable tech. This aligns with the company's long-term vision of the metaverse, despite the projected increase in Reality Labs' operating losses.
The
However, the projected significant increase in infrastructure costs for 2025 to support AI research and product development suggests that Meta is preparing for a major push in AI capabilities. This could lead to groundbreaking innovations but also represents a substantial financial commitment that investors should monitor closely.
Meta's Q2 2024 results reveal a company successfully navigating the evolving digital landscape while pushing the boundaries of AI and AR technologies. The
The increase in both ad impressions (
Meta's focus on AI, particularly with Meta AI and the open-source AI model, positions the company at the forefront of a transformative technology. This could potentially open new revenue streams and enhance user engagement across Meta's platforms.
The continued investment in Reality Labs, despite increasing operating losses, shows Meta's long-term commitment to AR and VR technologies. While this may impact short-term profitability, it could secure Meta's position in future digital interactions and experiences.
However, investors should be aware of potential headwinds. The company's caution regarding regulatory challenges in the EU and US could impact future growth and operations. Additionally, the projected increase in capital expenditures for AI development, while potentially beneficial long-term, may pressure margins in the near future.
"We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year," said Mark Zuckerberg, Meta founder and CEO. "We've released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we're driving good growth across our apps."
Second Quarter 2024 Financial Highlights
Three Months Ended June 30, | % Change | ||||
In millions, except percentages and per share amounts | 2024 | 2023 | |||
Revenue | $ 39,071 | $ 31,999 | 22 % | ||
Costs and expenses | 24,224 | 22,607 | 7 % | ||
Income from operations | $ 14,847 | $ 9,392 | 58 % | ||
Operating margin | 38 % | 29 % | |||
Provision for income taxes | $ 1,641 | $ 1,505 | 9 % | ||
Effective tax rate | 11 % | 16 % | |||
Net income | $ 13,465 | $ 7,788 | 73 % | ||
Diluted earnings per share (EPS) | $ 5.16 | $ 2.98 | 73 % | ||
Second Quarter 2024 Operational and Other Financial Highlights
- Family daily active people (DAP) – DAP was 3.27 billion on average for June 2024, an increase of
7% year-over-year. - Ad impressions – Ad impressions delivered across our Family of Apps increased by
10% year-over-year. - Average price per ad – Average price per ad increased by
10% year-over-year. - Revenue – Total revenue was
$39.07 billion 22% year-over-year. Revenue on a constant currency basis would have increased23% year-over-year. - Costs and expenses – Total costs and expenses were
$24.22 billion 7% year-over-year. - Capital expenditures – Capital expenditures, including principal payments on finance leases, were
$8.47 billion - Capital return program – Share repurchases were
$6.32 billion $1.27 billion - Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were
$58.08 billion $10.90 billion - Headcount – Headcount was 70,799 as of June 30, 2024, a decrease of
1% year-over-year.
CFO Outlook Commentary
We expect third quarter 2024 total revenue to be in the range of
We expect full-year 2024 total expenses to be in the range of
While we do not intend to provide any quantitative guidance for 2025 until the fourth quarter call, we expect infrastructure costs will be a significant driver of expense growth next year as we recognize depreciation and operating costs associated with our expanded infrastructure footprint.
We anticipate our full-year 2024 capital expenditures will be in the range of
Absent any changes to our tax landscape, we expect our full-year 2024 tax rate to be in the mid-teens.
In addition, we continue to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the
Webcast and Conference Call Information
Meta will host a conference call to discuss the results at 2:00 p.m. PT / 5:00 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at the Meta Investor Relations website at investor.fb.com, along with the earnings press release, financial tables, and slide presentation.
Following the call, a replay will be available at the same website. Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.
Disclosure Information
Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck), Instagram account (instagram.com/zuck) and Threads profile (threads.net/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
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:
Kenneth Dorell
investor@meta.com / investor.fb.com
Press:
Ryan Moore
press@meta.com / 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 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 artificial intelligence initiatives and 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, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; our ability to manage our scale and geographically-dispersed operations; and market conditions or other factors affecting the payment of dividends. 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 25, 2024, 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, 2024. In addition, please note that the date of this press release is July 31, 2024, 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.
For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in our most recent quarterly or annual report filed with the SEC.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
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.
Our non-GAAP financial measures are adjusted for the following items:
Foreign exchange effect on revenue. We translated revenue for the three and six months ended June 30, 2024 using the prior year's monthly exchange rates for our settlement or billing currencies other than the
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, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 39,071 | $ 31,999 | $ 75,527 | $ 60,645 | |||
Costs and expenses: | |||||||
Cost of revenue | 7,308 | 5,945 | 13,948 | 12,054 | |||
Research and development | 10,537 | 9,344 | 20,515 | 18,725 | |||
Marketing and sales | 2,721 | 3,154 | 5,285 | 6,198 | |||
General and administrative (1) | 3,658 | 4,164 | 7,114 | 7,049 | |||
Total costs and expenses | 24,224 | 22,607 | 46,862 | 44,026 | |||
Income from operations | 14,847 | 9,392 | 28,665 | 16,619 | |||
Interest and other income (expense), net | 259 | (99) | 624 | (19) | |||
Income before provision for income taxes | 15,106 | 9,293 | 29,289 | 16,600 | |||
Provision for income taxes | 1,641 | 1,505 | 3,455 | 3,102 | |||
Net income | $ 13,465 | $ 7,788 | $ 25,834 | $ 13,498 | |||
Earnings per share: | |||||||
Basic | $ 5.31 | $ 3.03 | $ 10.17 | $ 5.24 | |||
Diluted | $ 5.16 | $ 2.98 | $ 9.86 | $ 5.18 | |||
Weighted-average shares used to compute earnings per share: | |||||||
Basic | 2,534 | 2,568 | 2,540 | 2,577 | |||
Diluted | 2,610 | 2,612 | 2,619 | 2,604 | |||
(1) The second quarter 2024 general and administrative expenses include a charge for the recent settlement with the | ||||
META PLATFORMS, INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(In millions) | |||
(Unaudited) | |||
June 30, 2024 | December 31, 2023 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 32,045 | $ 41,862 | |
Marketable securities | 26,035 | 23,541 | |
Accounts receivable, net | 14,505 | 16,169 | |
Prepaid expenses and other current assets | 3,846 | 3,793 | |
Total current assets | 76,431 | 85,365 | |
Non-marketable equity securities | 6,207 | 6,141 | |
Property and equipment, net | 102,959 | 96,587 | |
Operating lease right-of-use assets | 14,058 | 13,294 | |
Goodwill | 20,654 | 20,654 | |
Other assets | 9,929 | 7,582 | |
Total assets | $ 230,238 | $ 229,623 | |
Liabilities and stockholders' equity | |||
Current liabilities: | |||
Accounts payable | $ 3,173 | $ 4,849 | |
Operating lease liabilities, current | 1,917 | 1,623 | |
Accrued expenses and other current liabilities | 21,914 | 25,488 | |
Total current liabilities | 27,004 | 31,960 | |
Operating lease liabilities, non-current | 17,685 | 17,226 | |
Long-term debt | 18,389 | 18,385 | |
Long-term income taxes | 7,897 | 7,514 | |
Other liabilities | 2,500 | 1,370 | |
Total liabilities | 73,475 | 76,455 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock and additional paid-in capital | 78,270 | 73,253 | |
Accumulated other comprehensive loss | (2,695) | (2,155) | |
Retained earnings | 81,188 | 82,070 | |
Total stockholders' equity | 156,763 | 153,168 | |
Total liabilities and stockholders' equity | $ 230,238 | $ 229,623 | |
META PLATFORMS, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Cash flows from operating activities | |||||||
Net income | $ 13,465 | $ 7,788 | $ 25,834 | $ 13,498 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 3,637 | 2,623 | 7,011 | 5,147 | |||
Share-based compensation | 4,616 | 4,060 | 8,178 | 7,111 | |||
Deferred income taxes | (1,643) | (1,137) | (2,098) | (1,757) | |||
Impairment charges for facilities consolidation, net | 41 | 232 | 280 | 1,002 | |||
Other | (6) | 212 | (71) | 204 | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | (1,171) | (1,424) | 1,350 | 1,122 | |||
Prepaid expenses and other current assets | (84) | (54) | 16 | 767 | |||
Other assets | 54 | 37 | (41) | 67 | |||
Accounts payable | 250 | (51) | (862) | (1,155) | |||
Accrued expenses and other current liabilities | (497) | 5,174 | (1,771) | 5,268 | |||
Other liabilities | 708 | (151) | 790 | 33 | |||
Net cash provided by operating activities | 19,370 | 17,309 | 38,616 | 31,307 | |||
Cash flows from investing activities | |||||||
Purchases of property and equipment, net | (8,173) | (6,134) | (14,573) | (12,957) | |||
Purchases of marketable debt securities | (3,289) | (717) | (10,176) | (803) | |||
Sales and maturities of marketable debt securities | 3,233 | 1,816 | 7,858 | 2,351 | |||
Acquisitions of businesses and intangible assets | (57) | (83) | (129) | (527) | |||
Other investing activities | (12) | (85) | (12) | (10) | |||
Net cash used in investing activities | (8,298) | (5,203) | (17,032) | (11,946) | |||
Cash flows from financing activities | |||||||
Taxes paid related to net share settlement of equity awards | (3,208) | (1,692) | (6,370) | (2,701) | |||
Repurchases of Class A common stock | (6,299) | (898) | (21,307) | (10,263) | |||
Dividend payments | (1,266) | — | (2,539) | — | |||
Proceeds from issuance of long-term debt, net | — | 8,455 | — | 8,455 | |||
Principal payments on finance leases | (299) | (220) | (614) | (484) | |||
Other financing activities | (106) | (353) | (115) | (231) | |||
Net cash provided by (used in) financing activities | (11,178) | 5,292 | (30,945) | (5,224) | |||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (152) | (14) | (440) | 71 | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | (258) | 17,384 | (9,801) | 14,208 | |||
Cash, cash equivalents, and restricted cash at beginning of the period | 33,284 | 12,420 | 42,827 | 15,596 | |||
Cash, cash equivalents, and restricted cash at end of the period | $ 33,026 | $ 29,804 | $ 33,026 | $ 29,804 | |||
Reconciliation of cash, cash equivalents, and restricted cash to the | |||||||
Cash and cash equivalents | $ 32,045 | $ 28,785 | $ 32,045 | $ 28,785 | |||
Restricted cash, included in prepaid expenses and other current assets | 100 | 165 | 100 | 165 | |||
Restricted cash, included in other assets | 881 | 854 | 881 | 854 | |||
Total cash, cash equivalents, and restricted cash | $ 33,026 | $ 29,804 | $ 33,026 | $ 29,804 | |||
META PLATFORMS, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Supplemental cash flow data | |||||||
Cash paid for income taxes, net | $ 5,929 | $ 1,102 | $ 6,559 | $ 1,507 | |||
Cash paid for interest, net of amounts capitalized | $ 124 | $ — | $ 245 | $ 182 | |||
Non-cash investing and financing activities: | |||||||
Property and equipment in accounts payable and accrued expenses and other | $ 3,229 | $ 3,845 | $ 3,229 | $ 3,845 | |||
Acquisition of businesses and intangible assets in accrued expenses and | $ 267 | $ 217 | $ 267 | $ 217 | |||
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 our virtual, augmented, and mixed reality related consumer hardware, software, and content.
The following table presents our segment information of revenue and income (loss) from operations:
Segment Information | ||||||||||
(In millions) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2024 | 2023 | 2024 | 2023 | |||||||
Revenue: | ||||||||||
Advertising | $ 38,329 | $ 31,498 | $ 73,965 | $ 59,599 | ||||||
Other revenue | 389 | 225 | 769 | 430 | ||||||
Family of Apps | 38,718 | 31,723 | 74,734 | 60,029 | ||||||
Reality Labs | 353 | 276 | 793 | 616 | ||||||
Total revenue | $ 39,071 | $ 31,999 | $ 75,527 | $ 60,645 | ||||||
Income (loss) from operations: | ||||||||||
Family of Apps | $ 19,335 | $ 13,131 | $ 36,999 | $ 24,351 | ||||||
Reality Labs | (4,488) | (3,739) | (8,334) | (7,732) | ||||||
Total income from operations | $ 14,847 | $ 9,392 | $ 28,665 | $ 16,619 | ||||||
Reconciliation of GAAP to Non-GAAP Results | |||||||
(In millions, except percentages) | |||||||
(Unaudited) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP revenue | $ 39,071 | $ 31,999 | $ 75,527 | $ 60,645 | |||
Foreign exchange effect on 2024 revenue using 2023 rates | 371 | 265 | |||||
Revenue excluding foreign exchange effect | $ 39,442 | $ 75,792 | |||||
GAAP revenue year-over-year change % | 22 % | 25 % | |||||
Revenue excluding foreign exchange effect year-over-year change % | 23 % | 25 % | |||||
GAAP advertising revenue | $ 38,329 | $ 31,498 | $ 73,965 | $ 59,599 | |||
Foreign exchange effect on 2024 advertising revenue using 2023 rates | 367 | 261 | |||||
Advertising revenue excluding foreign exchange effect | $ 38,696 | $ 74,226 | |||||
GAAP advertising revenue year-over-year change % | 22 % | 24 % | |||||
Advertising revenue excluding foreign exchange effect year-over-year | 23 % | 25 % | |||||
Net cash provided by operating activities | $ 19,370 | $ 17,309 | $ 38,616 | $ 31,307 | |||
Purchases of property and equipment, net | (8,173) | (6,134) | (14,573) | (12,957) | |||
Principal payments on finance leases | (299) | (220) | (614) | (484) | |||
Free cash flow | $ 10,898 | $ 10,955 | $ 23,429 | $ 17,866 | |||
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SOURCE Meta
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