7/26/2023: Meta Q2 Earnings Beat Expectations
Meta reports Q2 2023 earnings after market close today. Revenue was $32B vs. $31.12 expected. EPS was $2.98 vs. $2.91 expected. DAU was 2.06B vs. 2.04B expected. MAU was 3.03B vs. 3B expected. ARPU was $10.63 vs. $10.22 expected. It was a solid beat and META 0.00 stock went up 6% after the earnings release.
Metaverse continued to hemorrhage cash and lost $3.74B in Q2 vs. $2.81B a year ago. In the earnings release, the company said they expect Reality Labs’ operating losses to increase meaningfully year-over-year due to ongoing product development efforts in augmented reality/virtual reality and investments to further scale the ecosystem. It appears that Meta is going to lose $15B+ this year for the Metaverse. Again, I am skeptical about the long term ROI but we will know if the investment makes sense in five years.
It’s also worth noting that ad impressions increased by 34% YoY while the CPM decreased 16% YoY. A year ago, the ad impressions growth was 15% and the CPM decline was 14%. In other words, there is a very aggressive expansion of ad impressions (probably from WhatsApp and Messenger Ads) YoY. I wonder how long Meta could keep expanding the ad impressions to maintain their revenue growth. 34% is a lot.
As predicted, like Google, Meta’s ad revenue growth accelerated from Q1 to Q2. It appears that the Google and Facebook ad duopoly is even stronger after the Apple privacy change while small players suffer. Snap reported YoY revenue decline yesterday and Twitter has lost 50+% of its ad revenue YoY. I wonder how Tik Tok’s revenue is doing. I also wonder how much of the small players’ decline is from YouTube and Meta flooding cheap ad inventories in the market and a more muted demand on advertising from marketers.