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Summary of Meta's 2022 3Q earnings results and future prospects
In the company's 3Q (July-September) financial results for the fiscal year ending 2022/12, sales were 27.71 billion dollars, down 4% from the same period last year, and adjusted EPS was 1.64 dollars, down 49% from the same period last year. Although sales slightly exceeded market expectations (27.38 billion dollars), EPS fell well below market expectations (1.89 dollars). Daily active users (DAU) rose 3% to 1.98 billion people in line with market forecasts, and monthly active users (MAU) increased 2% to 2.96 billion people, slightly exceeding market expectations (2.94 billion people). Sales per user (ARPU) fell below market expectations (9.83 dollars) at 9.41 dollars.
On the sales side, sales of the main advertising division declined 4% (27.24 billion dollars). The number of ad views increased 17%, but the average unit price of advertisements decreased 18%. By region, while European advertising revenue fell sharply with the same 16% decrease, the Asia-Pacific region fought well with the same 6% increase. In terms of profit and loss, research and development expenses, SG&A expenses, and marketing expenses all swelled, and operating profit was reduced by almost half.
On the sales side, sales of the main advertising division declined 4% (27.24 billion dollars). The number of ad views increased 17%, but the average unit price of advertisements decreased 18%. By region, while European advertising revenue fell sharply with the same 16% decrease, the Asia-Pacific region fought well with the same 6% increase. In terms of profit and loss, research and development expenses, SG&A expenses, and marketing expenses all swelled, and operating profit was reduced by almost half.
Regarding the sales forecast for the 4Q (October-12), while the company's forecast of 30 billion to 32.5 billion dollars (down 11% to 3% from the same period last year) was clarified, the view was shown that headwinds due to exchange rates would push it down by about 7%. It indicated a policy to keep the number of employees at the end of fiscal year 23 to the level as of the end of the 3Q in '22. Regarding capital expenditure, the total cost in '22 was raised from the previous 85 billion dollars to 88 billion dollars or less, and capital expenditure in '23 was 960 to 101 billion dollars.
The decline in internet advertisements is not limited to the company, and similarly, GAFAM Alphabet is facing the difficult problem of advertisement reduction, but Alphabet is trying to find a way out by expanding its cloud business. In the case of the company, in addition to being dependent on one advertisement revenue, the center of the company's advertisers is composed of relatively small advertisers that acquire customers by relying on targeting and accurate measurement. It is seen that it is difficult to incorporate major advertisers that tend to place emphasis on so-called brand advertisements targeting a wide range of consumers.
Under such circumstances, the virtual space/metaverse relationship, which the company has been focusing on as the next growth field, was not good either. Sales in the same division fell 49% from the same period last year to 290 million dollars, and operating losses increased significantly from ▲2.63 billion dollars in the same period last year to ▲3.67 billion dollars. Costs are also expected to increase significantly in 2023 due to upfront investment in virtual spaces and the metaverse.
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