Meta Platforms (NASDAQ:META) Beats EPS and Revenue Estimates, Shares Fall

Meta Platforms (NASDAQ:META) reported strong financial results for the third quarter ended September 30, 2024, highlighting significant growth driven by advancements in artificial intelligence (AI) and increased advertising revenue. EPS of $6.03 beat expectations of $5.22, and revenue of $40.589 billion beat expectations of $40.213 billion. However, the stock is currently down 2.8% in after-hours trading as of 4:20PM EST.

"We've had a solid quarter, propelled by progress in AI across our applications and business operations," said Mark Zuckerberg, founder and CEO of Meta. "Our developments in Meta AI, the adoption of Llama, and the introduction of AI-powered glasses are gaining strong momentum."

Q3-2024 Financial Highlights

• Revenue: Meta's revenue reached $40.59 billion, a 19% increase from $34.15 billion in the same quarter last year. On a constant-currency basis, revenue growth was 20% year-over-year.

• Net Income: The company reported a net income of $15.69 billion, up 35% from $11.58 billion in the third quarter of 2023.

• Earnings Per Share (EPS): Diluted EPS came in at $6.03, a 37% rise compared to $4.39 in the previous year.

• Operating Margin: The operating (EBIT) margin improved to 43%, up from 40% in the prior-year quarter.

Operational Highlights

• User Engagement: The average daily active people (DAP) across Meta's family of apps reached 3.29 billion in September 2024, a 5% increase year-over-year.

• Advertising Metrics:

  • Ad Impressions: There was a 7% year-over-year increase in ad impressions delivered across Meta's platforms.

  • Average Price per Ad: The average price per ad increased by 11% compared to the same period last year.

• Expenses: Total costs and expenses were $23.24 billion, representing a 14% increase from $20.40 billion in the third quarter of 2023.

• Capital Expenditures: The company invested $9.20 billion in capital expenditures, including principal payments on finance leases.

• Shareholder Returns:

  • Share Repurchases: Meta repurchased $8.86 billion worth of its Class A common stock.

  • Dividends: The company paid out $1.26 billion in total dividends and dividend equivalents.

• Financial Position:

  • Cash and Marketable Securities: Meta held $70.90 billion in cash, cash equivalents, and marketable securities as of September 30, 2024.

  • Free Cash Flow: The free cash flow for the quarter was $15.52 billion.

  • Long-term Debt: The company's long-term debt stood at $28.82 billion.

• Workforce: Meta had 72,404 employees at the end of the quarter, marking a 9% increase compared to the same period last year.

CFO Outlook

• Q4 Revenue Guidance: The company expects total revenue for the fourth quarter of 2024 to be between $45 billion and $48 billion, assuming foreign currency effects remain neutral.

• Expenses Forecast: For the full year 2024, total expenses are projected to be in the range of $96 billion to $98 billion, slightly adjusted from the previous estimate of $96 billion to $99 billion.

• Reality Labs Outlook: Operating losses for Reality Labs are anticipated to increase significantly year-over-year in 2024 due to ongoing investments in product development and ecosystem expansion.

• CapEx: Capital expenditures (CapEx) for the full year 2024 are expected to be between $38 billion and $40 billion, updated from the prior range of $37 billion to $40 billion. The company also anticipates substantial growth in capital expenditures in 2025.

• Tax Rate: Meta expects its tax rate for the fourth quarter of 2024 to be in the low-teens, barring any changes in the tax environment.

Strategic Initiatives

Meta continues to make strides in artificial intelligence, particularly with the development of Meta AI and the widespread adoption of Llama, its open-source AI language model. The company is also investing in AI-powered devices, such as augmented reality (AR) glasses, as part of its broader strategy to move beyond traditional 2D screens and create more immersive experiences.

Valuation: What Is META’s P/E Ratio Now?

In the last year, META generated $21.23 in adjusted EPS. At the current share price of $575, this gives it a P/E ratio of 27.08x.

You can use our free valuation calculators to help you determine if META stock is undervalued or overvalued.