A month has gone by since the last earnings report for Meta Platforms (META). Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Meta Platforms due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

META Q4 Earnings & Revenues Beat Estimates

Meta Platforms reported fourth-quarter 2024 earnings of $8.02 per share, beating the Zacks Consensus Estimate by 20.06%. The figure surged 50.5% year over year.

Revenues of $48.385 billion beat the Zacks Consensus Estimate by 3.02% and increased 20.6% year over year. At constant currency (cc), revenues soared 21% year over year.

META’s Top-Line Growth Rides on Strong User Base

Revenues from Family of Apps (97.8% of total revenues), which includes Facebook, Instagram, Messenger, WhatsApp and other services, increased 21.2% year over year to $47.302 billion.

Family Daily Active People or DAP, defined as a registered and logged-in user who visited at least one of the Family products (Facebook, Instagram, Messenger and/or WhatsApp) on a given day, was 3.35 billion, up 5% year over year.
  
Geographically, revenues from the United States & Canada, Asia-Pacific, Europe and the Rest of the World (RoW) surged 17.2%, 23.1%, 21.8% and 28% on a year-over-year basis, respectively.

META’s Advertising Revenues Jump Y/Y

Advertising revenues (98.9% of Family of Apps revenues) increased 20.9% year over year to $46.78 billion and accounted for 96.7% of fourth-quarter revenues. At cc, revenues increased 21% year over year.

Advertising revenues from the United States & Canada, Asia-Pacific, Europe and the RoW surged 18%, 23.2%, 21.8% and 26.7% on a year-over-year basis, respectively.

Ad impressions delivered across Family of Apps increased 6% year over year, and the average price per ad jumped 14% in the reported quarter. Impression growth from Asia-Pacific, the RoW, the United States & Canada and Europe was 10%, 3%, 6% and 5%, respectively.

Family of Apps’ other revenues soared 55.4% year over year to $519 million.

Reality Labs’ revenues (2.2% of total revenues) increased 1.1% year over year to $1.08 billion.

META Expands Operating Margin Despite Higher Costs

In the fourth quarter of 2024, total costs and expenses increased 5.4% year over year to $25.02 billion. As a percentage of revenues, total costs and expenses were 51.7%, significantly down from 59.2% in the year-ago quarter. 

In the reported quarter, Family of Apps expenses were $19 billion, accounting for 76% of Meta Platforms’ overall expenses. FoA expenses were up 5% year over year, primarily due to higher infrastructure and headcount-related costs. 

Reality Labs’ expenses were $6 billion, up 6% year over year.

As a percentage of revenues, marketing & sales expenses decreased 130 basis points (bps), while general & administrative expenses fell 410 bps on a year-over-year basis.

Research & development expenses, as a percentage of revenues, were 25.2%, down 100 bps on a year-over-year basis.

Meta Platforms’ employee base was 74,067 at the end of the fourth quarter, up 10% year over year.

Operating income of $23.37 billion jumped 42.6% year over year. The operating margin was 48.3%, expanding significantly from 40.8% in the year-ago quarter.

Family of Apps’ operating income surged 34.7% year over year to $28.332 billion. Reality Labs reported a loss of $4.97 billion compared with the year-ago quarter’s loss of $4.65 billion.

META’s Balance Sheet & Cash Flow Remains Strong

As of Dec. 31, 2024, cash & cash equivalents and marketable securities were $77.82 billion compared with $70.90 billion as of Sept. 30, 2024.

Long-term debt was $28.83 billion as of Dec. 31, 2024, compared with $28.82 billion as of Sept. 30, 2024. 

Capital expenditures were $14.84 billion in the third quarter compared with $9.2 billion in the previous quarter. Free cash flow was $15.52 billion compared with $10.9 billion reported in the previous quarter.

META Offers Positive Guidance

Meta Platforms expects total revenues between $39.5 billion and $41.8 billion for the first quarter of 2025, assuming 8-15% year-over-year growth or 11 at cc. 

For 2025, META anticipates total expenses between $114 billion and $119 billion. 

META expects 2025 capital expenditure to be in the range of $60-$65 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Meta Platforms has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Meta Platforms has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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