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Meta to Report Second-Quarter Earnings: What to Watch
Key Numbers to Watch
Meta will report its second-quarter earnings after the market closes on Wednesday. Here are the key numbers to watch:
- Earnings: $2.91 per share expected, according to Refinitiv
- Revenue: $31.12 billion expected, according to Refinitiv
- Daily Active Users (DAUs): 2.04 billion expected, according to StreetAccount
- Monthly Active Users (MAUs): 3 billion expected, according to StreetAccount
- Average Revenue per User (ARPU): $10.22 expected, according to StreetAccount
Recovery in the Digital Advertising Market
In the first quarter, Meta reported modest sales growth, putting an end to three consecutive quarterly revenue declines. Investors will be looking for longer-term indications of a recovery in the digital advertising market. Analysts estimate that revenue growth in the second quarter will climb to about 8% and then increase to double digits in the second half of the year.
Challenges Faced by Meta
Meta's online ad business has been impacted by various factors, including the ongoing Ukraine war, a shaky economy, and the lasting effects of Apple's 2021 iOS privacy change. This privacy update made it more difficult for companies like Meta, Snap, and Twitter to track users across the web, which limited the effectiveness of their ad campaigns.
On the other hand, Alphabet reported better-than-expected second-quarter results driven by its cloud computing business. However, Google's ad revenue only rose 3.3% from the previous year. Meta has been working to improve its ad system following the iOS privacy change, and its Advantage+ service is gaining interest among retailers looking to invest more in Meta for more effective online advertising campaigns.
Potential Concerns for Meta
A recent survey from William Blair showed that companies are considering increasing their online marketing budgets for the rest of the year. However, small businesses, which contribute significantly to Meta's overall sales, remain concerned about the economy and are more reluctant to increase digital ad spending compared to larger companies. This could potentially pose a challenge for Meta.
Company executives will discuss the second-quarter results with analysts on a call at 5 p.m. ET.
In conclusion, Meta's second-quarter earnings report holds significant implications for new businesses looking to tap into the digital advertising market. With Meta's expected earnings and revenue numbers, investors and industry analysts will closely analyze the company's performance and assess the overall recovery in the digital advertising market. The projected growth in revenue signals a potential rebound and presents an opportunity for new businesses to leverage advertising platforms on Meta. However, Meta faces challenges due to the ongoing Ukraine war, a shaky economy, and the enduring effects of Apple's iOS privacy change. These factors have impacted Meta's online ad business and reduced the effectiveness of ad campaigns. Despite this, Meta's efforts to enhance its ad system, particularly through the Advantage+ service, offer new businesses a chance to explore more effective online advertising campaigns. Nevertheless, small businesses remain cautious about increasing digital ad spending, citing concerns about the economy. This cautious approach by smaller companies poses a potential obstacle for Meta's growth, as they contribute significantly to the company's overall sales. Therefore, new businesses entering the market should carefully consider the economic landscape and adjust their advertising strategies accordingly. In summary, Meta's second-quarter earnings report highlights both opportunities and challenges for new businesses. By closely monitoring Meta's performance and adapting to market conditions, new businesses can position themselves to take advantage of a potential rebound in the digital advertising market. Article First Published at: https://www.cnbc.com/2023/07/26/meta-to-report-second-quarter-earnings-after-the-bell.html
