Will Higher Ad Revenues Aid Meta Platforms (META) Q4 Earnings?

Meta PlatformsMETA fourth-quarter 2023 results, set to be reported on Feb 1, are expected to reflect the benefits of higher advertising revenues.

Meta Platforms' nearest competitor for ad dollars, Alphabet GOOGL, reported strong fourth-quarter 2023 results.

Alphabet division, Google advertising, reported revenues of $65.52 billion, up 11% year over year in fourth-quarter 2023, driven by solid growth in the retail vertical.

Meta Platforms is expected to have benefited from strong demand from advertisers. The Zacks Consensus Estimate for its fourth-quarter advertising revenues is pegged at $37.88 billion, indicating growth of 21.2% year over year.

In the third quarter of 2023, advertising revenues (99.1% of Family of Apps revenues) increased 23.5% year over year to $33.64 billion and accounted for 98.5% of revenues.

Meta Platforms, Inc. Revenue (TTM)

Meta Platforms, Inc. Revenue (TTM)

Meta Platforms, Inc. revenue-ttm | Meta Platforms, Inc. Quote

Meta Platforms’ focus on improving ad ranking and measurement by leveraging AI has been a key catalyst driving advertisers’ return on investment.

The Zacks Consensus Estimate for advertising revenues in Asia-Pacific is pegged at $7.22 billion, indicating growth of 21% in the fourth quarter of 2023.

The consensus mark for advertising revenues in Europe, United States and Canada and the Rest of the World is pegged at $8.82 billion, $17.51 billion and $680 million, indicating 27.8%, 16.7% and 5.8% growth, respectively.

Click here to know how Meta Platforms’ overall fourth-quarter performance is likely to be.

Reels Driving Prospects

The company, which currently carries a Zacks Rank #2 (Buy), is expected to have benefited from Instagram’s growing popularity in international markets, particularly in Asia. Much of it can be attributed to the growing popularity of short-form videos, Reels on Instagram.

Reels have been attracting Gen-Z to the platform amid competition from Snapchat, Twitter and TikTok. AI has helped in improving recommendations, which drove a more than 40% increase in time spent on Instagram.

Threads growth has been noteworthy for Meta Platforms. The company has been focusing on the retention of users, which is expected to have benefited user growth.

To increase revenues, it has been growing video monetization, especially in short-form videos like Reels using AI and machine learning.

Meta Platforms has also shown commitment to prioritizing user safety and well-being through initiatives aimed at enhancing parental supervision, messaging privacy and time management on its platforms. These factors are expected to have driven user base growth in fourth-quarter 2023.

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 or WhatsApp) on a given day, is expected to be 3.17 billion. Family Monthly Active People or MAP is pegged at 4 billion.

What Do the Estimates Say?

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $4.83 per share, up 1.04% over the past 30 days and indicates 61% year-over-year growth.

It expects total revenues between $36.5 billion and $40 billion for the fourth quarter of 2023. Favorable forex is expected to aid year-over-year top-line growth by roughly 2%.

The consensus estimate for fourth-quarter revenues is currently pegged at $38.99 billion, indicating growth of 21.23% from the figure reported in the year-ago quarter.

Upcoming Earnings to Watch For

Meta belongs to the Zacks Internet Software industry. Investors are eagerly waiting for the upcoming earnings of AvidXchange AVDX and BlackLine BL, two other top-ranked stocks in the Zacks Internet Software industry.

AvidXchange and BlackLine currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

While AvidXchange is set to report its quarterly earnings on Feb 28, BlackLine is scheduled to report on Feb 13.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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