Key Points
- Net income of $13.47 billion jumped 73% increase year over year.
- Total revenue for Q2 2024 stood at $39.07 billion, easily topping analysts' consensus guidance.
- The Family of Apps segment drove revenue growth with a 22% year-over-year increase.
Social media and tech giant Meta Platforms (META -1.88%) reported Q2 2024 earnings on Wednesday that showcased substantial growth in key areas. Meta's revenue and earnings both topped analysts' consensus estimates. Net income soared 73% year over year to $13.47 billion.
The quarter reflects overall operational efficiency and robust advertising revenue, but ongoing investments in Reality Labs and increased regulatory costs remain areas of concern.
| Metric | Q2 2024 | Analyst Expectations | Q2 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $39.07 billion | $38.26 billion | $32 billion | 22% |
| Net income | $13.47 billion | N/A | $7.79 billion | 73% |
| Diluted EPS | $5.16 | $4.72 | $2.98 | 73% |
| Operating margin | 38% | N/A | 29% | 31% |
| Family of Apps revenue | $38.72 billion | N/A | $31.72 billion | 22% |
| Reality Labs revenue | $353 million | N/A | $276 million | 28% |
Source: Meta Platforms. Analyst expectations provided by FactSet. YOY = Year over year.
Business Overview
is a global leader in social media and digital connections, operating major platforms like Facebook, Instagram, WhatsApp, and Messenger. collectively form Meta's Family of Apps (FoA) segment, contributing to the bulk of the company's revenue through advertising sales. Meta also operates Reality Labs (RL), focusing on virtual and augmented reality technologies.
Recently, Meta has placed major emphasis on (AI) initiatives and the development of its metaverse products. Key success factors for the company include growth in ad revenue, user engagement on its platforms, and advancements in AI technology. Despite its ambitious ventures, the company faces continued high operational costs, particularly within its Reality Labs sector.
Quarterly Highlights
Advertising revenue for FoA surged to $38.33 billion, a 22% increase year over year, primarily due to a 10% rise in ad impressions and average price per ad.
Reality Labs posted $353 million in revenue, up 28% from 2023's Q2. However, this segment continued to incur losses which totaled $4.49 billion in Q2 (compared to a loss of $3.74 billion in Q2 2023). These ongoing losses are attributed to substantial investments in developing augmented reality and virtual reality technologies.
Operationally, Meta recorded key increases in its daily active people (DAP) metric, averaging 3.27 billion in June (up 7% year over year). The company’s effective tax rate also dropped to 11% from 16% in the previous year, positively impacting the net income margin. Capital expenditures maintained robust at $8.47 billion, reflecting continued investment in AI and data infrastructure.
From a liquidity perspective, Meta's cash, cash equivalents, and marketable securities amounted to $58.1 billion as of June 30, 2024. Free cash flow was reported at $10.9 billion, underlining the company's strong financial footing.
Forward Outlook
, Meta raised its Q3 2024 revenue guidance to $38.5 billion to $41 billion, with a noted 2% headwind from foreign currency impacts. Meta also raised its full-year guidance for total expenses, which are now projected to range between $96 billion and $99 billion. Capital expenditures are estimated at $37 billion to $40 billion, slightly revising the low end of guidance from earlier projections.
Investors should watch for continued growth in ad revenue, developments in AI initiatives, and progress in the metaverse space. It will also be essential to monitor regulatory changes and their potential impact on Meta’s operations.
