Meta Platforms (META 2.20%) investors are still recovering from the brutal sell off following last quarter's earnings report. The social media powerhouse missed on some key measures but it was the first-quarter guidance for 2022 that really sent the stock into a downward spiral. How bad was the aftershock? The day after its earnings were released, Meta suffered the single largest loss (measured in market capitalization) in the history of the U.S. stock market.
For the fourth quarter of 2021, Meta saw its earnings per share fall short of estimates, while revenue narrowly beat estimates. Even more concerning, daily active users on the company's core Facebook platform declined sequentially and first-quarter revenue guidance was well below analysts' consensus forecast.
Meta is set to report its next earnings on April 27, and Wall Street will no doubt be watching closely. Ahead of the call, here are three metrics worth checking on.
1. Total revenue
Always an important measuring stick, total revenue illustrates how much business is flowing through the company before costs and other deductions are made. For Meta, and for other major companies, there's a lot of uncertainty surrounding Q1 because of geopolitical tensions. Further effects from Apple (AAPL 1.48%) allowing users to block apps from tracking their usage will also impact Meta's revenue.
Still, if there is a silver lining, both of these negative factors are known and should technically be baked into investors' expectations.
For some context going into the report, Meta had guided for first-quarter revenue to increase 3% to 11% year over year.
2. Full-year expense guidance
Operating expense guidance was a hot topic from Meta's last earnings call. The company revealed that its reality labs segment was burning cash at a rate of about $10 billion annually. With Meta's plan to continue investing aggressively in the metaverse, investors will look to the tech company's full-year operating expense guidance to see if management's previously stated guidance for total 2022 expenses between $90 billion and $95 billion was aggressive or if management keeps this guidance range (or worse, increases it).
Of course, Meta it is a free cash flow machine. So it's not like it can't afford to reinvest money aggressively. But as long as its reality labs segment is only bringing in paltry revenue in relation to its expenses, investors may hope the company can demonstrate more expense discipline across its consolidated business going forward.
3. Reality labs revenue
Finally, the market will be watching for continued growth in revenue from its reality labs segment. This division includes metaverse hardware like Oculus headsets, as well as software and other services included in the augmented and virtual reality market. Without growing revenue rapidly in this division, the market will be increasingly critical of the segment's massive expenses.
Meta's reality labs revenue increased 22% year over year in Q4 and about 100% between the full year of 2020 and the full year of 2021. Investors will likely be hoping that Meta's first-quarter reality labs revenue growth rate will at least be in the range it was in last quarter.
Meta reports its first-quarter results after market close on Wednesday, April 27.