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Meta Platforms (FB - Free Report) is set to report fourth-quarter 2021 results on Feb 2.

During the to-be-reported quarter, Facebook rebranded itself as Meta Platforms to focus on Metaverse.

Meta expects total revenues between $31.5 billion and $34 billion for the fourth quarter of 2021.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $33.04 billion, indicating an increase of 17.68% from the year-ago quarter’s reported figure.

The consensus mark for fourth-quarter earnings is pegged at $3.78 per share, unchanged in the past 30 days, suggesting a decline of 2.6% from the figure reported in the year-ago quarter.

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The company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 19.84%.

Let’s see how things are shaping up for the upcoming announcement.

Factors to Consider for Q4 Earnings

Beginning fourth-quarter 2021, Meta will report revenues and income (loss) from operations for the following two segments: Family of Apps (FoA) and Reality Labs (“RL”).

FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual-reality-related consumer hardware, software and content.

Usage of Meta’s services is expected to have remained strong despite increasing regulatory headwinds in the fourth quarter. This is likely to have driven top-line growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter MAUs worldwide is pegged at 2.965 billion, suggesting 6% growth from the figure reported in the year-ago quarter. Moreover, DAUs worldwide is pegged at 1.953 billion, indicating 5.9% growth from the figure reported in the year-ago quarter.

An improved ad-spending environment, as well as accelerated digital shift, is expected to have driven Meta’s ad revenues in the to-be-reported quarter. The company’s top line is likely to have gained from improving market share, driven by a growing user base and continuing innovation in ad products.

According to an e-Marketer report, U.S. digital ad spending is estimated to be more than $200 billion in 2021. Meta, along with Google and Amazon (AMZN - Free Report), will make up 64% of this digital spending.

However, changes made by Apple (AAPL - Free Report) and Google in their mobile operating systems and browser platforms have limited Meta’s ability to track the user-activity trend.

Moreover, stiff competition from Google, Snap (SNAP - Free Report), and Amazon for ad-dollars remains a headwind.

Snap is noteworthy given its rising popularity among Gen Zowing to the immersive experience offered by the platform.

Snap’s flagship platform, Snapchat, reaches 75% of the 13-34-year-old population of the United States, making it a bigger platform than Meta’s Facebook and Instagram among this demography.

These factors are expected to have affected Facebook’s year-over-year advertising revenue growth rate in fourth-quarter 2021.

The consensus mark for this Zacks Rank #3 (Hold) company’s third-quarter advertising revenues is pegged at $32.59 billion, indicating 20% growth from the figure reported in the year-ago quarter.

Markedly, advertising revenues surged 33.2% year over year to $28.28 billion and accounted for 97.5% of third-quarter revenues.

Non-ad revenues are expected to decline significantly in the fourth quarter of 2021. Other revenues had surged 194.8% year over year to $734 million in third-quarter 2021.

The Zacks Consensus Estimate for Other revenues is pegged at $850 million, indicating 4% decline from the figure reported in the year-ago quarter.