Image Source: Pixabay

Meta Platforms (META - Free Report) is set to report its fourth-quarter 2023 results on Feb 1.

The company 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 Zacks Consensus Estimate for fourth-quarter revenues is pegged at $38.93 billion, indicating an increase of 21.02% from the year-ago quarter’s reported figure.

The consensus mark for earnings stands at $4.84 per share, which has increased 0.83% over the past 30 days, suggesting growth of 61.33% from the figure reported in the year-ago quarter.

Meta’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 27.5%.

Meta Platforms, Inc. Price and EPS Surprise

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Let’s see how things have shaped up for the upcoming announcement.

Factors to Note

Meta’s fourth-quarter top line is expected to have benefited from Facebook’s expanding user base (more than 3.049 billion daily active users) and growing adoption of reels. Increased engagement for Meta’s offerings like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver.

Effective usage of AI has been helping the company keep its users engaged. AI-driven feed recommendations have been a key catalyst.

Reels have been a major growth driver for Instagram. The company stated that Reels has driven a more than 40% increase in time spent on Instagram since its launch. It remains focused on growing Reels as part of its overall portfolio of video services, which make up more than half of time spent on Facebook and Instagram.

Higher engagement levels are helping to steady its user growth across all regions, particularly Asia Pacific.

The Zacks Consensus Estimate for Asia Pacific Daily Active Users (DAUs) in the fourth quarter is pegged at 906 million, indicating 6.1% year-over-year growth. The consensus estimate for the Rest of World is expected to have increased 5.8% to 680 million DAUs.

Regarding Monthly Active Users (MAUs), the Zacks Consensus Estimate for Asia Pacific is pegged at 1.361 billion, suggesting 2.9% year-over-year growth. The consensus mark for the Rest of World is expected to have risen 3.7% to 1.361 billion MAUs.

The Zacks Consensus Estimate for Meta’s worldwide DAU is pegged at 2.093 billion, indicating 4.7% growth year over year. The consensus estimate for worldwide MAU is pegged at 3.061 billion, indicating a 3.3% year-over-year increase.

Nevertheless, Meta’s top line is expected to reflect the negative impact of the challenging macroeconomic environment and high inflation that is anticipated to have kept ad spending budgets under pressure. This is likely to have weighed on ad revenues in the to-be-reported quarter.

In the third quarter of 2023, Meta’s ad revenues represented 99.1% of total revenues, which increased 23.5% year over year to $33.64 billion.

The Zacks Consensus Estimate for fourth-quarter 2023 ad revenues is pegged at $37.88 billion, indicating 21.2% year-over-year growth.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is the exact case here.

Meta has an Earnings ESP of +0.51% and currently has a Zacks Rank #2. 

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