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Facebook (FB) Q4 2021 earnings results misses EPS expectations

Facebook has reported their first earnings release since they pitched everyone on being a metaverse company. How did the smoke and mirrors play out? Check out all the Q4 2021 results here.

Asif Khan

February 2, 2022 1:10 PM

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Facebook has rebranded itself to Meta, but it appears that their earnings results are still bound by reality. The company just reported $3.67/share EPS missing Wall Street expectations of $3.76/share. The company also reported $33.671 billion in total revenue, coming in slightly above expectations. Additionally, the company reported Daily Active Users (DAUS) of 1.93 billion, missing Wall Street expectations of 1.95 billion DAUs. It appears that the market is currently focused on the EPS and DAUs miss as the stock is down over $60/share right now in after-hours trading.

Here are some highlights and important data points from Facebook's Q4 2021 earnings release:

Fourth Quarter and Full Year 2021 Operational and Other Financial Highlights

• Family daily active people (DAP) – DAP was 2.82 billion on average for December 2021, an increase of 8% year-over-year.
• Family monthly active people (MAP) – MAP was 3.59 billion as of December 31, 2021, an increase of 9% year-over-year.
• Facebook daily active users (DAUs) – DAUs were 1.93 billion on average for December 2021, an increase of 5% year-over-year.
• Facebook monthly active users (MAUs) – MAUs were 2.91 billion as of December 31, 2021, an increase of 4% year-over-year.
• Ad impressions and price per ad – In the fourth quarter of 2021, ad impressions delivered across our Family of Apps increased by 13% year-over-year and the average price per ad increased by 6% year-over-year. For the full year 2021, ad impressions increased by 10% year-over-year and the average price per ad increased by 24% year-over-year.
• Capital expenditures – Capital expenditures, including principal payments on finance leases, were $5.54 billion and $19.24 billion for the fourth quarter and full year 2021, respectively.
• Share repurchases – We repurchased $19.18 billion and $44.81 billion of our Class A common stock in the fourth quarter and full year 2021, respectively. As of December 31, 2021, we had $38.79 billion available and authorized for repurchases.
• Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $48.0 billion as of December 31, 2021.
• Headcount – Headcount was 71,970 as of December 31, 2021, an increase of 23% year-over-year.

CFO Outlook Commentary

We expect first quarter 2022 total revenue to be in the range of $27-29 billion, which represents 3-11% year-over-year growth. We expect our year-over-year growth in the first quarter to be impacted by headwinds to both impression and price growth.

• On the impressions side, we expect continued headwinds from both increased competition for people's time and a shift of engagement within our apps towards video surfaces like Reels, which monetize at lower rates than Feed and Stories.
• On the pricing side, we expect growth to be negatively impacted by a few factors:
  • First, we will lap a period in which Apple's iOS changes were not in effect and we anticipate modestly increasing ad targeting and measurement headwinds from platform and regulatory changes.
  • Second, we will lap a period of strong demand in the prior year and we're hearing from advertisers that macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets.
  • Finally, based on current exchange rates, we expect foreign currency to be a headwind to year-over-year growth.

Ticker Symbol Change to META

Meta's Class A common stock is expected to begin trading on NASDAQ under the ticker symbol 'META' in the first half of 2022. This will replace the current ticker symbol 'FB,' which has been used since the company's initial public offering in 2012, and more details on exact timing will be forthcoming. No action is required by our stockholders with respect to the ticker symbol change and it does not affect the rights of our stockholders. Our Class A common stock will continue to be listed on NASDAQ and the CUSIP number will remain unchanged.

If today's earnings release is any indication, Facebook's pivot to the metaverse is costing them on the bottom line. The new Facebook Reality Labs segment brought in a quarterly record of $877 million, which would be very impressive if you ignore the fact that those sales translated into an operating loss of $3.3 billion for the new reporting division. Making matters even worse for Facebook is that their core advertising business is suffering. The CFO pointed to inflation and Apple's iOS cross-app tracking as two headwinds for the company's core business. If that wasn't enough bad news, it appears that people might be using their family of apps less than Wall Street had hoped. Only 1.93 billion DAUs being reported during the quarter is a miss, and highlights the tough boat Facebook finds itself in after years of tremendous growth.

Shacknews is livestreaming the FB Q4 2021 earnings call on our Twitch channel, so head over there to hear the executives at Facebook try to spin this turd of a quarter into something more palatable for investors who just got slammed in afterhours trading.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, and his company Virtue LLC had the following positions:

Short Facebook via FB shares (hedged with out-of-the-money call options)

Short Facebook via FB put options

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.