Meta Platforms Inc surprised
Wall Street with a profit beat and Facebook returning to user
growth, although Meta forecast a conservative revenue outlook
for the current quarter.

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Its stock rose 19% in after-hours trade on Wednesday.

Meta’s profit soundly beat Wall Street targets at $2.72 per
share, compared with an analyst consensus of $2.56, according to
IBES data from Refinitiv. The earning beats were tempered by
Meta recording its slowest revenue growth in a decade.

Facebook daily active users (DAU), a key metric for
advertisers that indicates activity on the platform, were 1.96
billion, slightly higher that the estimate of 1.95 billion,
according to IBES data from Refinitiv. Monthly active users came
in at 2.94 billion, missing Wall Street estimates by 30 million.

Meta has lost about half of its value since the start of the
year, after a dismal February earnings when it reported adecline in Facebook’s daily active users for the first time and
forecast a gloomy quarter, blaming factors including Apple’sprivacy changes and increased competition from
platforms like ByteDance’s TikTok.

“It’s good news that Meta somehow managed to eke out growth
in DAU. It needed to show some sort of turnaround from last
quarter’s performance,” Insider Intelligence analyst Debra
Williamson said.

“However, growth in monthly active users is slowing quickly.
A few quarters ago it could count on developing markets to keep
the growth engine going but it’s likely that even these
high-growth opportunities are starting to dry up,” she said.

Total revenue, the bulk of which comes from ad sales, rose
7% to $27.91 billion in the first quarter, but missed analysts’
estimates of $28.20 billion, according to IBES data from
Refinitiv.

Net income fell 21% to $7.47 billion in the first quarter,
but beat analysts’ estimates of $7.15 billion, according to IBES
data from Refinitiv.

Meta forecast second-quarter revenue between $28 billion and
$30 billion. Analysts on average were expecting current-quarter
revenue of $30.63 billion. The company said its outlook
reflected factors including the war in Ukraine. It also said it
was monitoring the potential impact of regulatory moves inEurope.

Russia banned Facebook and Instagram in March, finding Meta
guilty of “extremist activity” amid Moscow’s crackdown on social
media during its invasion of Ukraine. Meta’s messaging service
WhatsApp is not affected by the ban. Meta has also barredadvertisers in Russia from creating and running ads anywhere in
the world.

Recent earnings reports from Google parent Alphabet Inc
and Snap Inc have signaled the impact of the
global economic turmoil on digital ads spending, amid rising
inflation and geopolitical uncertainty.

Meta lowered its expected 2022 total expenses to between $87
billion and $92 billion, down from its prior outlook of $90
billion to $95 billion.

Meta saw quarterly revenue of $695 million for its Reality
Labs hardware division, which is home to its augmented and
virtual reality efforts. It reported $3 billion in losses from
operations from these metaverse ambitions.

The company has warned it will take billions of dollars and
multiple years to realise its aims around building themetaverse, a futuristic idea of virtual environments where users
can work, socialise and play.