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Meta Platforms, Inc. (META) SEC Filing 8-K Material Event for the period ending Wednesday, July 27, 2022

Meta Platforms, Inc.

CIK: 1326801 Ticker: META

Meta Reports Second Quarter 2022 Results
Announces Plans for Chief Financial Officer Transition and Chief Strategy Officer Appointment


MENLO PARK, Calif. – July 27, 2022 – Meta Platforms, Inc. (Nasdaq: META) today reported financial results for the quarter ended June 30, 2022.

"It was good to see positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in AI," said Mark Zuckerberg, Meta founder and CEO. "We're putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services."

Second Quarter 2022 Financial Highlights
Three Months Ended June 30,% Change
In millions, except percentages and per share amounts20222021
Total revenue$28,822 $29,077 (1)%
Total costs and expenses20,464 16,710 22%
Income from operations$8,358 $12,367 (32)%
Operating margin29 %43 %
Provision for income taxes$1,499 $2,119 (29)%
Effective tax rate 18 %17 %
Net income$6,687 $10,394 (36)%
Diluted earnings per share (EPS)$2.46 $3.61 (32)%

Second Quarter 2022 Operational and Other Financial Highlights

Family daily active people (DAP) – DAP was 2.88 billion on average for June 2022, an increase of 4% year-over-year.
Family monthly active people (MAP)
– MAP was 3.65 billion as of June 30, 2022, an increase of 4% year-over-year.
Facebook daily active users (DAUs) – DAUs were 1.97 billion on average for June 2022, an increase of 3% year-over-year.
Facebook monthly active users (MAUs) – MAUs were 2.93 billion as of June 30, 2022, an increase of 1% year-over-year.
Ad impressions and price per ad – In the second quarter of 2022, ad impressions delivered across our Family of Apps increased by 15% year-over-year and the average price per ad decreased by 14% year-over-year.
Capital expenditures – Capital expenditures, including principal payments on finance leases, were $7.75 billion for the second quarter of 2022.
Share repurchases – We repurchased $5.08 billion of our Class A common stock in the second quarter of 2022. As of June 30, 2022, we had $24.32 billion available and authorized for repurchases.
Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $40.49 billion as of June 30, 2022.
Headcount – Headcount was 83,553 as of June 30, 2022, an increase of 32% year-over-year.
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CFO Outlook Commentary

We expect third quarter 2022 total revenue to be in the range of $26-28.5 billion. This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty. We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue. Our guidance assumes foreign currency will be an approximately 6% headwind to year-over-year total revenue growth in the third quarter, based on current exchange rates.

In addition, as noted on previous calls, we continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations.

We expect 2022 total expenses to be in the range of $85-88 billion, lowered from our prior outlook of $87-92 billion. We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities.

We expect 2022 capital expenditures, including principal payments on finance leases, to be in the range of $30-34 billion, narrowed from our prior range of $29-34 billion.

Absent any changes to U.S. tax law, we expect our full-year 2022 tax rate to be above the second quarter rate and in the high teens.

Chief Financial Officer Transition and Chief Strategy Officer Appointment

Effective November 1, 2022, current Chief Financial Officer David Wehner will take on a new role as Meta's first Chief Strategy Officer, where he will oversee the company's strategy and corporate development. Susan Li, Meta's current Vice President of Finance, will be promoted and serve as Meta's Chief Financial Officer.
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Webcast and Conference Call Information

Meta will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck) and Instagram account (instagram.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (402) 977-9140 or +1 (800) 633-8284, conference ID 22019375.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

About Meta

Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.

Contacts

Investors:
Deborah Crawford
investor@fb.com / investor.fb.com

Press:
Ryan Moore
press@fb.com / about.fb.com/news/
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Forward-Looking Statements

This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of the ongoing COVID-19 pandemic and geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy and regulatory concerns; risks associated with acquisitions; security breaches; and our ability to manage our scale and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2022, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. In addition, please note that the date of this press release is July 27, 2022, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

We exclude the following items from our non-GAAP financial measures:

Foreign exchange effect on revenue. We translated revenue for the three and six months ended June 30, 2022 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release.
4



META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue$28,822 $29,077 $56,729 $55,248 
Costs and expenses: 
Cost of revenue5,192 5,399 11,197 10,530 
Research and development8,690 6,096 16,397 11,293 
Marketing and sales3,595 3,259 6,907 6,102 
General and administrative2,987 1,956 5,347 3,578 
Total costs and expenses20,464 16,710 39,848 31,503 
Income from operations8,358 12,367 16,881 23,745 
Interest and other income (expense), net(172)146 213 271 
Income before provision for income taxes8,186 12,513 17,094 24,016 
Provision for income taxes1,499 2,119 2,942 4,124 
Net income$6,687 $10,394 $14,152 $19,892 
Earnings per share attributable to Class A and Class B common stockholders:
Basic$2.47 $3.67 $5.21 $7.00 
Diluted$2.46 $3.61 $5.19 $6.90 
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
Basic2,704 2,834 2,714 2,841 
Diluted2,713 2,877 2,729 2,881 
Share-based compensation expense included in costs and expenses:
Cost of revenue$213 $163 $373 $281 
Research and development2,606 1,967 4,547 3,376 
Marketing and sales289 239 506 413 
General and administrative243 179 424 309 
Total share-based compensation expense$3,351 $2,548 $5,850 $4,379 





5



META PLATFORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$12,681 $16,601 
Marketable securities27,808 31,397 
Accounts receivable, net11,525 14,039 
Prepaid expenses and other current assets3,973 4,629 
Total current assets55,987 66,666 
Non-marketable equity securities6,536 6,775 
Property and equipment, net67,588 57,809 
Operating lease right-of-use assets14,130 12,155 
Intangible assets, net965 634 
Goodwill20,229 19,197 
Other assets4,344 2,751 
Total assets$169,779 $165,987 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$4,008 $4,083 
Partners payable982 1,052 
Operating lease liabilities, current1,275 1,127 
Accrued expenses and other current liabilities15,420 14,312 
Deferred revenue and deposits532 561 
Total current liabilities22,217 21,135 
Operating lease liabilities, non-current14,792 12,746 
Other liabilities7,003 7,227 
Total liabilities44,012 41,108 
Commitments and contingencies
Stockholders' equity:
Common stock and additional paid-in capital59,929 55,811 
Accumulated other comprehensive loss(3,411)(693)
Retained earnings69,249 69,761 
Total stockholders' equity125,767 124,879 
Total liabilities and stockholders' equity$169,779 $165,987 


6



META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cash flows from operating activities
Net income$6,687 $10,394 $14,152 $19,892 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization1,979 1,985 4,135 3,958 
Share-based compensation3,351 2,548 5,850 4,379 
Deferred income taxes(453)229 (1,016)647 
Other189 (21)(33)(88)
Changes in assets and liabilities:
Accounts receivable(522)(1,366)2,035 (517)
Prepaid expenses and other current assets(435)(1,852)138 (2,313)
Other assets(25)(185)(132)(195)
Accounts payable237 116 (645)(134)
Partners payable73 (61)(33)(133)
Accrued expenses and other current liabilities1,180 1,482 1,943 (200)
Deferred revenue and deposits24 (28)
Other liabilities(88)(26)(94)184 
Net cash provided by operating activities12,197 13,246 26,272 25,489 
Cash flows from investing activities
Purchases of property and equipment(7,572)(4,641)(13,013)(8,944)
Proceeds relating to property and equipment44 29 170 60 
Purchases of marketable debt securities(2,220)(10,297)(6,288)(16,528)
Sales of marketable debt securities2,648 4,687 7,713 6,337 
Maturities of marketable debt securities511 2,347 913 6,327 
Acquisitions of businesses and intangible assets(363)(259)(1,216)(259)
Other investing activities(7)(61)(17)(62)
Net cash used in investing activities(6,959)(8,195)(11,738)(13,069)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards(1,002)(1,354)(1,927)(2,432)
Repurchases of Class A common stock(5,233)(7,079)(14,739)(11,018)
Principal payments on finance leases(219)(123)(452)(274)
Net change in overdraft in cash pooling entities(79)53 (59)
Other financing activities(30)(45)(46)(13)
Net cash used in financing activities(6,563)(8,548)(17,223)(13,734)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(550)117 (698)(129)
Net decrease in cash, cash equivalents, and restricted cash(1,875)(3,380)(3,387)(1,443)
Cash, cash equivalents, and restricted cash at beginning of the period15,353 19,891 16,865 17,954 
Cash, cash equivalents, and restricted cash at end of the period$13,478 $16,511 $13,478 $16,511 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents$12,681 $16,186 $12,681 $16,186 
Restricted cash, included in prepaid expenses and other current assets228 201 228 201 
Restricted cash, included in other assets569 124 569 124 
Total cash, cash equivalents, and restricted cash$13,478 $16,511 $13,478 $16,511 
7




META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Supplemental cash flow data
Cash paid for income taxes, net$2,139 $3,387 $2,641 $6,294 
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses and other current liabilities$4,543 $2,249 $4,543 $2,249 
Settlement of convertible notes with marketable equity securities$131 $— $131 $— 
Other current assets through financing arrangement in accrued expenses and other current liabilities$214 $381 $214 $381 
Repurchases of Class A common stock in accrued expenses and other current liabilities$70 $310 $70 $310 




8



Segment Results

We report our financial results for our two reportable 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.

The following table presents our segment information of revenue and income (loss) from operations. For comparative purposes, amounts in the prior period have been recast:

Segment Information
(In millions)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue:
Advertising$28,152 $28,580 $55,150 $54,018 
Other revenue218 192 433 391 
Family of Apps28,370 28,772 55,583 54,409 
Reality Labs452 305 1,146 839 
Total revenue$28,822 $29,077 $56,729 $55,248 
Income (loss) from operations:
Family of Apps$11,164 $14,799 $22,647 $28,004 
Reality Labs(2,806)(2,432)(5,766)(4,259)
Total income from operations$8,358 $12,367 $16,881 $23,745 




9




Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
GAAP revenue$28,822 $29,077 $56,729 $55,248 
Foreign exchange effect on 2022 revenue using 2021 rates1,263 2,156 
Revenue excluding foreign exchange effect$30,085 $58,885 
GAAP revenue year-over-year change %(1)%%
Revenue excluding foreign exchange effect year-over-year change %%%
GAAP advertising revenue$28,152 $28,580 $55,150 $54,018 
Foreign exchange effect on 2022 advertising revenue using 2021 rates1,255 2,143 
Advertising revenue excluding foreign exchange effect$29,407 $57,293 
GAAP advertising revenue year-over-year change %(1)%%
Advertising revenue excluding foreign exchange effect year-over-year change %%%
Net cash provided by operating activities$12,197 $13,246 $26,272 $25,489 
Purchases of property and equipment, net(7,528)(4,612)(12,843)(8,884)
Principal payments on finance leases(219)(123)(452)(274)
Free cash flow$4,450 $8,511 $12,977 $16,331 
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Ticker: META
CIK: 1326801
Form Type: 8-K Corporate News
Accession Number: 0001326801-22-000079
Submitted to the SEC: Wed Jul 27 2022 4:07:22 PM EST
Accepted by the SEC: Wed Jul 27 2022
Period: Wednesday, July 27, 2022
Industry: Computer Programming Data Processing
Events:
  1. Earnings Release
  2. Financial Exhibit

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