Facebook Revenue Miss & Meta's AR/VR Plans

Facebook Announces Q3 2021 Financial Results

Facebook, the leading U.S. social networking company, has released its financial performance data for the third quarter of 2021. The company announced total revenues of $29.0 billion and a diluted earnings per share (EPS) of $3.22.

Revenue and Earnings Overview

These results were reported after market close today. Analysts, according to Yahoo Finance data, had predicted revenues of $29.58 billion and an EPS of $3.19.

Currently, Facebook shares are experiencing a slight increase in after-hours trading. This suggests the market wasn't significantly surprised by the marginally lower-than-expected revenue figures.

Impact of Snap's Recent Report

The relatively muted market reaction could be attributed to Snap’s recent earnings report, which was released last week. Snap’s stock price declined following their forecast of a weaker-than-anticipated fourth quarter.

Snap attributed its projected revenue challenges to factors including changes to Apple’s mobile operating system and ongoing supply-chain disruptions.

Q4 2021 Guidance

In its communication to investors, Facebook provided its financial outlook for the fourth quarter of 2021. The company anticipates revenues to fall within the range of $31.5 billion to $34 billion.

Market consensus currently estimates $34.89 billion in revenue for Q4, exceeding Facebook’s projected range.

Factors Influencing Forecasts

The discrepancy between Facebook’s guidance and market expectations is largely linked to anticipated challenges. These include modifications to Apple’s mobile privacy features and continuing impacts from the COVID-19 pandemic.

Facebook explicitly acknowledged these factors in its earnings report concerning its Q4 guidance.

New Reporting Segment: Facebook Reality Labs

Facebook also announced a change in its reporting structure. It will now delineate Facebook Reality Labs (FRL) as a distinct reporting segment.

This decision reflects the substantial investment the company is making in augmented and virtual reality products and services.

Segment Breakdown

Beginning with the next quarterly report, Facebook will operate with two primary segments:

“Family of Apps” – encompassing Facebook, Instagram, Messenger, WhatsApp, and related services.
FRL – covering augmented and virtual reality consumer hardware, software, and content.

While this segmentation is a positive step, a more detailed breakdown of its social application performance would be beneficial for shareholders.

Further analysis is underway as we continue to review the full report.