Meta Platforms (NASDAQ:META) is scheduled to unveil its fourth-quarter 2023 results on February 1.

For the fourth quarter of 2023, the company anticipates total revenues to range between $36.5 billion and $40 billion. Positive foreign exchange rates are expected to contribute to a year-over-year top-line growth of approximately 2%.

The Consensus Estimate for fourth-quarter revenues stands at $38.93 billion, reflecting a 21.02% increase from the reported figure in the year-ago quarter.

The consensus estimate for earnings is $4.84 per share, demonstrating a growth of 61.33% from the figure reported in the same quarter last year. Over the past 30 days, the earnings consensus has increased by 0.83%.

In the preceding four quarters, Meta’s earnings surpassed the Consensus Estimate, with an average surprise of 27.5%.

Let’s examine the factors that might influence the upcoming announcement.

Key Points to Consider

Meta’s fourth-quarter revenue is expected to benefit from the expanding user base of Facebook, which boasts more than 3.049 billion daily active users, and the increasing adoption of reels. Enhanced engagement with Meta’s platforms, including Instagram, WhatsApp, Messenger, and Facebook, has been a major growth driver.

The effective use of artificial intelligence (AI) has played a crucial role in maintaining user engagement. AI-driven feed recommendations have been instrumental in this regard.

Reels, a feature on Instagram, has significantly contributed to growth. Since its launch, Reels has led to a more than 40% increase in time spent on Instagram. Meta aims to continue growing Reels as part of its overall video services portfolio, accounting for more than half of the time spent on Facebook and Instagram.

Increased engagement levels have helped stabilize user growth across all regions, particularly in the Asia Pacific. The Consensus Estimate for Asia Pacific Daily Active Users (DAUs) in the fourth quarter projects 906 million, indicating a 6.1% year-over-year growth. The consensus estimate for the Rest of the World suggests a 5.8% increase to 680 million DAUs.

As for Monthly Active Users (MAUs), the Consensus Estimate for Asia Pacific stands at 1.361 billion, signaling a 2.9% year-over-year growth. The Rest of the World consensus estimate is expected to rise by 3.7% to 1.361 billion MAUs.

Meta’s worldwide DAU is estimated at 2.093 billion, reflecting a 4.7% year-over-year growth, while the worldwide MAU is pegged at 3.061 billion, indicating a 3.3% year-over-year increase.

However, Meta’s top line is anticipated to reflect the negative impact of a challenging macroeconomic environment and high inflation, which may have constrained ad spending budgets. 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, rising 23.5% year over year to $33.64 billion. The Consensus Estimate for fourth-quarter 2023 ad revenues is projected at $37.88 billion, indicating a 21.2% year-over-year growth.

Featured Image: Unsplash @ Julio Lopez

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