Meta Q4 2024 Earnings Overview

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• Key Financial Metrics (FY2024):
  • Revenue: $164.50 billion (+22% YoY).
  • Net Income: $62.36 billion (+59% YoY).
  • EPS (Diluted): $23.86 (vs. $14.87 in 2023).
  • Operating Margin: 42% (vs. 35% in 2023).
  • Net Profit Margin: ~37.9% (vs. ~29% in 2023).
  • Q4 2024 Growth: Revenue $48.39B (+21% YoY), Net Income $20.84B (+49% YoY).

Why It Matters: These metrics demonstrate a strong rebound in growth and profitability in 2024, exceeding expectations and signaling the effectiveness of Meta's efficiency measures and the resilience of its core ad business.

• Performance Analysis (FY2024 & Q4 2024):
  • Drivers: Performance was driven by a recovery in the digital ad market, improved ad targeting efficiency using AI (e.g., Advantage+ suite), increased ad impressions (+11% FY24) and higher average price per ad (+10% FY24). Strict cost control (total expenses +8% YoY) significantly boosted operating leverage.
  • Management Guidance (for Q1 2025 & FY 2025): Guided Q1 2025 revenue of $39.5–$41.8 billion (8-15% YoY growth adjusted). Guided FY2025 total expenses of $114–$119B (up from $95B in 2024) and capital expenditures of $60–$65B, primarily for AI infrastructure. Reality Labs losses are expected to increase meaningfully in 2025.
  • Analyst Reactions & Sentiment: FY2024 results were well-received, though the heavy 2025 spending guidance tempered immediate stock reaction after Q4. Overall sentiment remains positive ("Strong Buy" consensus) based on the demonstrated ability to grow revenue while managing costs, but analysts are watchful of spending discipline.

Why It Matters: Analysis reveals the interplay between ad market dynamics, Meta's AI investments paying off in ads, and cost discipline. Future guidance indicates a period of heavy investment, particularly in AI, which may pressure near-term margins but is aimed at securing long-term growth.

• Financial Trends:
  • Historical EPS/Revenue: After a dip in 2022, both revenue and EPS surged to record highs in 2024. Analysts project further EPS growth in 2025, albeit at a slower pace (~11%) after 2024's large jump (~52%).
  • Key Financial Ratios (Approx. recent):
    • P/E Ratio (TTM): ~23.8x(Forward P/E ~20x)
    • PEG Ratio: ~0.38x(Note: Nasdaq reported a forward PEG of 1.1)
    • Current Ratio: 2.98
    • Quick Ratio: 2.82 - 2.98
  • Free Cash Flow: Strong rebound to $52.10 billion in 2024. FCF per share was $21.34.

Why It Matters: Trends show a strong recovery from the 2022 trough, with key valuation ratios like P/E and PEG suggesting reasonable valuation relative to growth. Robust FCF generation supports investments, buybacks, and dividends.

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