Meta Platforms Inc’s (Previously Known as Facebook Inc.) ($FB) Q4 & FY2021 Result Summary

Meta Platforms Inc’s (Previously Known as Facebook Inc.) ($FB) Q4 & FY2021 Result Summary

As I’ve mentioned in my previous post a couple of days back, one of my holdings in the US market is Meta Platforms (you can read the post here –… With that, I thought of sharing a brief summary about the company’s latest fourth quarter, as well as full-year results for the financial year ended 31 December 2021 (i.e. FY2021) which I’ve compiled for personal consumption (and I hope you’ll benefit from them): 

This post was originally posted here. The writer, Lim Jun Yuan is a veteran community member and blogger on InvestingNote, with a username known as @ljunyuan and has close to 2,000 followers.

Financial Performance (FY2020 vs. FY2021):

  • Revenue and net profit saw 37.2% and 35.1% improvements, contributed by growth in all of its business segments – Advertising up by 36.6% due to increases in both average price per ad and number of ads delivered, Family of Apps (Facebook, Instagram, Messenger, WhatsApp) up by 36.3% driven by increase in ad revenue, and Reality Labs (its augmented and virtual reality-related consumer hardware, software, and content) skyrocket by more than 100% due to increase in volume of their consumer hardware products sold
  • Cost of sales went up by 35.7% due to increase in Reality Labs cost of products sold and increase in operational expenses related to their data centres and technical infrastructure
  • While gross profit edged up 0.2 percentage points (pp) to 80.8% (FY2020: 80.6%), net profit was down slightly to 33.4% (FY2020: 33.9%)
  • Return on Equity climbed 8.8pp to 31.5% (FY2020: 22.7%)

Financial Performance (Q4 FY2020 vs. Q4 FY2021):

  • Mixed set of results, as a higher percentage increase in its cost of service (by 21.8%) vs. a smaller 19.9% growth in its revenue resulted in its net profit recording a 8.3% decline
  • Both its gross, as well as its net profit margin, also declined – with the former down by 0.3pp to 81.1%, and the latter down by 9.5pp to 30.5% 

Cash Flow Position (FY2020 vs. FY2021):

  • The 48.9% jump in net cash flow from operating activities mostly consisted of $39.37b net income adjusted for non-cash items, such as share-based compensation expense and deferred income taxes
  • Cash & Cash Equivalents down 6.1% to $16,865m (do note that this statistic saw a y-o-y dip in FY2020 as well) 
  • However, free cash flow per share was up by 71.1% to $16.80 due to a reduction in the number of shareholdings (vs. $9.82 in FY2020)

Management’s Outlook Ahead:

  • Continued headwinds from both increased competition for people’s time and shift of engagement within the company’s apps towards video surfaces like Reels, which monetise at lower rates than Feed and Stories
  • Macroeconomic challenges like cost inflation and supply chain disruptions impacting advertiser budgets
  • Forex will continue to be a headwind to the company’s y-o-y growth
  • Company is investing aggressively in 2022 (in technical and product talent, and infrastructure) to support their product road map as they work to deliver new and engaging experiences for their users

Currently Undervalued:

  • At its current traded price ($208.11) and valuations, compared against its 7-year average, Meta Platforms is considered overvalued, with current P/E at 15.3 vs. average at 35.4, and current P/B at 4.6, vs. average at 5.1

Once again, this article is a guest post and was originally posted on Ljunyuan‘s profile on InvestingNote. 

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