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Net income down ~40% YoY ouch. Stock is up though!

by jihadjihad 4y ago

MuffinFlavored 4y ago
what's the main reason for this?
- ra7 4y ago
  $40B increase to their buyback program. Edit: Actually meant announcement of an increase to buyback program, not that they've already done it.
  - chollida1 4y ago
    That cash hasn't come out of the corporate treasury yet:)
  - ojbyrne 4y ago
    I don’t think that’s correct. They announced a future increase of $40 billion. And I don’t think share repurchases affects net income anyway.
  - MuffinFlavored 4y ago
    what would the number look like if it weren't for this?
    - StrangeDoctor 4y ago
      Hard to predict and I’m not sure of the timeline of purchases, but 40B was 10% of their market cap at closing, which is kinda bonkers. So naively at least a 10% jump.
  - dd36 4y ago
    Stock buybacks aren’t on the Income Statement…
  - gen220 4y ago
    Hrm, no. The $40bn they announced is forward-looking guidance for 2023. In 2022 they repurchased $28bn (2021 they repurchased $44bn) [1]. Not sure that I'd call this "admitting defeat on growth" as other people have said elsewhere in this thread, given that they've done buybacks of this magnitude before. The main issue, it seems, is that they grew expenditures on cost of revenue and R&D (i.e. operations and capex), but revenue (advertising from family of apps, whatever revenue VR yields) did not keep pace -- in fact, it was flat on a YoY basis [2]. IMO, this doc is strong evidence that the layoffs were a bona fide good idea. Will be interesting to compare to Alphabet's tomorrow. [1]: see the cash flow statement on page 8, the search term is "Repurchase" https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4/Meta-12.31.2022-Exhibit-99.1-FINAL.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4... [2]: revenue and income figures are broken out on page 10. costs of revenue/r&d figures on page 6.
- blsapologist42 4y ago
  Costs went up a lot, primarily from increased payroll. That's why they did a big layoff, although I believe they still have more employees than end of 2021 even after that.
  - gen220 4y ago
    Yea, I think the point-in-time, annualized R&D expense on 2023/03 will be the midpoint of the reported figure for 2022 and 20221. (~$30bn, where EOY 2022 was $35bn and EOY 2021 was $24.6bn). The layoff, we can imagine, impacted maybe 15% of R&D at most. It might still be too high in 2023, depending on what their revenue figures do in Q1/Q2. Would be interesting if they needed to do another layoff -- doesn't seem outside the realm of possibility.
  - ojbyrne 4y ago
    As someone who was laid off, this is because while the announcement was in November, the WARN period meant we were all on the payroll until into 2023.
  - MuffinFlavored 4y ago
    kind of interesting covid happened, money was printed to replace lost wages but somehow it trickled up plus people couldn't leave their house so tech companies saw booms in sales/revenue so then inflation happened to the tune of 8% and the narrative was "if you didn't get at least an 8% raise 2019 -> 2020 -> 2021 each year you basically got a paycut" and now we're seeing layoffs that basically feel like a reaction/counterbalance to any inflation rasies (or hires) that were given/made "if a tree falls in the woods and nobody is around to hear it" "if you get an inflation-sized big raise but then get laid off, did you really get a raise at all?"
- nwellnhof 4y ago
  Probably a huge short squeeze.

Net income down ~40% YoY ouch. Stock is up though!

MuffinFlavored 4y ago

what's the main reason for this?

ra7 4y ago
$40B increase to their buyback program. Edit: Actually meant announcement of an increase to buyback program, not that they've already done it.
- chollida1 4y ago
  That cash hasn't come out of the corporate treasury yet:)
- ojbyrne 4y ago
  I don’t think that’s correct. They announced a future increase of $40 billion. And I don’t think share repurchases affects net income anyway.
- MuffinFlavored 4y ago
  what would the number look like if it weren't for this?
  - StrangeDoctor 4y ago
    Hard to predict and I’m not sure of the timeline of purchases, but 40B was 10% of their market cap at closing, which is kinda bonkers. So naively at least a 10% jump.
- dd36 4y ago
  Stock buybacks aren’t on the Income Statement…
- gen220 4y ago
  Hrm, no. The $40bn they announced is forward-looking guidance for 2023. In 2022 they repurchased $28bn (2021 they repurchased $44bn) [1]. Not sure that I'd call this "admitting defeat on growth" as other people have said elsewhere in this thread, given that they've done buybacks of this magnitude before. The main issue, it seems, is that they grew expenditures on cost of revenue and R&D (i.e. operations and capex), but revenue (advertising from family of apps, whatever revenue VR yields) did not keep pace -- in fact, it was flat on a YoY basis [2]. IMO, this doc is strong evidence that the layoffs were a bona fide good idea. Will be interesting to compare to Alphabet's tomorrow. [1]: see the cash flow statement on page 8, the search term is "Repurchase" https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4/Meta-12.31.2022-Exhibit-99.1-FINAL.pdf https://s21.q4cdn.com/399680738/files/doc_financials/2022/q4... [2]: revenue and income figures are broken out on page 10. costs of revenue/r&d figures on page 6.
blsapologist42 4y ago
Costs went up a lot, primarily from increased payroll. That's why they did a big layoff, although I believe they still have more employees than end of 2021 even after that.
- gen220 4y ago
  Yea, I think the point-in-time, annualized R&D expense on 2023/03 will be the midpoint of the reported figure for 2022 and 20221. (~$30bn, where EOY 2022 was $35bn and EOY 2021 was $24.6bn). The layoff, we can imagine, impacted maybe 15% of R&D at most. It might still be too high in 2023, depending on what their revenue figures do in Q1/Q2. Would be interesting if they needed to do another layoff -- doesn't seem outside the realm of possibility.
- ojbyrne 4y ago
  As someone who was laid off, this is because while the announcement was in November, the WARN period meant we were all on the payroll until into 2023.
- MuffinFlavored 4y ago
  kind of interesting covid happened, money was printed to replace lost wages but somehow it trickled up plus people couldn't leave their house so tech companies saw booms in sales/revenue so then inflation happened to the tune of 8% and the narrative was "if you didn't get at least an 8% raise 2019 -> 2020 -> 2021 each year you basically got a paycut" and now we're seeing layoffs that basically feel like a reaction/counterbalance to any inflation rasies (or hires) that were given/made "if a tree falls in the woods and nobody is around to hear it" "if you get an inflation-sized big raise but then get laid off, did you really get a raise at all?"
nwellnhof 4y ago
Probably a huge short squeeze.