Meta and Apple: Earnings Previews

Meta (NASDAQ: META) Q3 2024 Earnings Preview

Meta Platforms – Consensus Expectations for Q3 2024, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (October 21, 2024). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

According to Visible Alpha consensus, estimated total revenues for Q3 have edged up to $40.2 billion, driven by better expected DAU performance in the Family of Apps segment across geographies, especially in the U.S. and Europe. On the cost front, expectations for operating profit have increased to $15.9 billion, up slightly from last quarter, but there is some debate among analysts. Into Q3 for the Family of Apps’ income from operations estimates range from $18.4 billion to $22.6 billion. For 2024, expectations for operating income from the Family of Apps have moved up from $80.6 billion to $82.8 billion since last quarter, driven by more robust views about the profitability of this business. In addition to the continued expected strength in the Family of Apps segment, projected losses from Reality Labs for 2024 have not changed since last quarter. Will Meta be able to continue growing revenue while managing costs in 2025?

The stock has been strong since last quarter, driven by wearables and AI announcements at Meta Connect. What new information will come out of the Q3 release that could potentially be a catalyst?

Meta Platforms – Consensus Estimate Revisions

Source: Visible Alpha consensus (October 21, 2024). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date. Stock price data courtesy of FactSet. META’s current stock price is as of the market close on October 18, 2024.

Apple (NASDAQ: AAPL) Q4 2024 Earnings Preview

Apple – Consensus Expectations for Q4 2024, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (October 21, 2024). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

Total revenues expected for fiscal Q4 have ticked down slightly from last quarter, according to Visible Alpha consensus, from $94.7 billion to $97.5 billion, driven by slightly decreased optimism about the iPhone. Expected Q3 iPhone units moved from 53 million to 51 million over the past quarter. Currently, Q4 is expected to deliver $45.2 billion in iPhone sales and $200.1 billion in 2024. Overall full-year iPhone revenue expectations for 2025 have jumped around since early 2024, as the market tries to figure out the demand trajectory. There are questions about whether the new Apple Intelligence capabilities may help to drive upgrades in 2025 and beyond.

In addition, expectations for the high-margin Services segment also edged up slightly for Q4 and FY 2025. Gross margin for the Services segment is over 70%, significantly higher than the 36% gross margin for Products. It will be helpful to hear what the company says in the earnings release about growth in Services and the role of Apple Intelligence.

Vision Pro will show results this quarter. In Q4, consensus of four analysts estimated 116,300 units to be sold, generating $451 million. For the full year, consensus revenue estimates for the Vision Pro have remained flat at $1.2 billion. As the company gears up for the important holiday shopping period, there are questions about whether Apple may make some announcements around updates to the Vision Pro.

The stock traded up 30% since the Q2 release in May, but has not reacted much since last quarter. Apple has underperformed other Big Tech stocks and the S&P 500 year to date. Could the Q4 release and FY 2025 outlook provide a positive catalyst for the stock?

Apple – Consensus Estimate Revisions

Source: Visible Alpha consensus (October 21, 2024). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date. Stock price data courtesy of FactSet. AAPL’s current stock price is as of the market close on October 18, 2024.