Meta reported better-than-expected results for the third quarter as revenue increased 23%, the fastest rate of growth since 2021. The stock rose more than 4% in extended trading on Wednesday.
- Earnings: $4.39 per share vs $3.63 per share expected by LSEG, formerly known as Refinitiv.
- Revenue: $34.15 billion vs $33.56 billion expected by LSEG.
Investors are also looking at user numbers:
- Daily active users (DAUs): 2.09 billion vs 2.07 billion expected, according to StreetAccount
- Monthly active users (MAUs): 3.05 billion vs 3.05 billion expected, according to StreetAccount
- Average revenue per user (ARPU): $11.23 vs $11.05 expected, according to StreetAccount
Meta is seeing faster growth in its core digital ads business as clients rebound from a tough 2022, when revenue dropped for three straight quarters.
For the fourth quarter, Meta said it expects revenue of $36.5 billion to $40 billion. Analysts were expecting sales for the quarter of $38.85 billion, according to LSEG. At the mid-point of the range, growth in the quarter will be about 19% from a year earlier.
The company said it now has 3.9 billion monthly active people.
Meta said its total expense outlook for 2023 will be in the range of $87 billion to $89 billion, which is down from its previous forecast of $88 billion to $91 billion. Expenses for 2024 will fall in the range of $94 billion to $99 billion.
The social networking giant’s net income rose 164% year-over-year to $11.58 billion in the quarter.
“We had a good quarter for our community and business,” said Meta CEO Mark Zuckerberg said in a statement. “I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.”
Meta’s Reality Labs division, which focusses on virtual reality and augmented reality technologies generated $3.74 billion in operating losses for the quarter. It’s now lost close to $25 billion since the start of last year.
The company said that it expects the Reality Labs unit’s operating losses “to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem.”
Meta has 66,185 employees as of Sep. 30, which is a 24% year-over-year decrease. The company said “a substantial majority of the employees” who were part of its major cost-cutting efforts are no longer included in its headcount.
“Beginning in 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities,” Meta said in its earnings release. “As of September 30, 2023, we have substantially completed planned employee layoffs while continuing to assess facilities consolidation and data center restructuring initiatives.”
The tech firm’s total costs and expenses declined 7% year-over-year to $20.40 billion, underscoring the effect of Zuckerberg’s ‘Year of Efficiency’ theme for 2023 that emphasized a slimmer and more nimble workforce.
Meta’s ad business is rebounding from the 2022 doldrums better than its competitors. Google parent Alphabet said in its earnings report on Tuesday that ad revenue increased about 9.5%, while smaller rival Snap reported revenue growth of 5%.
A big part of Meta’s reacceleration appears to be because its furthest along in terms of improving the effectiveness of its online ads following Apple’s iOS privacy changes in 2021, which made it hard for app developers to target users. Meta has pointed to its hefty investments in artificial intelligence as a key technology that’s helped it land retailers looking to serve customers targeted promotions.
Correction: This story has been updated to reflect that Refinitiv is now known as LSEG. A previous version of this story misspelled the company name.
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