Meta beats on top and bottom line as digital ad recovery pushes revenue up 23%


Meta reported better-than-expected results for the third quarter as revenue increased 23%, the fastest rate of growth since 2021. The stock rose about 4% in extended trading on Wednesday.

Here are the key numbers:

  • 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.

Its business is outperforming 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.

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.

Meta said expenses 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.

Net income rose 164% to $11.58 billion, or $4.39 a share, from $4.4 billion, or $1.64 a share, a year earlier.

“We had a good quarter for our community and business,” CEO Mark Zuckerberg said in a statement.

Meta’s Reality Labs division, which focusses on virtual reality and augmented reality technologies, racked up $3.74 billion in operating losses for the quarter. It’s now lost close to $25 billion since the start of last year. That’s after releasing its Quest 3 headset and other new products.

“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,” Zuckerberg said.

The company said it expects Reality Labs’ 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.”

Total costs and expenses declined 7% from a year earlier to $20.4 billion, underscoring Zuckerberg’s “year of efficiency” declaration in February, when he emphasized the need for a slimmer and more nimble workforce.

Meta’s stock price is up about 150% this year, the second-best performer in the S&P 500, behind only AI chipmaker Nvidia.

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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