Meta Platforms Inc., the parent company of social media giants Facebook and Instagram, reported impressive financial results for the final quarter of 2023. The company's profit tripled, while revenue saw a significant boost, thanks to a resurgence in digital advertising and strategic cost-cutting measures.
CEO Mark Zuckerberg referred to the past year as the 'year of efficiency' and attributed the positive performance to the company's focus on streamlining operations. Despite Meta's ambitions in areas such as AI and the metaverse, it remains primarily reliant on advertising revenue, which continues to attract advertisers' interest and support.
In the October-December period, Meta earned a staggering $14 billion, translating to $5.33 per share, compared to $4.65 billion, or $1.76 per share, in the same quarter of the previous year. The revenue for the quarter showed a solid growth rate of 25%, reaching $40.11 billion, up from $32.17 billion in 2022.
The reported figures exceeded analysts' expectations. According to FactSet Research, the average earnings per share estimate was $4.82 on revenue amounting to $39.1 billion. Meta's financial success was backed by a statement from the company declaring that it had amplified its operating discipline, executed its product priorities effectively, and improved advertising performance for businesses relying on their services.
Moreover, Meta witnessed a surge in the user base across its apps, including Facebook, Instagram, Messenger, and WhatsApp. As of the end of 2023, monthly active users on these platforms reached an impressive 3.98 billion, marking a 6% increase from the previous year. Facebook alone boasted 3.07 billion monthly active users by the end of December, showing a 3% year-over-year growth. However, Meta does not disclose user numbers for its other platforms.
The remarkable financial results were unveiled a day after Mark Zuckerberg testified before the Senate, where he, along with other social media CEOs, addressed concerns about child safety on their respective platforms. The positive outcome serves as a testament to Meta's resilience amidst regulatory scrutiny.
Looking ahead, Meta's forecast for the next quarter is optimistic. The company expects revenue between $34.5 billion and $37 billion, surpassing Wall Street's expectations. Analysts had projected revenue of $33.9 billion for the first quarter. However, Meta anticipates increased payroll costs due to its plans to recruit highly-paid AI specialists, as the company aims to enhance its AI capabilities and compete with other tech giants in attracting talent in this field.
To reward its shareholders, Meta announced its initiation of a quarterly dividend. Shareholders of record as of February 22 will receive a dividend payment of 50 cents per share on March 26. The company intends to continue paying quarterly dividends in the future.
Meta's Reality Labs segment, which encompasses virtual reality headsets and augmented reality technology, saw a revenue increase of 47% to $1.07 billion in the fourth quarter. However, it reported an overall loss of $4.65 billion for the same period, indicating the challenges the company faces in this area.
Insider Intelligence analyst Jasmine Enberg emphasized Meta's commitment to becoming a major player in the AI space through its investments in artificial intelligence. Enberg added that investors and advertisers are likely to recognize and support Meta's efforts. However, she also highlighted the ongoing task of integrating AI with the metaverse, alongside potential headwinds from a reduction in advertising from Chinese businesses. Any faltering in Meta's ad business could put pressure on the company to address mounting losses in Reality Labs.
Following the release of these impressive financial results, Meta's shares soared by 14.1% in after-hours trading, jumping to $450.28 from the previous closing price of $394.78. This indicates a positive market response to Meta's solid performance and future prospects.
