When Meta released its earnings for the quarter that ended in September on Wednesday, it once again outperformed Wall Street’s forecasts, providing further evidence that the company’s “year of efficiency” turnaround strategy is working. The impressive outcomes coincide with Meta’s announcement that, in the wake of a tough 2022, it had “substantially completed” the layoff phase of its cost-cutting plan.
The parent company of Facebook reported quarterly revenue gains of 23% year over year to over $34 billion, surpassing experts’ projections of $33.5 billion. Additionally, Meta reported net income of nearly $11.6 billion, more than doubling its profits from the same quarter last year, when they had decreased by half.
Following the story, shares of Meta (META) increased by as much as 4% in after-hours trading on Wednesday. By Wednesday’s close, the year-to-date gain on Meta stock was already 140%.
In a statement released after the announcement, senior analyst Jesse Cohen of Investing.com remarked, “All in all, it was a blowout quarter with Meta reporting its most profitable quarter in years.”
After the business’s third quarter revenue loss in February, Zuckerberg unveiled his objectives for a “year of efficiency.” The company had a rough year due to lower digital ad spending amid broader macroeconomic uncertainties and hurdles from Apple’s app privacy measures. In the face of fierce competition from rivals like TikTok, the company’s user growth had also been decreasing.
On Wednesday, Meta announced comparatively robust user growth for both its main Facebook platform and its suite of apps. Facebook’s monthly active user count increased from 2% growth rate in the same quarter last year to over 3 billion, a 3% year-over-year increase.
Additionally, the company’s primary advertising division showed some encouraging signs. In September, the total number of ad impressions across all Meta apps increased by 31% year over year. A 6% decline in average price per advertisement was also recorded by the corporation from the previous year. However, compared to the same period last year, when the average price per ad dropped 18%, this fall is occurring at a slower rate.
In order to increase marketers’ return on investment and more effectively monetize Instagram’s well-liked Reels feature, Meta has been trying to enhance its ad targeting technology through the use of AI. “On a Wednesday analyst call, CEO Mark Zuckerberg stated that Reels has advanced from being a pilot program to a fundamental component of our applications.”
Additionally, Meta seems to be a major winner as marketers resume increasing their spending as the macroeconomic picture slightly stabilizes.
“Meta’s strong quarter provides more proof that advertisers are prioritizing the so-called market leaders, Facebook and Instagram, over the smaller social media networks,” Cohen stated.
Zuckerberg emphasized on Wednesday that Meta will continue to prioritize efficiency in its operations. In the September quarter, the business reported its greatest operating margin in the previous two years. “I look forward to carrying this operating discipline forward,” he stated. In 2024, he continued, the corporation plans to spend heavily in artificial intelligence.
Additionally, Zuckerberg revealed that Threads, Meta’s rival to the Twitter platform, now had less than 100 million active monthly users. According to the release, despite an initial spike in sign-ups and a subsequent steep drop in engagement following its introduction in July, the platform is now gradually increasing the number of active users. According to Zuckerberg, if the network keeps growing over the coming years, it has a “good chance” of surpassing 1 billion users.
