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Meta Soundly Tops Q4 Revenues Estimates as Company Doubles-Down on AI Development

Meta, bucking broader industry struggles with digital advertising, rode stronger advertising results and restructuring savings to report higher-than-expected earnings of $14 billion for the fourth quarter of 2023, as the company said it was accelerating a rapid pivot towards AI development initiatives while continuing to pour investment into metaverse research.

Here are the top-line results:

Revenues: $40.11 billion, rose 25% from the year-ago period

Net income: $14.02 billion, a 201% increase over $4.7 billion in Q4 of 2022

Daily active users: Grew by 8% to 3.19 billion on average

Meta’s revenues of $40.11 billion, and diluted earnings of $5.33 per share for its fourth quarter of 2023, beat Wall Street expectations, results the company attributed in part to advancing AI technology.

Meta shares jumped over 14% in after-hours trading on Thursday.

“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta founder and CEO Mark Zuckerberg said in the shareholder statement.

Meta’s net income for the quarter marked a massive 201% increase from the same period a year ago. Daily active user numbers across its family of apps, which include Facebook, WhatsApp, and Instagram, climbed to an average of 3.19 billion, up by 8% compared to last year.

Driving that quarterly growth, in part, was a 21% jump in ad impressions across Meta’s family of apps, with the average price paid per ad ticking up by 2%. For the full year, however, ad impressions rose 28% while the price per ad fell 9%.

If foreign exchange rates remained constant with the Q4 of 2022, revenue would have been $816 million and $374 million lower, an increase of 22% and 15% on a constant currency basis for the fourth quarter and full year 2023, respectively, the company said Thursday.

Analysts surveyed by Zacks Investment Research were expecting Meta to report earnings of $4.83 per share and revenue of $38.99 billion.

In the fourth quarter of 2022, Meta reported revenues of $32.17 billion which was down 4% from the same period in 2021. Net income fell 55% to $4.7 billion for the fourth quarter of 2022, compared to the year prior.

On Thursday’s shareholders call, Zuckerberg emphasized the company’s intentions to improve and develop AI technology, saying “Overall, we’re playing to win here.”

Zuckerberg noted that Meta’s efforts to slim down the company in the “year of efficiency,” have been successful, “making Meta a stronger technology company, and improving our business to give us the stability to deliver our ambitious long-term vision for AI and the metaverse.”

Meta saw a revenue bump from facilities consolidation, more so than from cutting staffers. Overall restructuring costs totaled $1.15 billion in the quarter, with $1.1 billion of that coming from facilities. Meta decreased its headcount 22% year-over-year. The company said that at year-end it had completed its data center initiatives and planned employee layoffs, and “substantially completed the facilities consolidation initiatives.”

Zuckerberg’s efforts to slim down Meta are connected to his desire to pursue more ambitious AI development. “We’ve been working on general intelligence research for more than a decade,” Zuckerberg said. “But now, general intelligence will be the theme of our product work as well.”

The Meta CEO also highlighted the performance of social media platform Threads, with the platform currently boasting more than 130 million monthly active users, more people actively using it than when it launched in July. “So that one’s I think on track to be a major success,” Zuckerberg said.

Looking ahead, Meta expects the first quarter of 2024 total revenue to be in the range of $34.5 to $37 billion. The company is also anticipating higher infrastructure-related costs during 2024, as Meta continues to increase capital investments.

Meta is expecting AI and non-AI hardware to drive growth in 2024, as well as further investment in new data center architecture. The company reiterated that its efforts will increasingly focus on AI research and product development, which will require consistent investment beyond a one-year period.

Even as Meta doubles down keeping up with its Big Tech rivals in AI development, the company is still pouring investment into the metaverse. Meta’s Reality Labs unit saw a Q4 operating loss of $4.6 billion, due to higher headcount expenses and research and development spending. Reality labs expenses were $5.7 billion, up 14% year over year.

The company is anticipating more losses for Reality Labs in 2024, as investment into AI development grows. “We expect Reality Labs operating losses to increase meaningfully year over year,” Meta CFO Susan Li said Thursday.

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