Meta Platforms announced its third-quarter results, with revenue of $40.6 billion, a year-on-year increase of 19%, slightly above the market expectation of $40.3 billion; earnings per share were $6.03, exceeding the expected $5.25. Advertising revenue was $39.9 billion, accounting for 98.3% of total revenue. Daily active users were 3.29 billion, below expectations. CEO Mark Zuckerberg stated that revenue growth was attributed to investments in artificial intelligence, despite the Reality Labs division reporting an operating loss of $4.4 billion. Meta's stock price has risen over 67% this year
According to Zhitong Finance APP, social networking giant Meta Platforms (META.US) announced its third-quarter results after U.S. stock market hours on Wednesday. The data shows that the company's Q3 revenue was $40.6 billion, a year-on-year increase of 19%, slightly above the market expectation of $40.3 billion; earnings per share were $6.03, exceeding the market expectation of $5.25.
Meta's advertising revenue in the third quarter was $39.9 billion, a year-on-year increase of 18.7%. In the third quarter, advertising revenue accounted for 98.3% of Meta's total revenue.
The daily active users in the third quarter were 3.29 billion, a year-on-year increase of 5%, but below analysts' expectations of 3.31 billion.
Meta CEO Mark Zuckerberg attributed the revenue growth to the company's investment in artificial intelligence (AI).
Zuckerberg stated in a statement, "Our applications and business have performed well driven by AI." He pointed out that the company's generative AI models and its AI glasses are showing "strong momentum."
Zuckerberg has been focused on transforming the social media company into an AI innovator, changing investors' perceptions of Meta's potential growth. As of Wednesday's close, Meta's stock price has risen over 67% this year, making it one of the best-performing stocks in the S&P 500 index.
Meta's main AI products include several large language models used to drive chatbots, AI assistants built into various social applications, and AI glasses, although the company has even more ambitious goals. Zuckerberg ultimately hopes that users will be able to work and entertain themselves in a digital universe known as the "metaverse," which Meta is still building.
The company recently launched its first augmented reality (AR) glasses, which can project images into the real world. Zuckerberg hopes that the glasses, named Orion, will one day rival smartphones.
The Meta division responsible for these future projects, Reality Labs, reported an operating loss of $4.4 billion in the third quarter. Meta attributed the higher operating loss to "ongoing product development work and investments."
Spending Will Increase Significantly
Meta warned investors that losses in its AI and augmented reality divisions will continue to "significantly" widen this year, putting financial pressure on its core advertising business.
Meanwhile, even with recent improvements in AI, the advertising business has not generated the kind of momentum that Wall Street expected. Meta forecasts that fourth-quarter revenue will be between $45 billion and $48 billion. Analysts had previously estimated $46 billion.
Meta expects total spending for fiscal year 2024 to be between $96 billion and $98 billion, down from the previous expectation of $96 billion to $99 billion.
The company also reiterated that spending on infrastructure and other AI initiatives will continue to rise. Meta stated in its earnings press release, "We expect infrastructure spending growth to accelerate significantly next year." This echoes the warning the company issued to investors last quarterMark Zuckerberg said during the earnings call on Wednesday: "Our investments in artificial intelligence still require a lot of infrastructure, and I expect to continue making significant investments in this area."
As of the time of publication, Meta is down 2.94% in after-hours trading