The parent company of Facebook reported a year-over-year quarterly revenue increase of 23%, surpassing $34 billion, which outperformed analysts' projections of $33.5 billion. Meta also saw its profits more than double compared to the same quarter last year, with a net income of nearly $11.6 billion, a stark improvement from the prior year when Meta's profits had halved.
Following this report, Meta (META) shares surged by up to 4% in after-hours trading on Wednesday. As of Wednesday's close, Meta stock had already risen by 140% year-to-date.
Jesse Cohen, a senior analyst at Investing.com, commented, "All in all, it was a blowout quarter with Meta reporting its most profitable quarter in years."
Mark Zuckerberg had outlined his "year of efficiency" strategy in February, aiming to address the company's challenges, which included revenue declines and increased competition. These challenges were exacerbated by factors like Apple's app privacy changes and reduced digital ad spending in the face of broader economic uncertainty.
Meta posted strong user growth for both its family of apps and its core Facebook platform. Facebook's monthly active users grew by 3% year-over-year, reaching over 3 billion, up from a 2% growth rate in the same quarter of the previous year.
Positive signals were also seen in Meta's core advertising business. Ad impressions across all of Meta's apps grew by 31% year-over-year in the September quarter. The company reported a 6% year-over-year decrease in the average price per ad, a slower decline compared to the same period in the previous year when it had fallen by 18%.
Meta's efforts to enhance ad targeting technology with artificial intelligence and to monetize popular features like Reels on Instagram are showing promise. As macroeconomic conditions stabilize and advertisers increase their spending, Meta appears to be a primary beneficiary.
Jesse Cohen noted, "Meta’s solid quarter adds further evidence to the view that advertisers are choosing to spend their budget on the so-called market leaders, such as Facebook and Instagram, at the expense of the smaller social media networks."
While Meta faces potential challenges, such as recent lawsuits regarding the impact on young users' mental health, and ongoing investments in its metaverse efforts, the company's performance in this latest report underscores its resilience and adaptability. Meta projects year-over-year revenue growth for the final quarter of 2023 to be between 13.5% and 24%.
Mark Zuckerberg emphasized that Meta's focus on efficiency will remain a priority. The company achieved its highest operating margin in two years during the September quarter. Additionally, AI is set to be a major investment area for Meta in 2024.
Zuckerberg also revealed that Threads, Meta's platform competing with what was formerly known as Twitter, now has nearly 100 million monthly active users. This suggests steady growth in active users after an initial surge in sign-ups and subsequent decline in engagement following its launch in July. Zuckerberg expressed optimism that the platform could reach 1 billion users in the coming years if growth continues.
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