Almost all of Meta’s revenue is generated from advertisements on its platforms, making the slight decline in user numbers a notable concern amid an otherwise robust quarter. The company reported an average of 3.29 billion “family daily active people” as of September, slightly below analysts’ expectations of 3.31 billion.
eMarketer analyst Jasmine Enberg expressed concern about the drop in daily active users, suggesting that as growth slows, Meta may need to extract more revenue from its existing user base. However, she acknowledged that the company is well-positioned to do so, as its AI-powered tools are enhancing user engagement and improving the effectiveness of its ads, particularly on Reels.
For the quarter ending September 30, the Menlo Park, California-based company earned $15.69 billion, or $6.03 per share, marking a 35% increase from $11.58 billion, or $4.39 per share, during the same period last year. Revenue surged by 19%, reaching $40.59 billion, up from $34.15 billion.
According to FactSet Research, analysts had forecasted an average revenue of $40.21 billion, with earnings of $5.22 per share. CEO Mark Zuckerberg attributed the quarterly success to advancements in AI within the company’s apps and business, stating, “We have strong momentum with Meta AI, Lama adoption, and AI-powered glasses.”
Looking ahead, Meta anticipates revenue for the current quarter to fall between $45 billion and $48 billion, while analysts expect approximately $46.18 billion.
Investing.com noted that Meta’s solid performance further demonstrates that digital advertisers prefer to allocate their budgets to market leaders like Facebook and Instagram over smaller social media networks like Snap. Analyst Jesse Cohen remarked that while AI is clearly driving growth at Meta, investors appear to be concerned about the company’s forward guidance and the increasing costs associated with developing AI capabilities.
Meta also warned that operational losses in its Reality Labs segment, which encompasses its virtual and augmented reality glasses, are expected to “meaningfully increase” in 2024 due to product development costs and other investments. Recently, the company teased a prototype called Orion, a holographic augmented reality headset that it has been developing for over a decade, although no release date has been announced due to high production costs. Zuckerberg referred to Orion as “a glimpse into the future.”
Following the earnings report, Meta’s stock fell approximately 3% in after-hours trading, reflecting investor concerns amidst promising financial results.
