Due to its continuous austerity effort and a resurgence in digital advertising investment in anticipation of the holiday season, Meta’s third-quarter profit and sales surpassed projections.
In addition to reporting its highest operating margins in the past two years, Meta the company that owns social media giants Facebook and Instagram has also reduced its spending for the year.
As it delays recruiting needs for this year and keeps investing in AI technology, the company has predicted spending in 2024 that will exceed Wall Street projections.
Having spent billions creating the metaverse—the shared virtual worlds that individuals can access via the internet—amidst competing constraints and a post-pandemic decline in digital marketing, Meta, which also owns WhatsApp, has been recovering from a brutal 2022 when investors fled.
In a conference call with investors, CEO Mark Zuckerberg, who said in February that 2023 would be Meta’s “year of efficiency,” stated that the company’s primary investment focus for 2024 will be artificial intelligence. Without giving details, he stated that the corporation will de-prioritize some non-AI initiatives in order to avoid hiring too many people.
In the third quarter, Meta’s operating margin more than doubled to 40%. Also, revenue climbed at its fastest rate in the previous two years.
From a range of $88 billion to $91 billion in 2023, the total amount of expenses was reduced to a range of $87 billion to $89 billion.
According to LSEG data, the social media business stated that it anticipated total expenses for 2024 to be between $94 billion and $99 billion, which was higher than anticipated.
From a year ago, Meta’s ad views climbed by 31% in the third quarter that concluded on September 30. Although the average price per ad fell by 6%, it did so at the slowest rate in the previous seven quarters.
In accordance with expert projections, the business estimated sales for the fourth quarter to range between $36.5 billion and $40 billion.
The daily active people (DAP) of Meta increased by 7%. Utilizing the metric, the company keeps tabs on unique users who utilize any of its apps within a given day, including Facebook, Instagram, Messenger, and WhatsApp. In the June quarter that had just ended, DAP had also increased by 7%.
Ad impressions across all of Meta’s apps increased by 31%, but Facebook’s daily active user base increased by only 5%.
Following the revenue announcement, after-hours trading saw a 3% increase in Meta shares, which had already increased by about 150% this year, but two hours later, the price had dropped by 3%.
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