Meta Chief Executive Mark Zuckerberg spent the last two years facing the downturn in digital advertising and cutting costs. He announced that this year would be “the year of efficiency” for his company.
Some fruits of that hard work are now visible.
Meta, which owns Facebook, Instagram, WhatsApp and Messenger, informed of Third-quarter revenue rose 23 percent to $34.15 billion, beating Wall Street estimates of $33.6 billion, according to data compiled by FactSet on Wednesday. Profit was $11.6 billion, more than double the $4.4 billion a year earlier.
Meta’s growth was fueled by a boom in digital advertising, which has also boosted the financial performance of other companies. On Tuesday, Google reported a rise in ad sales, with Snap also revealing rising sales after two quarters of revenue declines.
But Meta’s results were also helped by its cost cuts, as expenses fell 7 percent from a year earlier to $20.4 billion.
The results underlined META’s resilience amid a tumultuous few years for Silicon Valley. The company saw record profits and user growth in the early days of the pandemic, as people were forced to stay indoors and connected through their devices and apps. But the easing of the pandemic along with higher interest rates and global economic uncertainty weighed on the meta later. The company reduced its workforce by about a third and flattened its organizational structure.
“The company may be starting to emerge from the crisis as the Mark Zuckerberg-led company focuses on improving operational efficiency,” said Jesse Cohen, senior analyst at Investing.com.
Meta’s user growth continued in some of its key markets, including the United States and Canada. About 3.14 billion people use one or more of the company’s apps every day, up 7 percent from last year. Nearly half the people on the planet – nearly four billion – use one or more of Meta’s apps every month.
The company said Threads, Meta’s Twitter competitor, is performing well with less than 100 million users. Mr. Zuckerberg said he hoped to continue adding features to the app to keep people coming back to it.
Meta said it expects revenue in the current quarter to be $36.5 billion to $40 billion. It also estimates that spending next year will be lower than previously expected, at $87 billion to $89 billion, down from previous guidance of $88 billion to $91 billion. Meta said it expects losses from its Reality Labs division, which is working on metaverse-related products, to continue growing next year.
However, the company is exercising caution in other expenses as it keeps an eye on what Meta’s Chief Financial Officer Susan Lee called a “volatile environment” with the war in the Middle East. Ms Lee said the company had seen some “softening” in ad spending in some areas at the beginning of the conflict, and compared it to Russia’s invasion of Ukraine last year.
Mr. Zuckerberg continues to invest in the metaverse, an interconnected world that he believes will become the next generation of digital connections. That means spending heavily on hardware devices like virtual reality goggles and augmented reality glasses, and investing billions of dollars in the gaming companies that produce content for those devices.
The costs of those investments far outweigh their returns, with no guarantee that people will flock to the metaverse. Yet Mr. Zuckerberg has made it clear that he is behind the metaverse effort for the long term.
More recently, the meta has leaned heavily toward artificial intelligence as Silicon Valley and tech giants including Google and Microsoft are in the grip of a frenzy over the technology. In September, Meta introduced several AI-powered chatbots designed to provide entertaining or informative distractions.
In an earnings call on Wednesday, Mr. Zuckerberg said he expected to start hiring more AI-focused technologists. He also cautioned that the chatbot is in its early stages and will improve over time as the company works out initial shortcomings and errors.
“It will take time to streamline all these experiences before they can be used by millions or billions of people,” he said.
