Meta once again surpassed Wall Street’s expectations when it reported earnings for the quarter that ended in September. This serves as another indicator of the ongoing success of the company’s “year of efficiency” turnaround strategy. These impressive results coincide with Meta’s announcement that it has nearly completed the layoff portion of its cost-cutting plan, a response to a challenging 2022.
The parent company of Facebook revealed a 23% year-over-year increase in quarterly revenue, surpassing the $34 billion mark, which was higher than the $33.5 billion projected by analysts. Meta also more than doubled its profits compared to the same quarter in the previous year, reporting a net income of nearly $11.6 billion. In the previous year’s equivalent quarter, Meta’s profits had dropped by half.
Meta’s Profits in the September Quarter Doubled as They Continued Their Efforts to Turn Things Around
Meta (META) shares saw an up to 4% increase in after-hours trading on Wednesday after the report. As of Wednesday’s close, Meta stock had already risen by 140% year-to-date.
Jesse Cohen, a senior analyst at Investing.com, stated in response to the report, “In summary, it was an outstanding quarter for Meta, with the company reporting its most profitable quarter in years.
In February, Zuckerberg detailed his “year of efficiency” plans following the company’s third consecutive quarterly revenue decline. This decision came after a challenging year during which the company confronted obstacles due to Apple’s app privacy changes, reduced digital ad spending caused by broader macroeconomic uncertainty, and slowed user growth due to intense competition from platforms like TikTok.
On Wednesday, Meta reported robust user growth across both its family of apps and its core Facebook platform. Facebook’s monthly active users increased by 3% compared to the previous year, reaching over 3 billion, a notable improvement from the 2% growth rate in the same quarter of the previous year.
Meta’s Advertising Business Shows Resilience and Growth
Positive signs also emerged for Meta’s core advertising business. Ad impressions across all Meta’s apps experienced 31% year-over-year growth in the September quarter. Additionally, the company noted a 6% year-over-year reduction in the average price per ad. While this still represents a decline, it’s a slower rate of decrease than the previous year, when the average price per ad dropped by 18% in the same period.
Meta has actively enhanced its ad targeting technology through artificial intelligence to boost advertiser returns and maximize the monetization of its popular Instagram Reels feature. CEO Mark Zuckerberg stated during an analyst call on Wednesday that “Reels has evolved from an early initiative to become a fundamental component of our apps.
Furthermore, as advertisers increase their spending with an improved macroeconomic outlook, Meta seems to be a significant beneficiary. Jesse Cohen commented, “Meta’s strong quarter provides further proof that advertisers are favoring major market leaders like Facebook and Instagram over smaller social media networks.
Snap, a fellow social media platform, reported in its Tuesday earnings report that some advertisers temporarily halted their spending after the Israel-Hamas conflict outbreak earlier this month. This situation has raised questions regarding potential implications for the broader digital advertising industry. During Wednesday’s analyst call, Meta CFO Susan Li mentioned that Meta also observed reduced ad spending in the early part of the fourth quarter, which coincided with the timing of the Israel-Hamas conflict. However, Li pointed out that it’s challenging to attribute this decrease in demand to any specific geopolitical event.