parent Meta reported a surge in profit in the fourth quarter (Q4) of FY23, tripling its earnings with the highest revenue in nine quarters driven by strong digital ad spending.
The Mark Zuckerberg-owned company also declared its first cash dividend of $0.50 per share and a $50 billion increase in its stock repurchase authorisation, leading to its stocks surging 14% during extended trading.
In the quarter ended December 31, 2023, Meta’s net profit surged 201.3% to $14 billion (or $5.33 per share) from $4.6 billion (or $1.76 per share) in the same period last year. Its revenue increased 24.7% to $40.1 billion from $32.2 billion in Q4 FY22.
The social media giant concluded FY23 with $134.9 billion in revenue—a 15.7% annual growth—and a net profit of $39.1 billion, a 68.5% increase from the previous fiscal year.
“This was a good quarter, and it wrapped up an important year for our community and our company,” Mark Zuckerberg, Founder and CEO of Meta, said during the fourth-quarter earnings call.
The year 2023 was Meta’s “year of efficiency”, Zuckerberg said, which focused on becoming a stronger technology company, improving its business stability to deliver the ambitious long-term vision for artificial intelligence (AI) and the metaverse.
“Last year, not only did we achieve our efficiency goals, but we returned to strong revenue growth, saw strong engagement across our apps, shipped a number of exciting new products.. and of course established a world-class AI effort that is going to be the foundation for many of our future products,” he added.
Focus on AI
The Meta chief highlighted that moving forward, a major goal for the company will be building the “most popular” and “most advanced” AI products and services.
Zuckerberg believes this next generation of services requires building full general intelligence. “We’ve been working on general intelligence research in FAIR for more than a decade, but now general intelligence will be the theme of our product work as well,” he added.
Meta’s other major long-term focus is the metaverse—an immersive digital realm—where it has been making significant investments ever since 2021 when Facebook rebranded to Meta.
Zuckerberg noted that Meta has invested heavily in AI and the metaverse for a long time, and it will continue to do so.
“These days there are a lot of questions, more about AI and that field is moving very quickly, but I still expect this next generation of AR, MR, and VR computing platforms to deliver a realistic sense of presence that will be the foundation for the future of social experiences and almost every other category of experiences as well,” he added.
Meta CEO believes everyone will want a new category of computing devices that “let you frictionlessly interact with AIs that can see what you see and hear what you hear”—like smart glasses.
Reality Labs, which works on virtual reality (VR) and augmented reality (AR) gadgets and Meta’s metaverse vision, crossed $1 billion in revenue in Q4 for the first time, driven by Quest 3 sales during the holiday season. While the unit’s revenue rose 47.3% annually, its operating loss widened 8.6% to $4.6 billion.
“For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our
ongoing product development efforts in AR/VR and our investments to further scale our ecosystem,” Meta CFO Susan Li noted.
Meta’s Family of Apps
Zuckerberg said besides AI and the metaverse, Meta is continuing to improve its apps and ads businesses as well.
Meta, which also owns Instagram, WhatsApp, and Threads, said the community across its Family of Apps continues to grow. About 3.19 billion people used at least one of its apps daily, and nearly 3.98 billion people used at least one app every month, it noted.
The social media company is transitioning away from reporting Facebook-specific metrics, and it will no longer report daily and monthly active users for Facebook or monthly active people for its Family of Apps.
Meta saw significant growth in advertising revenue—its main revenue source—which increased to $38.7 billion from $31.3 billion in the year-ago period. The California-based firm’s Q4 total expenses were $23.7 billion, down 8% year-on-year.
The social media giant ended the fourth quarter with over 67,300 employees, down 22% from a year ago, while up 2% from the third quarter as it resumed its hiring efforts.
In 2024, the company expects total expenses to be between $94 billion-$99 billion, unchanged from its prior outlook and “foresees capital expenditure in the range of $30 billion-$37 billion—a $2 billion increase of the high end of its prior range”.
Meta also issued an optimistic outlook for Q1 2024, where it expects its revenue to be in the range of $34.5 billion-$37 billion. Its revenue in the corresponding year-ago period was $28.6 billion.
Highlighting that 2023 was a pivotal year for Meta, Li said, “We increased our operating discipline, delivered strong execution across our product priorities, and improved advertising performance for the businesses who rely on our services. We will look to build on our progress in each of those areas in 2024 while advancing our ambitious, longer-term efforts in AI and Reality Labs.”
Edited by Suman Singh
