Meta Platforms Inc. tripled its profit and posted sharply higher revenue in the final quarter of 2023, boosted by a rebound in digital advertising as well cost cutting and layoffs in what CEO Mark Zuckerberg called the “year of efficiency.”
"The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta,” said longtime tech analyst Debra Aho Williamson.
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The Menlo Park, California-based parent company of Facebook and Instagram said Thursday that it earned $14 billion, or $5.33 per share, in the October-December period. That's up from $4.65 billion, or $1.76 per share, a year earlier.
Revenue grew 25% to $40.11 billion from $32.17 billion.
Analysts, on average, were expecting earnings of $4.82 per share on revenue $39.1 billion, according to FactSet Research.
“This was a pivotal year for our company. We increased our operating discipline, delivered strong execution across our product priorities, and improved advertising performance for the businesses who rely on our services,” Meta said in a statement.
Meta also grew the user base on its apps, with monthly active users on its family of apps — Facebook, Instagram, Messenger and WhatsApp — reaching 3.98 billion as of the end of the year, up 6% from 2022.
Facebook had 3.07 billion monthly active users as of Dec. 31, an increase of 3% year-over year. The company does not break out the user base of its other platforms.
The blowout results come a day after Zuckerberg testified before the Senate along with other social media CEOs about the dangers their platforms pose to children.
For the current quarter, Meta is forecasting revenue of of $34.5 billion to $37 billion, above Wall Street's expectations. Analysts are projecting revenue of $33.9 billion for the first quarter.
The company said it had 67,317 employees as of December 31, 2023, a decrease of 22% year-over-year after it laid off thousands to cut expenses. But Meta expects higher payroll costs this year as it plans to add more highly-paid AI specialists to further its ambitions and compete with other tech giants for talent in this area.
Meta also initiated a quarterly dividend to its shareholders. It said it will pay 50 cents per share on March 26 to shareholders of record as of Feb. 22. It said it plans to pay a quarterly dividend going forward.
The company’s Reality Labs segment, which includes its virtual reality headsets and augmented reality technology, grew its revenue by 47% to $1,07 billion — but it still reported an overall loss of $4.65 billion for the quarter.
Insider Intelligence analyst Jasmine Enberg said Meta's investments in artificial intelligence "demonstrate the company’s commitment to becoming an AI heavy-hitter—something investors and advertisers will reward.”
“Meta still faces the big task of proving that it can integrate AI with its other big bet, the metaverse," she said. "Meanwhile, a pullback from Chinese advertisers could be a headwind to its ad business, and investors won’t be willing to overlook the mounting losses in Reality Labs should Meta’s ad business falter.”
Meta's shares jumped $55.52 or 14.1%, to $450.28 in after-hours trading. The stock had closed at $394.78, up 1.2%.