Zhitong Finance APP has learned that Meta Platforms (META.US), the parent company of Facebook and Instagram, announced on the morning of February 2, Beijing time that its holiday quarter (Q4) revenue was better than market expectations, mainly due to the Facebook social network attracting more revenue. With multiple users, the demand for advertising becomes even stronger.
According to financial report data, Meta Platforms’ revenue in the fourth quarter was 32.2 billion US dollars, although it fell 4% year-on-year, but exceeded the 31.6 billion US dollars generally expected by Wall Street analysts. Meta shares rose nearly 19 percent in after-hours trading. Meta’s diluted earnings per share came in at $1.76 in the fourth quarter, well below the $3.67 it earned in the year-ago quarter and analysts’ expectations of $2.24.
Meta CEO Mark Zuckerberg said Meta’s investments in artificial intelligence are making progress, particularly in improving the videos it shows users on Facebook and Instagram. “In addition to this, our management theme for 2023 is ‘Year of Efficiency’ and we will focus on becoming a stronger and more agile organisation,” he said in a statement on Wednesday.
Meta’s total costs and expenses for the fourth quarter and full year of 2022 are $25.77 billion and $87.66 billion, respectively, up 22% and 23% year over year, respectively. This includes charges related to Meta’s restructuring efforts in the fourth quarter and full year of 2022 of $4.2 billion and $4.61 billion, respectively.
Today, the company is recovering from its worst year in the stock’s history. Meta is facing a rapid decline in advertiser demand due to a weaker overall economy, persistently high inflation and ongoing geopolitical conflict, as well as changes to iPhone privacy rules. In November last year, Meta cut its first large-scale layoffs, laying off 11,000 employees, accounting for 13% of the total workforce.
These layoffs came during a relatively positive quarter for the company. Meta’s flagship social network, Facebook, is still growing, with more than 2 billion daily active users (DAU), up more than 70 million from a year ago.
In terms of other important operating indicators, as of December 31, 2022, Facebook’s monthly active users (MAU) will be 2.96 billion, a year-on-year increase of 2%. In the fourth quarter of 2022, the number of ad impressions in the Meta application family increased by 23% year-on-year, although the average price per ad decreased by 22% year-on-year. For all of 2022, ad impressions will increase by 18% year-on-year, while the average price per ad will decrease by 16% year-on-year.
In terms of performance outlook, Meta expects the first quarter revenue range of this year to be US$26 billion to US$28.5 billion in its financial report, which is in line with analysts’ consensus expectations of US$27.25 billion. The company also increased the size of its share repurchase authorization by $40 billion, and at the end of last year it had $10.87 billion of funds available for authorized buybacks.
For full-year 2023, the company expects expenses of $89 billion to $95 billion, down sharply from its previous range of $94 billion to $100 billion, due to slower expected growth in payroll expenses and cost of revenue. The company also now expects $1 billion in restructuring-related charges to consolidate office facilities in 2023, down from a previous forecast of $2 billion. The Menlo Park, Calif.-based company said full-year spending in 2023 will be lower than previously forecast, which could help ease investor concerns about budget overruns on the company’s virtual reality (VR) ambitions.
After the announcement of Meta’s financial report, a group of social media advertising stocks in the US stock market followed Meta’s rise after hours. Google parent Alphabet (GOOGL.US) and Pinterest (PINS.US) got the biggest boosts. More than 50% of Alphabet’s revenue comes from Google search ads. Pinterest generates a large portion of its revenue from advertising and has various businesses in the social media space.