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Meta Beats Expectations on Third-Quarter Revenue, Earnings

CIO Insider Team | Thursday, 26 October, 2023

Meta Platforms this week beat expectations on third-quarter revenue and earnings, helped by austerity measures and a recovery in digital advertising ahead of the holiday season.

The company, which posted its best operating profit margin in two years, also cut its expenses for the year.

Meta shares, which are up nearly 150 percent this year, were up three percent in after-hours trading.

The owner of Facebook and Instagram has climbed back from the blues of 2022.

Last year the company spent in the metaverse, or shared virtual worlds that people can access through the Internet. It has laid off 21,000 workers since last fall, following a post-pandemic drop in customers.

Meta's operating profit margin doubled to 40 percent in the third quarter. Turnover also grew the fastest in two years.

It cut total spending in 2023 to between $87 billion and $89 billion, down from $88 billion to $91 billion previously.

The social media company also said it expects total spending in 2024 to be between $94 billion and $99 billion, according to LSEG data, which is higher than expected.

Meta shares, which are up nearly 150 percent this year, were up three percent in after-hours trading.

Advertisers, betting on resilient consumer spending, flocked to the company's social media and digital platforms ahead of the holiday shopping season, also boosting ad sales at Alphabet and Snap.

In the third quarter, which ended September 30, Meta ad views were up 31 percent year over year. Average spend per ad fell six percent but the pace of decline was the slowest in seven quarters.

Meta also again warned of future regulatory pressure and further spending on infrastructure.

Sales for the quarter ended in September rose 23 percent to $34.15 billion. Analysts had expected revenue of $33.56 billion, according to LSEG data.

Meta Daily Active People (DAP) grew by seven percent. The company uses the counter to track individual users who have used one of its apps, such as Facebook, Instagram, Messenger or WhatsApp, throughout the day. DAP grew by seven percent in the last June quarter.

Facebook and daily active users grew by five percent, while ad impressions on Meta apps grew by 31 percent.

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