Facebook parent Meta predicts strong quarterly revenue fuelled by digital ad growth, shares rally

After surpassing the market expectations, Facebook owner, Meta Platforms witnessed an 11% rise in its revenue to $32 billion in the second quarter. The company has predicted an upbeat third-quarter revenue above market expectations. 

The company's revenues are fuelled by its increasing ad revenues. After the release of quarterly results, Meta shares were on fire, and were up by 4% in after-hours of trading on Wednesday. 

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The company expects July-September revenue in the range of $32 billion to $34.5 billion, compared with analysts' average estimate of $31.30 billion, according to Refinitiv data.

Meta Q2 revenue

Exceeding the market expectations, Meta recorded an 11% rise in its revenue to $32 billion in the quarter ended on June 30. Analysts have expected around $31.12 billon of revenue. The social media mamoth is still overcoming from a bruising 2022 crunch, buoyed by hype around emerging AI technology and an aggressive austerity drive in which it has shed around 21,000 employees since last fall. Since the advent of AI, the company's shares have more than doubled in value this year as a result.

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Moreover, advertisers are reinforcing those gains by pumping more money into digital ads again after months of muted spending. As the sitatuation is improving, brands are hedging their bets, but keeping them limited to trusted platforms like Meta and Alphabet. Its impact can be seen on small players like Snap.

'We continue to see strong engagement across our apps,' Meta chief Mark Zuckerberg

Sharing promising performance of the company, Meta Chief Mark Zuzkerberg said that he company will continue to see strong engagement across all apps. He also shared a glimps of some products that are up for launch.

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"We continue to see strong engagement across our apps and we have the most exciting roadmap I've seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall," Meta Chief Executive Mark Zuckerberg said.

He also said that the revenue can be shadowed by the forecast of rising expenses in both 2023 and 2024. The cost will include legal fees and increased spending on infrastructure.  

There was no clear indication of further division of the source of revenue in Meta's Q3 forecast. THere are chances that the boost in revenue might be contributed by the recently launched Threads app, which does not yet have ads.

The revenue gains provide relief as Meta makes massive investments to upgrade its infrastructure and stay competitive in an emerging arms race around AI technology, while continuing to invest more than $10 billion a year in a longer-term bet on "metaverse" hardware and software.

The company is hoping to spend $88 billion to $ 99 billion, due to “legal-related expenses” in 2023. Moreover, the company might also need to handle "higher infrastructure-related costs" in 2024, as well as growth in payroll expenses.