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Business News/ Companies / Company Results/  Meta Q3 Results: Facebook parent beats revenue, profit estimates; shares fall on warning over macro uncertainty
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Meta Q3 Results: Facebook parent beats revenue, profit estimates; shares fall on warning over macro uncertainty

Meta, which also owns WhatsApp, reported a 23% rise in revenue to $34.15 billion for the quarter ended September, growing at the quickest pace in two years. Analysts expected revenue of $33.56 billion.

Meta shares initially climbed more than 5%, but declined over 3% in extended trading after executives expressed concerns about the macro environment. (Image: Reuters)Premium
Meta shares initially climbed more than 5%, but declined over 3% in extended trading after executives expressed concerns about the macro environment. (Image: Reuters)

Meta Platforms, the owner of social media platforms Facebook and Instagram, beat expectations for third-quarter profit and revenue on Wednesday led by a recovery in digital advertising spending.

The social media giant reported its best operating margins in two years and also trimmed expenses for the year.

Meta, which also owns WhatsApp, reported a 23% rise in revenue to $34.15 billion for the quarter ended September, growing at the quickest pace in two years. Analysts expected revenue of $33.56 billion, according to LSEG data. 

The company’s earnings per share increased to $4.39, compared with $1.64 in the prior year. Meta's operating margin in the third quarter doubled to 40%.

Also Read: Boeing results: Q3 loss at $1.64 billion on lower deliveries, 737 delivery forecast cut

Total 2023 expenses were cut to a range of $87 billion to $89 billion, from a previous range of $88 billion to $91 billion. It expected 2024 total expenses in the range of $94 billion to $99 billion, higher than estimates.

The company forecast fourth quarter revenue between $36.5 billion and $40 billion, in line with analyst expectations.

The company forecast 2024 spending that will exceed Wall Street estimates, as it pushed hiring needs from this year to the next and continued to invest in AI infrastructure. It also suggested the conflict in Israel and Gaza could dampen fourth-quarter sales, Reuters reported.

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Meta has shed 21,000 employees since autumn 2022, particularly in non-engineering roles. The company is keeping focus on engineering talent as it makes plans to rev up hiring again next year, executives said.

CEO Mark Zuckerberg told analysts on a conference call that artificial intelligence would constitute the top investment priority for 2024. 

The company will de-prioritize a number of non-AI projects to avoid adding too much headcount, Zuckerberg said, without providing specifics. 

A lean company culture provided stability for Meta to “see our long-term initiatives through in a very volatile world," he added.

Meta planned to end 2024 with “meaningfully higher" headcount than its approximately 66,000-person workforce as of the end of September, CFO Susan Li said.

The company reported “softness" in ad spending at the beginning of the fourth quarter that appeared to be related to the start of the conflict between Israel and Hamas. Li said the impact was captured in the company's fourth-quarter outlook.

Also Read: Alphabet Q3 Results: ‘lots more to come…’ - Google parent's focus on Artificial Intelligence

Meta also warned again on regulatory pressures ahead, specifically a plan by the U.S. privacy regulator to toughen a 2019 order to include a ban on making money from minors' data.

“We are very subject to volatility in the macro landscape," Li said on a call with investors. “The revenue outlook is uncertain" for 2024.

The comments put a damper on an otherwise upbeat earnings report. Meta shares initially climbed more than 5%, but declined over 3% in extended trading after executives expressed concerns about the macro environment. Meta shares have risen nearly 150% so far this year.

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Published: 26 Oct 2023, 08:52 AM IST
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