Meta Earnings: Zuckerberg’s ‘Year of Efficiency’ Records Huge Profit, Surpasses Analyst Estimation

American multinational technology conglomerate Meta has posted a huge revenue for the fourth quarter (Q4) of 2023, which was boosted by a rebound in digital advertising as well as a significant layoff of workers, in what CEO Mark Zuckerberg termed as the “Year of Efficiency”.

The California-based company said on Thursday that it earned $14 billion profit, and $5.33 per share, in the October- December period. That is up  $4.65 billion and $1.76 per share, posted last year. It posted a revenue of $40.1 billion.

Meta Q4 revenue surpassed analyst earnings of $39.1 billion and $4.82 per share. The company also saw its user base grow significantly on its apps, with monthly active users on (Facebook, Instagram, Messenger, and WhatsApp) reaching 3.98 billion as of the end of the year, up 6% from 2022.

Shares of Meta surged more than 10% shortly after the release of its earnings reports, as the company announced another $50 billion in stock buybacks and unveiled its inaugural cash dividend of $0.50 per share, to be paid out on March 26.

Speaking on the remarkable revenue growth in Q4 of 2023, the company said via a statement,

“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”.

Here is an overview of how Meta performed in Q4 of last year;

• Earnings per share: $5.33 vs. $4.96 expected by LEG, formerly known as Refinitiv.

• Revenue: $40.1 billion vs. $39.18 billion expected by LSEG.

•Daily active users (DAUs): 2.11 billion vs. 2.08 billion expected. Monthly active users (MAUs): 3.07 billion vs. 3.06 billion expected.

• Average revenue per user (ARPU): $13.12 vs. $12.81 expected. Revenue jumped 25% in the quarter from $32.2 billion a year earlier, the fastest rate of growth for any period since mid-2021, as the online ad market continued to rebound.

Meanwhile, the company’s expenses decreased 8% year over year to $23.73 billion, and its operating margin more than doubled to 41%, a clear sign that cost-cutting measures are bolstering profitability.

Net income more than tripled to $14 billion, or $5.33 per share, from $4.65 billion, or $1.76 per share, a year earlier. Based on its late-trading price, Meta’s market cap has swelled to almost $1.2 trillion.

Sales in Meta’s Reality Labs unit passed S1 billion in the quarter, though the virtual reality unit recorded $4.65 billion in losses.

Meta’s Finance chief Susan Li said on the call with analysts that the biggest drivers of revenue growth came from companies in areas including e-commerce, entertainment, and gaming.

For the current quarter, Meta is forecasting revenue of $34.5 billion to $37 billion, above Wall Street expectations. On the other hand, analysts have predicted a revenue of $33.9 billion for the first quarter (Q1) of 2024.

Zuckerberg further added that Meta will continue to invest in Al and in building up its computing infrastructure to handle bigger workloads. He disclosed that growth will come without much expansion in headcount.

LinkedIn Summary

Meta’s fourth-quarter earnings report confirmed that 2023 was one of the company’s strongest years to date, sending its shares surging on Friday. Revenue at Facebook and Instagram’s parent company grew at the fastest clip since mid-2021, totaling $40.1 billion — about 900 million more than investors expected and a 25% jump from last year, Thursday’s report showed. CEO Mark Zuckerberg’s “year of efficiency,” during which he laid off one third of Meta staff, brought costs and expenses down 8% from the prior year, and its operating margin doubled. Meta shares almost tripled in value last year.

• If Meta’s stock gains hold through Friday’s trading session, it will add about $200 billion in market cap, the biggest one-day gain ever, per Bloomberg.
• Meta announced its first dividend payment: it will pay investors 50 cents per share on March 26. It will also use more than $65 billion in excess cash for a $50 billion stock buyback.
• Facebook is still growing, with 2.11 billion daily users, 3.07 billion monthly users and an average of $13.12 in revenue per user.