Meta has reported its Q3 2023 earnings with average daily users across its family of apps up seven per cent year-on-year and up five per cent on Facebook.
Its ad impressions across its family of apps jumped by almost a third year-on-year and its average price per ad dropped six per cent. All told, the company’s revenue jumped 23 per cent year-on-year to a whopping US$34 billion (AU$54 billion).
However, the company’s chief financial officer, Susan Li said that it was “seeing more volatility at the start of the quarter”.
Li also told investors that while Meta doesn’t have “direct revenue exposure” to Israel and the Middle East, it had noticed “softer ad spend” at the start of this quarter, coinciding with the start of the Israel-Hamas conflict.
Meta’s shares rose by around four per cent in after-hours trading but slid and ended three per cent lower. The news from Mark Zuckerberg’s company follows impressive earnings for Snap, Microsoft and Google which reflected a growing confidence in the advertising market. However, it stands to reason that these firms’ revenues will fall accordingly with Meta’s.
Zuckerberg also told investors that he and his leadership team will continue to restructure the business around AI. Zuck promised that this business change would improve its content recommendations and ad targeting smarts.
He also talked up the company’s other AI initiatives including the recent launch of AI assistants on its Whatsapp and Messenger platforms and the launch of its own large language model, Llama 2.
“In terms of investment priorities, AI will be our biggest investment area in 2024 for both engineering and compute resources,” he said.
“We’re going to continue deprioritising a number of non-AI projects across the company to shift people towards working on AI.”
Late last year, Meta announced that 2023 would be a “year of efficiency” and began mass layoffs. More than 17,000 staff have been laid off globally, with the Australian office taking a significant hit to its top execs.
But this year of efficiency has not stopped Meta from pouring funds into its metaverse-focused Reality Labs division.
“For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem,” added Li.
In the three months to the end of September, Reality Labs lost almost US$3.75 billion (around AU$5.95 billion). It is looking increasingly unlikely that Zuck’s big bet on virtual reality will pay off.
