Global Courant 2023-04-27 03:28:31
Revenues increased as digital advertisers returned to familiar platforms like Facebook and Instagram in an uncertain economy.
Meta Platforms posted its first revenue increase in nearly a year on Wednesday, forecasting second-quarter revenue that topped market expectations as digital advertisers returned to familiar platforms like Facebook and Instagram amid growing economic concerns.
Shares of the Facebook parent company rose 12 percent after the bell, adding more than $50 billion to the market capitalization, with earnings also beating Wall Street estimates.
The company said spending for the year could be lower than forecast in March.
The strong results came as Meta’s tech rivals also appeared to be climbing out of an industry-wide slump that has led to more than 150,000 layoffs across the industry.
Google parent Alphabet reported results on Tuesday as digital ad sales held up better than expected and demand for cloud services increased. Microsoft beat Wall Street estimates, saying artificial intelligence products boosted sales.
Meta has kicked off an aggressive cost-cutting drive, with plans to cut 21,000 jobs and flatten its middle-management structure as it works toward CEO Mark Zuckerberg’s goal of making 2023 the “year of efficiency.”
The results indicate that the austerity drive “got off to a stronger-than-expected start for Meta,” said Debra Aho Williamson, chief analyst at Insider Intelligence.
“In this economic environment – and after the disaster of 2022 – a 3 percent annualized revenue growth is an achievement. Meta’s strong outlook for Q2 revenue is another indicator that the company may be starting to emerge from the woods.
The social media giant faced a bloody 2022 as a pandemic-era e-commerce boom sputtered, while rivals like TikTok conquered young users, while Apple’s privacy updates closed access to the user data it built its advertising business on.
Expensive revisions
As it cuts costs, Meta is simultaneously undertaking several costly overhauls to strengthen its core business, including a major project to upgrade its AI capability, while also investing $10 billion a year in a longer-term bet on “metaverse” hardware and software.
“Our AI work is driving good results in our apps and our business. We are also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver on our long-term vision,” said Zuckerberg.
Spending on AI retooling drove up the company’s capital expenditures, which came in slightly below expectations at $7.1 billion for the quarter. Analysts forecast $7.2 billion in capital expenditures in the quarter, based on the company’s annual forecast of $30 billion to $33 billion, which remained unchanged.
The company cut its annual spending forecast to between $86 billion and $90 billion, down from the $86 billion to $92 billion it forecast in March when it announced its second round of layoffs.
Meta said its quarterly price per ad is down 17 percent from a year earlier, while it expects revenue for the current quarter to be between $29.5 billion and $32 billion, compared to analyst estimates of $29. 53 billion, according to Refinitiv data.
Net income for the first three months of the year fell to $2.20 per share from $2.72 a year earlier, but beat expectations of $2.03 per share.
Revenue for the first quarter increased 3 percent to $28.65 billion, better than an average estimate of $27.66 billion.
“We continue to expect Reality Labs operating losses to increase year-over-year through 2023,” Meta said in a statement, referring to the metaverse-oriented unit in which the company had invested billions of dollars and lost $13.7 billion last year. .
