Meta topped estimates in Q3 results released after the bell in the US on Wednesday.
Company-wide revenue was $34.146 billion last quarter, ahead of the $33.51 billion the Street expected.
It wasn’t a blockbuster beat by any stretch, but top-line growth of 23% was the briskest YoY pace in two years.
Recall that revenue growth was negative for three consecutive quarters in 2022, when the shares fell 75% from their post-pandemic highs.
Meta guided for between $36.5 billion and $40 billion in sales in the current quarter. Taking the midpoint, revenue growth is seen near 19% for Q4. The Street is looking for $38.76 billion this quarter.
All of the underlying prints and metrics looked fine, although Reality Labs was a blight as usual. Ad revenue was $33.64 billion against estimates for $32.94 billion. Facebook daily and monthly active users were 2.09 billion and 3.05 billion, respectively. The former was ahead of estimates, the latter matched expectations.
Operating income across Meta’s apps was more than $2 billion better than anticipated at $17.49 billion. EPS was $4.39.
The operating loss in Reality Labs was $3.74 billion. That was a bit narrower than expected, but Meta suggested the red ink will continue to flow.
The loss in Reality Labs for 2023 is now $11.5 billion. “We expect operating losses to increase meaningfully YoY due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem,” Meta said, of the segment.
I’m done making jokes about that. It is what it is, and what it isn’t is an impediment to the stock anymore, which is all that counts for me as a shareholder. Maybe Reality Labs will work out, maybe it won’t, but it’s not going to kill the company if it doesn’t, Mark Zuckerberg’s best efforts aside (I’m just joking, Mark).
Zuckerberg dubbed 2023 a “year of efficiency,” where that meant job losses, among other things. On Wednesday, Meta lowered its full-year expense guidance to between $87 billion and $89 billion from $88 billion to $91 billion previously. $3.5 billion of that is restructuring costs.
Full-year 2024 expenses will be between $94 billion and $99 billion due to higher infrastructure costs, growth in payroll expenses and, of course, Reality Labs. That projection was described as “preliminary.” Capex should be between $27 billion and $29 billion next year. For what it’s worth, analysts expect expenses will be $96.53 billion in 2024.
Ultimately, Meta’s results were fine, but “fine” hasn’t been enough this quarter. For anyone, really. Between what I’d describe as “ho-hum” beats and the nod to accelerating losses in Reality Labs, it wouldn’t be terribly surprising to see the shares balk at the report, but as we saw on Wednesday during the US cash session, bond yields are in the driver’s seat right now.
