Key Takeaways
- Meta Platforms had a better-than-expected quarter, with net income up 164%.
- The parent company of Facebook and Instagram took in $33.64 billion in advertising revenue across its sites, a 23% growth year-over-year.
- Cost-cutting measures gave the company some breathing room, as the company reported the end to layoffs and continued facilities consolidation.
Meta Platforms (META)'s third-quarter net income and revenue topped analysts' predictions as the company reported healthy advertising revenue and continued efforts to cut costs.
The parent of Facebook and Instagram reported earnings of $11.6 billion, or $4.39 per diluted share, up 164% year-over-year. Meta's revenue came in at $34.1 billion for the quarter, an improvement of 23% compared with the prior-year period, beating lofty predictions from analysts on the strength of ad revenue gains.
Meta said ad revenue rose 24% as the company recovers from a volatile 2022, where advertising revenue seesawed.
While Meta has been somewhat slower than tech peers like Microsoft (MSFT) and Alphabet (GOOG) to adopt AI technology into its offerings, it has moved to entice advertisers with AI. Earlier this month the company unveiled generative AI tools allowing advertisers to automatically create new ad copy, background images, and more.
While tech companies have so far not managed to turn their newfound interest in AI into substantial profit, the move seems to be encouraging advertisers on Facebook and Instagram.
Meta is also moving to eke out gains through cost-cutting measures. Starting last November the company engaged in multiple rounds of layoffs to reduce its headcount by at least 21,000. The most recent round of layoffs took place just this month.
"Beginning in 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities," the company said in its earnings report. "As of Sept. 30, 2023, we have substantially completed planned employee layoffs while continuing to assess facilities consolidation and data center restructuring initiatives."
Along with cost-cutting maneuvers, Meta has signaled it will shift some of its practices in line with regulatory rulings. In Europe, for instance, the company plans to offer paid subscriptions for Facebook and Instagram users wishing to go ad-free. This policy, if it does take effect, may boost the company's top-line performance, although it may deter some users accustomed to a free experience on those platforms.
Meta shares were up nearly 3% in after-hours trading, at about $308. The stock, which fell 4.2% during regular trading hours amid a broader tech sell-off, is now trading roughly in line with its position in late 2021, just before prices began to plunge for most of 2022.