Meta Platforms, Inc., the multinational technology conglomerate, reported a whopping $11.6 billion net income in Q3 2023, more than double compared to the same quarter in the previous year. This outstanding performance is a sign that the company’s turnaround strategy continues to deliver. The strong results come as Meta says it has “substantially completed” the layoffs portion of its cost-cutting plan.
The company posted year-over-year quarterly revenue gains of 23% to more than $34 billion, exceeding the $33.5 billion analysts had projected. Ad impressions across all of Meta’s apps grew 31% year-over-year in the September quarter. The company also reported a 6% year-over-year decrease in average price per ad.
Meta has been working to improve its ad targeting technology using artificial intelligence to improve return on investment for advertisers and to better monetize its popular Reels feature on Instagram.
As advertisers return to higher spending as the macroeconomic outlook stabilizes somewhat, Meta appears to be a key beneficiary.
Social media reactions have been largely positive, with many users expressing surprise at the strong results and praising the company’s successful turnaround strategy.
In interviews, experts have also noted that Meta’s solid quarter adds further evidence to the view that advertisers are choosing to spend their budget on market leaders, such as Facebook and Instagram, at the expense of smaller social media networks.
CEO Mark Zuckerberg stated that Meta would shift many employees from non-AI projects to AI projects as part of a new company focus. Behind the scenes, its “AI” algorithms push better video recommendations that increase user retention and ad revenue in the billions.
This strategy seems to be paying off, with “30 million Llama downloads last month,” and its new generative AI chatbots like Snoop Dogg expected to help that number grow.
In contrast, Meta’s VR/AR profits are relatively small compared to its massive advertising profits. Despite the launch of new devices like the Meta Quest 3 and Ray-Ban Meta smart glasses, Reality Labs’ quarterly profits were lower than ever ($210 million), but Q4 profits should rise thanks to Quest 3 and Ray-Ban Meta smart glasses.
However, CFO Susan Li admitted that they “expect Reality Labs operating losses to increase meaningfully year-over-year”.
In conclusion, while Meta’s VR/AR initiatives like the Quest 3 are important for the company’s long-term vision, it’s clear that in the short term, AI and Instagram Reels are driving much of the company’s profit growth. As we move forward, it will be interesting to see how Meta continues to leverage these technologies to maintain its momentum.
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