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广告给力、降本见效,但预警元宇宙大亏!Meta盘后大涨后转跌

Advertising is powerful and cost reduction is effective, but the early warning metaverse is a huge loss! Meta rose sharply after the market and then turned down

wallstreetcn ·  Oct 26, 2023 07:01

Source: Wall Street News

In the third quarter, Meta's revenue growth rate tripled month-on-month, EPS profit increased 168% year over year, and operating profit margin doubled year on year; social media app revenue exceeded expectations by 24%, Facebook's daily and monthly active users continued to hit record highs. Metaverse revenue exceeded expectations by a sharp 26% drop, but losses were 5% lower than expected.

Meta lowered its annual fee guidelines by 2 billion US dollars. It is expected that next year's expenses may increase by more than 10%, partly due to losses in the metaverse business that will increase significantly compared to this year. Meta lowered its capital expenditure guidelines by 1 billion US dollars this year. Next year's spending may increase by 20%, partly due to investment in AI servers and data centers. After the financial report was announced, Meta, which closed down more than 4%, rose 5.5% after the market, and once fell more than 3% after turning down.

Following Google, another digital advertising giant, Meta also confirmed strong advertising growth. Its sales revenue and profit surged beyond expectations in the third quarter, and cost reduction measures continued to bear fruit.

The review said that Meta, which was hit by a slump in the advertising business last year, is recovering. From November of last year to after laying off several thousand employees and cutting off a number of projects this year, Meta is focusing more on advertising and algorithms, and is using artificial intelligence (AI) technology to strengthen the company's core business advertising. Meta is betting on using content recommended by AI to keep users on social media such as Facebook.

However, when announcing its performance guidelines, Meta warned that next year, the metaverse business that the company focuses on investing in will significantly expand its losses from this year's level.

During the performance call, Meta also warned that its biggest source of revenue, advertising business is heavily dependent on the spending-related macroeconomic environment. Meta's chief financial officer Susan Li said in a conference call that Meta is very vulnerable to fluctuations in the macro environment, and next year's revenue prospects are uncertain.

After the financial report was announced, Meta, which closed down about 4.2%, quickly stopped falling and turned up after the market. At one point, the post-market increase reached 5.5%. Since then, the increase has continued to narrow. It turned down for about two hours after closing, and is now down nearly 3%.

Revenue growth doubled month-on-month, EPS profit increased 168%, and operating margin doubled year-on-year

After the US stock market on Wednesday, October 25, EST, Meta announced that for the third quarter of this year ending September 30, the company's operating income and earnings per share (EPS) were higher than expected, and the growth was significantly faster than in the second quarter:

Third quarter revenue34.15 billion US dollars,23% year-on-year increase,Twice the 11% growth rate in the second quarterClose to the top of the company's guidance range of 32 billion to 34.5 billion US dollars, analysts expect an increase of 20.9% to 33.51 billion US dollars.

EPS after dilution in the third quarterFor $4.39,168% year-on-year increaseAnalysts expect an increase of 121% to $3.63, and a year-on-year increase of 21% in the second quarter.

Operating profit for the third quarter was 40%, double that of a year ago, higher than analysts' expectations of 33.9%, and 29% for the second quarter.

Ad revenue exceeded expectations by 24% year-on-year, and the growth rate doubled month-on-month

The day before Meta released its financial report, Google's parent company Alphabet announced that total advertising revenue for the third quarter exceeded expectations by 9.5% to 59.65 billion US dollars. Among them, Google Search and other advertising revenue increased by more than 11% year-on-year to 44.03 billion US dollars.

Google's earnings report will allow Wall Street to conduct a comprehensive review of the health of the digital advertising market in the third quarter for the first time. Some analysts believe that the digital advertising situation in the second half of the year is still optimistic, and the growth rate continues to accelerate.

This Wednesday's financial report shows that Meta, which is the same leader in the digital advertising industry as Google, continued to increase sharply by double digits in the third quarter, and the growth rate doubled from the second quarter.

Meta's advertising revenue for the third quarter was $33.64 billion, up 24% year over year, about 2% higher than analysts' expectations of US$32.94 billion, and increased 11.9% year over year in the second quarter.

Social media app revenue increased by 24%, metaverse revenue exceeded expectations and fell sharply by 26%, but losses fell short of expectations

By business, Meta's two major businesses continue to have mixed feelings. Including Facebook, Instagram, Messenger, WhatsApp, and other services, Meta's “Family of Apps” (Family of Apps) revenue exceeded expectations by more than 20% in the second quarter, and profits far exceeded expectations, surging by nearly 90%.

Including hardware, software, and content related to AR (augmented reality) and VR (virtual reality), the metaverse related business, “Reality Labs” (Reality Labs), exceeded expectations and dropped sharply by more than 20%. However, losses in this area of business were not expected to be significant.

  • Q3 application familyoftherevenueIt's 33.94 billion US dollars,24% year-on-year increase, analysts expect US$33.08 billion, a year-on-year increase of 11.8% in the second quarter; application families in the second quarterOperating profitIt's 17.49 billion US dollars,Up 87% year over yearThis is nearly 15% higher than analysts' expectations of US$15.23 billion.

  • Actual lab revenue for the third quarter210 million US dollars,Decreased 26% year over year, analysts expect 313.4 million US dollars, down 38.9% year on year in the second quarter; reality lab in the third quarterOperating lossesAt 3.74 billion US dollars, the same as in the second quarter.YoYLosses a year ago1.9% increaseIt is about 5% lower than analysts' expected loss of 3.94 billion US dollars, and the year-on-year loss increased by 33.3% in the second quarter.

Facebook's daily and monthly active users continue to hit record highs

The number of active users of both the app family and Facebook continued to grow year over year in the third quarter.

By the end of the third quarter, the number of daily active users (DAU) of the app family was 3.14 billion, an increase of 7% over the previous year. Facebook's DAU for the quarter was 2.09 billion, an increase of 5% over the previous year, setting a record high in a single quarter for two consecutive quarters.

By region, in the first three quarters of this year, Facebook maintained a month-on-month growth trend in DAU in the US and Canada.

By the end of the third quarter, the number of monthly active users (MAU) of the app family was 3.96 billion, an increase of 7% over the previous year. Facebook's MAU for the quarter was 3.05 billion, up 3% year over year, and continued to reach a record high. In the second quarter, MAU broke through the 3 billion mark for the first time in MAU history.

This year's fee guidelines were lowered by 2 billion US dollars, and next year's expenses may increase by more than 10%, partly due to a sharp increase in losses in the metaverse business

In terms of performance guidelines, Meta expects fourth-quarter revenue of 36.5 billion to 40 billion US dollars, which is higher than Wall Street's forecast of 38.76 billion US dollars.

In last year's Quarterly Report's performance conference call, Meta CEO Zuckerberg, who had been tough on investing in the metaverse before, said that this year's management theme was “improving efficiency,” and that the company will focus on transforming into a stronger and more flexible organization, will “proactively cut down projects that have no performance or may no longer be critical,” and strive to improve decision-making efficiency.

Cost cuts have effectively supported Meta's positive performance this year. Meta has been lowered this timeThis year's annual fee guide, announced from the time the second quarterly report was published88 billion to 91 billion US dollars was lowered to 87 billion to 89 billion US dollars, a drop of 2 billion US dollars. This is the second annual fee reduction guideline in the year following the publication of the quarterly report this year.

According to Meta, this year's cost guidelines include around $3.5 billion in facility integration costs, severance payments, and restructuring costs associated with other personnel expenses. When the department published its second quarterly report, it estimated that the cost of such restructuring would be about 4 billion US dollars.

At the same time, Meta predicts,The cost guide for next year is 94 billion to 99 billion US dollars, which is equivalent to an increase of about 8% to 11% compared to this year's expected expenses.

According to Meta, the forecast for next year's expenses stems from three points: first, infrastructure-related costs are expected to increase next year, and larger infrastructure will also bring higher operating costs; second, employee expenses to support these facilities will also increase accordingly, and at the same time, the talent structure will continue to shift to technical posts with higher labor costs; third,As we continue to develop mixed reality (XR) /virtual reality (VR) related products and invest in further expanding the size of related ecosystems, Metaverse Business Reality Lab's losses next year will increase significantly compared to this year.

This year's capital expenditure guidelines indicate that high-end spending will be reduced by 1 billion US dollars or increased by 20% next year partly due to investment in AI servers

When the first quarterly report and the second quarterly report were published in April and July of this year respectively, Meta lowered the overall capital expenditure guidance range for the full year of this year twice in a row, lowering 4 billion dollars and 3 billion US dollars respectively.

Meta announced that it will cut the high end of this year's capital expenditure guidelines by 1 billion US dollars, from 27 billion to 30 billion US dollars to 27 billion US dollars to 29 billion US dollars. Meta expects next year's capital expenditure guidelines to be $30 billion to $35 billion, which is equivalent to an increase of about 11% to 21% over this year's spending.

Meta said that next year's capital expenditure growth stems from investment in AI and non-AI hardware servers, as well as investment in data centers. At the end of last year, Meta announced that it would step up site construction efforts for the new data center architecture.

Zuckerberg says the company is proud to advance work in the field of AI and XR

Since ChatGPT sparked the AI boom, Meta has been striving to catch up with other tech giants such as Microsoft and Google this year. After Meta released the open source Llama 2 model in July, news broke in August and September that Meta was training the Llama 3 model. The plan was to make the model reach the performance level of GPT 4, and it will still be provided free of charge.

At the annual developer conference at the end of last month, Meta announced that all of its social media apps will be supported by AI chatbots, which means that Meta's 3 billion users all have experiences similar to ChatGPT services.

At the annual developer conference at the end of last month, Meta also unveiled the new generation of the Quest 3 headset and Ray-Ban smart glasses. Quest 3 marks Meta's transformation from virtual reality (VR) to mixed reality (XR). It starts at $499 and is 67% higher than the previous generation Quest 2.

At the same time as the third quarter earnings report was released, Zuckerberg said that by launching Quest 3, smart glasses, and AI studios, the company team is promoting efforts in the AI and XR fields, and he is proud of the team's work.

Editor/Somer

The translation is provided by third-party software.


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