Meta reports that profits have more than tripled and pays out its first dividend
Meta on Thursday reported a 25 percent increase in quarterly revenue while profits more than tripled, a surge fueled by the advertising business after a shaky eighteen months of layoffs and a shaky digital advertising market.
The Silicon Valley company, which owns Facebook, Instagram and WhatsApp, also said it would pay its first dividend of 50 cents per share. Dividends are generally associated with mature and slower growing companies. Meta made the announcement as it is spending a lot of money on capital investments, such as data centers and other infrastructure. The company also authorized another $50 billion in stock buybacks.
“We've had a great quarter as our community and our company continue to grow,” said Mark Zuckerberg, founder and CEO of Meta. “We have made great progress on our vision of advancing AI and the metaverse.”
For the three months ended Dec. 31, Meta's revenues were $40.1 billion, up from $32.2 billion a year ago and ahead of Wall Street estimates of $39 billion, according to data compiled by FactSet. Profit was $14 billion, compared to $4.65 billion a year earlier.
The company has benefited from a continued recovery in digital advertising, although marketers remain cautious about where they spend their advertising budgets. On Tuesday, Google reported search revenue and a profit margin for the latest quarter that fell short of Wall Street expectations due to modest advertising growth.
Meta has had a tumultuous few years as the global economy changed and turned online advertising markets upside down. The company has also faced criticism over privacy issues and the spread of misinformation and toxic content on its platforms.
Mr. Zuckerberg has moved the company into the immersive digital world of the metaverse. Last year he also embarked on what he called a “year of efficiency” to cut costs, including laying off tens of thousands of workers. The company's workforce has shrunk by 22 percent since December 2022 and now stands at 67,317 employees.
Meta remains under pressure to rein in harmful content on its platforms, which are regularly used by more than four billion people. On Wednesday, Mr Zuckerberg – along with other tech executives – was questioned at a congressional hearing about the spread of child sexual abuse material online. Mr Zuckerberg told those at the hearing that he regretted what families of children who suffered online abuse had experienced.
Nevertheless, more people regularly return to Meta's services. The company has more than 3.98 billion monthly users in its apps, an increase of 6 percent compared to a year ago.
It also continues to invest heavily in artificial intelligence and redesigning its data centers to keep pace with other tech giants in the highly competitive field. Meta said part of the higher operating costs came from attracting top technical talent in AI
But the company said the layoffs and some other cost-cutting measures, such as the restructuring of its data centers, had been “completed.” Restructuring costs of $1.1 billion were required for the quarter.
Meta expects it to continue growing in the current quarter, with revenue between $35 billion and $37 billion.
The company also increased its capital expenditure forecasts to $30 billion to $37 billion over the course of 2024. Much of that will include building out and maintaining its infrastructure, as well as the rising costs of AI research and development.