Social media giant Meta released its third-quarter financial report, with profits and revenue exceeding expectations. Net income increased by 35% to reach $15.7 billion, and EPS grew to $6.03. However, slower-than-expected growth in active users and Mark Zuckerberg’s continued large investments in AI infrastructure have made investors hesitant. Meta’s stock price fell more than 3% after hours, but it is still up 68% year-to-date.
AI assistance drives impressive advertising revenue
Meta’s third-quarter sales increased by 19% year-on-year, reaching $40.59 billion. 98% of the revenue comes from advertising, with advertising revenue growing by 18.7% this quarter to reach $39.9 billion, showing consistent growth.
Meta’s founder and CEO Mark Zuckerberg stated:
Under the drive of AI artificial intelligence, our applications and business have made significant progress, with strong momentum in the adoption of Meta AI, Llama, and AI glasses.
Metaverse still incurring losses
Mark Zuckerberg’s beloved metaverse business still shows no improvement, with the Reality Labs division’s revenue growing by 29% in the third quarter but still incurring a $4.4 billion loss.
The CFO stated that due to ongoing product development work and further investments to expand the ecosystem, the operational loss for 2024 is expected to increase significantly compared to the same period last year.
Increased capital expenditure and active investment in AI
Meta expects full-year capital expenditure in 2024 to range between $38-40 billion, up from the previous range of $37-40 billion. Capital expenditure is also expected to grow significantly in 2025. Meta has expanded its infrastructure team, with 72,404 employees as of the end of September, a 9% increase from the same period last year.
Zuckerberg stated during the financial report conference that there are many opportunities to use AI to accelerate Meta’s core business, which should yield high returns on investment in the coming years, so more investment should be made.
He also mentioned the Ray-Ban Meta glasses and their newly launched affordable version, Quest 3S. Zuckerberg believes that this is perhaps the most vibrant moment he has seen in the industry, and he will focus on ensuring that Meta can take advantage of this opportunity to create great products.
(Meta launches more affordable virtual reality device Quest 3S, with further evolution of AI features)