Meta shares jump 15% as Q4 net income surges to $14 billion

Shares of Facebook parent company Meta jumped more than 15 per cent in after-hours trading after the company reported a 201 per cent yearly surge in fourth-quarter net profit, driven by a jump in advertising revenue and an increase in user numbers.

The California-based company posted a net profit of more than $14 billion in the quarter that ended on December 31, up 21 per cent compared with the third quarter.

Revenue for the three-month period surged by an annual 25 per cent to more than $40.1 billion, exceeding analyst estimates of $39.1 billion.

This is the third consecutive quarter that the company has reported double-digit revenue growth since the fourth quarter of 2021.

Meta's shares, which closed at $394.78 on Thursday, surged 15.1 per cent to trade at $454.40 a share in after-hours trading.

The stock has gained about 14 per cent so far this year and the company had a market value of about $1.01 trillion at close on Thursday.

In the fourth quarter, advertising impressions delivered across Meta’s family of apps increased 21 per cent on an annual basis while the average price for an advertisement soared by 2 per cent year on year.

Meta’s family of apps includes Facebook, Instagram, Messenger, WhatsApp and other services.

“We had a good quarter as our community and business continue to grow,” said Mark Zuckerberg, Meta founder and chief executive.

“We have made a lot of progress on our vision for advancing AI [artificial intelligence] and the metaverse.”

The company’s earnings per share jumped 203 per cent annually to $5.33 in the fourth quarter.

Meta, which employs more than 67,000 people, expects its March quarter total revenue to be in the range of $34.5 billion to $37 billion.

Facebook’s daily active users stood at 2.11 billion as of December 31, an increase of 6 per cent, while monthly active users surged 3 per cent to 3.07 billion.

“These numbers are a testament to the long-term benefits of Zuckerberg's turnaround that began in 2022,” Thomas Monteiro, senior analyst at Investing.com, told The National

“Not only did the company show an impressive ability to improve margins, but it was also agile enough to direct any extra revenues to the correct operations.

“This leaves no doubt to the fact that Zuckerberg's company is a serious player in all the main races being disputed at the moment, especially VR [virtual reality] and AI [artificial intelligence].”

In the fourth quarter, the company's costs and expenses stood at $23.73 billion, down 8 per cent on an annual basis, while its capital expenditure, including principal payments on finance leases, stood at more than $7.9 billion.

The company said it expects its full-year 2024 total expenses to be in the range of $94 billion to $99 billion, unchanged from its prior outlook.

The company's advertising sales contributed more than 96 per cent to overall sales in the fourth quarter, growing by about 23.8 per cent on an annual basis to more than $38.7 billion.

Revenue from other streams – including the Reality Labs unit – jumped 54 per cent on an annual basis to more than $14 billion.

Reality Labs, which includes augmented and VR-related consumer hardware, software and content for the metaverse, reported an operating loss of over $4.6 billion.

The unit's operating losses are expected to “increase meaningfully year over year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem”, said Susan Li, Meta’s chief financial officer.

The company expects its 2024 capital expenditure to hover in the range of $30 billion and $37 billion, a $2 billion increase of the high end of its prior range.

“We expect [capex] growth will be driven by investments in servers, including both AI and non-AI hardware, and data centres as we ramp up construction on sites with our previously announced new data centre architecture,” Ms Li said.

As part of its restructuring efforts in March, Meta announced it would lay off 10,000 employees and close about 5,000 open roles.

In November last year, the company laid off 11,000 employees, or 13 per cent of its workforce.

Meta said restructuring charges in the fourth quarter totalled $4.2 billion and $4.6 billion for the full year.