Meta Platforms has reported an impressive performance for its third quarter, showcasing significant revenue growth and strong earnings. Revenue for the three months ending September 30 increased by nearly 19% year-over-year, reaching $40.59 billion, surpassing analyst expectations of $40.29 billion, as per estimates from LSEG. Earnings per share also surged over 37% reaching $6.03, far exceeding the consensus estimate of $4.25.
Despite the strong results, Meta’s shares dropped by 3% following the release of these figures. Investor concerns were sparked by lower-than-anticipated daily active users and a rise in the company’s capital expenditure guidance for the full year. Nevertheless, the Family of Daily Active People metric saw growth of nearly 5% year-over-year, totaling 3.29 billion users, although it fell short of the 3.31 billion that analysts were anticipating. This still represents over 40% of the global population, indicating a robust user base across its platforms, which include Facebook, Instagram, Threads, Messenger, and WhatsApp.
In addition to user base growth, the average revenue per user across Meta’s family of apps rose by more than 12% year-over-year to $12.29. The company has adjusted its full-year capital expenditures guide upward by $1 billion, but it also reduced its total expenses guidance by the same amount, suggesting a balancing act in investment and expense management.
In terms of operational efficiencies, the company demonstrated strong performance in various areas, including operating margin expansion and smaller-than-expected losses in its Reality Labs segment, which focuses on virtual and augmented reality products. Although Reality Labs reported a significant operating loss of $4.4 billion for the quarter, new products like the Quest headsets and Ray-Ban smart glasses are emerging successes.
Looking to the future, Meta anticipates fourth-quarter revenue to be between $45 billion and $48 billion, which is higher than the $46.31 billion that analysts projected. Mark Zuckerberg emphasized a commitment to investing in artificial intelligence and infrastructure, hinting at a positive outlook for growth driven by advancements in AI.
Furthermore, platforms like WhatsApp and Threads are experiencing strong user growth, with WhatsApp achieving over 2 billion calls per day and Threads gaining over 1 million new sign-ups daily. The implementation of AI-driven tools is yielding positive results, with businesses leveraging these tools showing increased conversion rates.
Overall, despite some short-term stock volatility, Meta’s solid financial performance, user engagement, and strategic investments in technology point to a promising future. This can instill confidence in long-term investors as the company continues to capitalize on new opportunities in advertising and technology.
In summary, Meta Platforms has delivered a strong financial quarter and promising guidance, showcasing resilience and potential for future growth, making it an appealing choice for long-term investors to consider.