Meta third-quarter revenue up by 23%

Facebook parent Meta’s third-quarter revenue jumped 23% to $34.15 billion, the latest indicator of a rebound in digital advertising. The company reported $11.6 billion in profit, more than twice the $4.4 billion from a year earlier. Its operating income of $13.7 billion also more than doubled year-over-year.

Meta, which also owns Instagram, WhatsApp, Threads and Messenger said its ads viewed in the quarter increased by 31% from a year earlier. Average price per ad decreased by 6%, the smallest decline in seven quarters.

“The year-over-year decline in pricing was driven by strong impression growth, especially from lower monetizing surfaces and regions,” CFO Susan Li said in an analyst call yesterday. “While overall pricing remains under pressure from these factors, we believe our ongoing improvements to ad targeting and measurement are continuing to drive improved results for advertisers.”

Cost cutting

Earnings were also helped by its cost cuts, with expenses falling 7% from a year earlier to $20.4 billion. In the past year, Meta has reduced its workforce by roughly a third and flattened its organizational structure.

User growth continued in some of Meta’s key markets, including the United States and Canada. About 3.14 billion people use one or more of the company’s apps every day, up 7% from last year. Nearly four billion people, about half the world’s population, use at least one of Meta’s apps each month.

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AI has been and will continue to be a big part of Meta’s drive to increase efficiency and lower costs. The company has depended on AI-powered marketing planning and ad measurement in particular in recent years to drive growth. Speaking on the earnings call, CEO Mark Zuckerberg said that customer use of chatbots was still in its infancy. 

“It’s going to take time to tune all of these experiences before hundreds of millions or billions of people are going to use them,” he said.

Hiring to increase

Zuckerberg said Meta plans to start hiring more A.I.-focused technologists for that and that the will increase headcount overall as it works through its “sizable hiring backlog.”

In the current quarter, the company expects to do well but warned of volatility because of events in the Middle East. Li said the company has “seen broader demand softness follow other regional conflicts in the past, such as in the Ukraine war” after Russia invaded in 2022.

“We have observed softer ads in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook,” Li said. “It’s hard for us to attribute demand softness directly to any specific geopolitical event.”