Meta has revealed revenue for the third quarter of 2023, ending September 30 2023, is USD $34.1 billion, up 23% year-on-year.
Total costs and expenses were USD $20.40 billion, a decrease of 7% year-over-year, meanwhile capital expenditures, including principal payments on finance leases, were USD $6.8 billion for the third quarter of 2023.
Will Easton, managing director, Meta ANZ said: “The latest earnings demonstrate the strength of Meta’s global business, and we’ve experienced similar growth within Australia and New Zealand.
“Our significant investments into AI have helped deliver strong performance for our advertisers in Australia and New Zealand, and we look forward to helping them further grow and succeed as we enter the crucial retail season.”
On the earnings call CEO Mark Zuckerberg spoke about the increasing use of AI across its ads systems and products. He said: “AI advances are driving a lot of our product and business performance. GenAI will be increasingly important going forward.
“We are building foundation models like Llama 2, which we believe is now the leading open-source model, with over 30 million Llama downloads last month.
In addition to its recent GenAI updates for advertisers, Zuckerberg said: “our AI tools are also driving results with more than half our advertisers are using our Advantage+ Creative tools to optimize images and text in their ad creative.”
CFO Susan Li also noted that the tech giant has introduced quite a lot of new ads products and features and noted that they have increasingly tested GenAI tools in our AI sandbox – and as they become more mature, have become “incorporate them into our ads manager directly. We’ve incorporated them into some of our Advantage+ solutions.”
Meta reported a 7% increase in time spent on Facebook and a 6% increase on Instagram as result of recommendation improvements, according to its Q3 reporting.
On improving Reels monetization, reporting noted that it has graduated from an early initiative to now being a core part of the family of apps.
Zuckerberg said in the call: “We estimate that with all the ranking and product improvements we’ve made, Reels has now driven more than 40% increase in time spent on Instagram since launch… Going forward, we’ll continue focusing on Reels, but we’ll also look at growing it as part of our overall set of video services, which make up more than half of time spent on Facebook and Instagram.”
The monetization milestone was reported reached earlier than expected, and it is estimated that Reels is now net neutral to overall company ad revenue.
On creating engaging on-platform ad experiences with business messaging, Meta noted that it is seeing sustained momentum with Click-to-Message ads – and are progressing on work to enable further down the funnel conversions, and longer-term to help businesses message with customers more efficiently at scale.
Zuckerberg said: “Business messaging also continues to grow across our services – and there are more than 600 million conversations between people and businesses every day on our platforms.”
Li shared her outlook for the fourth quarter of 2023 and said: “We expect fourth quarter 2023 total revenue to be in the range of $36.5-40 billion.”
Looking at the expense outlook, she noted that full-year 2023 total expenses will be in the range of $87-89 billion, lowered from the prior range of $88-91 billion.
“This outlook includes approximately $3.5 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs. We expect Reality Labs operating losses to increase year-over-year in 2023.”
“We are also sharing a preliminary outlook for 2024 expenses, capex and our tax rate. We expect full-year 2024 total expenses to be in the range of $94-99 billion. We continue to expect a few factors to be drivers of total expense growth in 2024:
• Meta expect higher infrastructure-related costs next year.
• The tech giant anticipate growth in payroll expenses as they work down our current hiring underrun and add incremental talent to support priority areas in 2024, which they expect will continue to shift our workforce composition toward higher-cost technical roles.
• For Reality Labs, Meta expects operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.
Zuckerberg also reiterated that Meta’s continued long term focus remains on the metaverse.
Zuckerberg said: “We just launched Quest 3, our most powerful headset yet, at a very competitive price. We packed a lot of improvements in there, including a next generation chipset with 2x graphics performance, our best displays yet, and a form factor that’s 40% thinner than Quest 2. But the most important breakthrough for Quest 3 is that it’s the first mainstream mixed reality device.
“That means when you put on the device you see your physical room around you, and you can bring digital objects and games into your physical space — whether that’s a ping-pong table, your workstation, a big screen TV to play Xbox games on, or your friends as holograms. The early reviews have been great and it’s been fun to see how people respond to this.”
Meta also launched the next generation of Ray Ban Meta smart glasses, which he said features a better camera, clearer audio, lighter, have more styles, and are able to livestream video. “Most importantly, these are the first smart glasses shipping with Meta AI built in, so you can ask your glasses questions throughout the day and it’ll answer them right in your ear,” he said.
“We’re also making progress on software for the metaverse too. Horizon is now growing faster as more new worlds like Super Rumble and Citadel come online. We also started testing Horizon for phones, tablets, and PCs, which is going to be an important, key part of how to build the metaverse across devices. And we’ve had a couple of important milestones with avatars as well — both for our expressive avatars and the latest codec avatars I showed off recently.”