Meta disclosed its Q3 2024 financial results, highlighting a mixed performance with a notable increase in revenue but slower-than-expected user growth. The company reported a 19% revenue growth, reaching $40.59 billion, while net income rose by 35% to $15.7 billion. However, the number of active users fell slightly below forecasts, with Meta recording 3.29 billion daily active users, just under the expected 3.31 billion. This shortfall in user numbers led to a slight decline in Meta’s shares in after-hours trading, despite strong earnings per share of $6.03, exceeding analysts’ forecast of $5.25.
Meta raised its capital expenditure guidance for 2024, now estimating between $38 billion and $40 billion. This increase underscores the company’s commitment to expanding AI capabilities and infrastructure, reflecting a strategic focus that is set to elevate costs significantly in 2025.
AI Investments and Advertising Growth
CEO Mark Zuckerberg emphasized that Meta will continue investing heavily in AI and related infrastructure, notably through new data centers and significant purchases of Nvidia GPUs. These GPUs are integral to Meta’s advertising-focused AI systems, a division that contributed $39.9 billion in advertising revenue, up 18.7% year-over-year and accounting for 98.3% of the company’s total revenue. More than a million advertisers have already utilized Meta’s AI-powered advertising tools, demonstrating the impact of this technology on the company’s business.
However, regional performance varied; while global revenue saw a 19% increase, Asia Pacific’s revenue growth slowed to 15%, attributed to a reduction in Chinese advertising demand. CFO Susan Li noted that this decline, driven by lower activity from prominent advertisers such as Temu and Shein, impacted growth in the region, contrasting with the previous quarter’s 28% growth. Meta’s revenue forecast for Q4 remains positive, estimated between $45 billion and $48 billion, above the analyst consensus of $46.3 billion. We’ll keep you updated on any developments.
Challenges in Reality Labs and Workforce Growth
Meta’s Reality Labs division, dedicated to VR and AR, posted an operating loss of $4.4 billion, slightly better than anticipated but reflective of high development costs in these areas. The division’s sales increased by 29% to $270 million, though this figure was below analysts’ expectations of $310.4 million. Cumulatively, Reality Labs has accrued over $58 billion in operating losses since its launch in 2020, underscoring the long-term investment required for advancements in VR and AR technology, adds NIXSOLUTIONS.
Meta’s workforce reached 72,404 as of September 30, marking a 9% year-over-year increase as the company aligns its talent strategy with its objectives in AI and infrastructure. This staffing growth supports Meta’s ambitious AI initiatives, signaling a firm commitment to its strategic goals amid a challenging landscape.