Meta reported net income of $11.6 billion, or diluted earnings of $4.39 per share for its third quarter of 2023 on Wednesday, beating Wall Street expectations, results the company attributed in part to efficiencies from AI and mixed reality initiatives. Revenue grew 23% year over year to $34.1 billion.
Analysts surveyed by Zacks Investment Research were expecting the Facebook and Instagram parent company to report earnings of $3.62 per share and revenue of $33.45 billion. Despite beating consensus estimates, Meta shares were down about 3% in after-hours trading as of 4 p.m. PST.
Meta’s net income for the quarter marked a 164% increase from the same period a year ago. Daily active user numbers across its family of apps, which include Facebook, WhatsApp, and Instagram, climbed to an average of 3.14 billion, up by 7% compared to last year.
The Facebook parent company cited restructuring efforts beginning in 2022 “to pursue greater efficiency,” as cost-saving measures. Meta noted that the company shrunk its workforce by 24% year-over-year, to 66,185, after significant layoffs.
In the third quarter of 2022, Meta reported earnings of $4.4 billion, or $1.64 a diluted share, on revenue of $27.7 billion.
The company said its Reality Labs unit had Q3 operating loss of $3.7 billion. Meta expects that operating losses to the unit, which develops metaverse-related technologies, will “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.”
On Wednesday’s earnings call, CEO and founder Mark Zuckerberg noted that Meta’s largest area of increased investment in 2024 would be directed toward AI advancement, but that the company would avoid “allocating a lot of new headcount.” Zuckerberg said the company would restructure non-AI project staff, shifting “people towards working with AI instead.”
The Meta CEO said the company has a “sizable hiring backlog,” due to swapping out “certain skill sets for being able to hire others” and that the company still planned to fill those roles into 2024.
“Even though we’re planning to grow headcount at a much slower rate going forward, the actual rate next year may temporarily be faster as we work through this hiring backlog,” Zuckerberg said.
In May, Meta said it would cut roughly 10,000 jobs in a restructuring effort dubbed “Year of Efficiency,” coming after the company had let go of around 11,000 employees last year in post-pandemic cuts.
However, in August, Meta opened an “alumni portal,” with the intention of rehiring some of the staffers it had recently laid off. The new openings consist mainly of engineering and technical roles. According to a report in Business Insider, any employee who was laid off after November was welcome to apply; dozens have already been rehired.
Wednesday’s call also included a brief update on Meta’s X competitor Threads, launched in July, which now has nearly 100 million monthly active users, according to Zuckerberg. The Meta CEO said he is “very happy with the trajectory,” of the three-month-old platform and will be “focusing on growing the community further.”
The company acknowledged at the end of the second quarter of 2023, that increasing regulatory and legal challenges in both the U.S. and E.U. could “significantly impact” its business and earnings going forward.
“We continue to monitor the active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and our financial results,” the company said on Wednesday’s call.
Meta added that “the FTC is seeking to substantially modify our existing consent order and impose additional restrictions on our ability to operate. We are contesting this matter, but if we are unsuccessful, it would have an adverse impact on our business.”
Meta was hit with multiple lawsuits on Tuesday filed by more than 30 states, claiming that Facebook and Instagram exploit children for profit and feed them harmful content, damaging their mental health. The lawsuits argue that Meta uses manipulative tactics, addicting kids to their social media, and then feeding them dangerous content posted to the platforms. The states also charged Meta with violating federal privacy laws for minors.
“We’re disappointed that instead of working productively with companies across the industry to create clear, age-appropriate standards for the many apps teens use, the attorneys general have chosen this path,” Meta said in a statement. The company maintained that it had “engaged in a meaningful dialogue with the attorneys general” about Meta’s efforts to “support young people on its platforms.”
Some 70 lawsuits have been filed this year alone against Meta and other social media platforms. The lawsuits focus on claims from adolescents and young adults who say they have experienced heightened mental health issues as a result of addictive social media tendencies, exploited by the platforms themselves. At least seven of the plaintiffs are the parents of children who have died by suicide.
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