Meta, With a Continued Push Into AI Development, Doubles Q1 Profits and Pushes Revenues Up 27%
Meta beat Wall Street expectations in the tech company’s first quarter of 2024, which the company attributed in part to furthered AI development. But the share price fell over 12% in after-hours trading on Wednesday as the company upped their previously estimated range of capital expenditures.
Revenues: $36.46 billion, up 27% from the year-ago period
Net income: $12.37 billion, a 117% increase over $5.71 billion in Q1 of 2023
Daily active users: Grew by 7% year-over-year to 3.24 billion on average
Meta’s revenues of $36.46 billion, and diluted earnings of $4.71 per share for its first quarter of 2024, beat Wall Street expectations, results the company attributed in part to progress in the development of the company’s AI technology. Analysts surveyed by Zacks Investment Research were expecting Meta to report earnings of $4.32 per share and revenue of $36.28 billion.
The tech company also noted that it was increasing its previously estimated range of capital expenditures from $30-37 billion to $35-40 billion, which Meta attributed to the continuing acceleration in “infrastructure investments to support our artificial intelligence (AI) roadmap.”
“We expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” the company said in Wednesday’s report.
In a statement, founder and CEO Mark Zuckerberg said that the new version of Meta’s Llama 3 AI large language model, its competitor to Google’s Gemini and Microsoft/OpenAI’s GPT-4, “is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.”
During Wednesday’s earnings call, Zuckerberg hedged that “Realistically, even with shifting many of our existing resources to focus on AI will still grow our investment envelope meaningfully before we make much revenue from some of these new products.”
“I think it’s worth calling that out that we’ve historically seen a lot of volatility in our stock during this phase of our product playbook,” Zuckerberg continued, “Where we’re investing in scaling and new products but aren’t yet monetizing it.”
The Meta CEO added that he expects to see a “multi-year investment cycle” before fully scaling the tech company’s AI services. While Zuckerberg says “initial signs are quite positive,” the company is committed to “building the leading AI,” which will be a larger undertaking than previous initiatives.
Daily active user numbers across Meta’s family of apps, which include Facebook, WhatsApp, and Instagram, climbed to an average of 3.24 billion, up by 7% compared to last year.
Driving that quarterly growth, in part, was a 20% jump in ad impressions across Meta’s family of apps, with the average price paid per ad ticking up by 6%.
The company also continued its pattern of slimming down its workforce, with the headcount now at 69,329, a 10% decrease year-over-year.
In the first quarter of 2023, Meta reported revenues of $28.65 billion, which was an increase of 3% from the same period in 2022. Net income fell 24% to $5.71 billion for the first quarter of 2023, compared to the year prior.
At the close of the fourth quarter of 2023, Meta was expecting the first quarter of 2024 total revenue to be in the range of $34.5 to $37 billion. The tech company also anticipated higher infrastructure-related costs during 2024, as Meta continues to increase capital investments.
Meta’s Reality Labs unit, which houses the tech company’s hardware and software development, continues to bleed cash, as Meta reported sales of $440 million for the first quarter of 2024 and $3.85 billion in losses.
The company also anticipated further losses for Reality Labs in 2024, as Meta continues to pour investments into AI development. In the fourth quarter of 2023, Meta’s Reality Labs unit saw an operating loss of $4.6 billion, due to higher headcount expenses and research and development spending.
More to come…
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