Peter Kafka
Updated Fri, February 2, 2024
Meta lost an astonishing $16 billion on the Metaverse last year.
But Wall Street loves Meta as of late Thursday: Its stock is up another 12%.
One big reason: Even with the Metaverse losses, Meta's margins are way better.
Remember when investors were worried that Mark Zuckerberg was incinerating money on the Metaverse and virtual reality?
Well, that's still happening: Last year, Meta lost $16.1 billion on its "Reality Labs" division, which brings you Oculus goggles. That's up from a loss of $13.7 billion in 2022.
Those losses are accelerating, too: In the last quarter of 2023, Meta lost $4.6 billion on the Metaverse.
Zuckerberg is promising investors there's more to come: "For Reality Labs, we expect operating losses to 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," Meta said in its most recent earnings release.
But this time around, investors seem cool with Zuckerberg's Metaverse investments. Meta's stock, already at an all-time high, has shot up by some 12% on the news.
What gives?
Here's an easy answer: Meta says it will continue to buy back its stock — something Wall Street always loves — and, for the first time in its history, it will start rewarding shareholders with dividends.
But the bigger picture is that Meta has spent the last couple of years pushing people out the door and getting out of leases, among other things. And that has improved the company's bottom line — even while Meta is bleeding red ink on the future.
Last year, Meta spent $3.5 billion shrinking itself: $2.5 billion came from "facilities consolidation" — closing and combining offices — and another $1 billion from "severance and other personnel costs" — that is, firing people. The company operates with 67,300 employees, a staggering 22% decrease over the last year.
And all of that means Meta's profit margins are way better: While its revenues increased by 16% — a number most Big Tech companies would be very happy with these days — its operating income increased by 62%, and its profits increased by 69%.
And while Zuckerberg and other Big Tech leaders have said they've been cutting to make their companies more efficient and dynamic, those bottom-line results are the point: They want to show Wall Street they can still increase profits — even if their go-go growth days are behind them, and even if they're still plowing money into new stuff.
Mark Zuckerberg made more than $28 billion this morning after Meta stock makes record surge
Eva Rothenberg, CNN
Fri, February 2, 2024
Mark Zuckerberg’s net worth increased by more than $28 billion between your morning coffee and your lunch break.
The Meta founder and CEO — who is already worth more than $140 billion, according to Bloomberg’s billionaire index — has cleaned up from Meta’s share price skyrocketing over the past day, after the company announced its first-ever cash dividend program.
On Friday, shares of Meta (META) jumped more than 20% on the news of a quarterly dividend of $0.50 per share to be paid out on March 26 to shareholders of record as of February 22.
Zuckerberg owns about 350 million shares of the company, according to the US Securities and Exchange Commission
Unless he sells or buys more shares of company stock, and assuming the quarterly dividend remains at the same level, Zuckerberg will also gain off of the company’s dividend payouts to the tune of approximately $700 million per year.
While dividends excite shareholders because they reward investors for just holding the stock, they’re also widely criticized for artificially inflating the stock price without spending on employees or improvements to the underlying business.
This upswing plasters over potential harm to Meta stock after Zuckerberg, alongside other social media company heads, testified Wednesday before the Senate Judiciary Committee about the risks their products pose to young people.
Zuckerberg was pressed about internal Meta documents that suggested the company estimates the lifetime value of a teen user at $270, as well as Meta’s transparency regarding how its monetizes user data.
Zuckerberg apologized to the parents in attendance, who say their children were victims of social media.
“I’m sorry for everything you have all been through,” he said. “No one should go through the things that your families have suffered and this is why we invest so much and we are going to continue doing industry wide efforts to make sure no one has to go through the things your families have had to suffer.”
The story has been updated with additional information.
CNN’s Clare Duffy and Brian Fung contributed to this reporting.
Meta Soundly Tops Q4 Revenues Estimates as Company Doubles-Down on AI Development
Natalie Korach
Thu, February 1, 2024
Meta, bucking broader industry struggles with digital advertising, rode stronger advertising results and restructuring savings to report higher-than-expected earnings of $14 billion for the fourth quarter of 2023, as the company said it was accelerating a rapid pivot towards AI development initiatives while continuing to pour investment into metaverse research.
Here are the top-line results:
Revenues: $40.11 billion, rose 25% from the year-ago period
Net income: $14.02 billion, a 201% increase over $4.7 billion in Q4 of 2022
Daily active users: Grew by 8% to 3.19 billion on average
Meta’s revenues of $40.11 billion, and diluted earnings of $5.33 per share for its fourth quarter of 2023, beat Wall Street expectations, results the company attributed in part to advancing AI technology.
Meta shares jumped over 14% in after-hours trading on Thursday.
“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta founder and CEO Mark Zuckerberg said in the shareholder statement.
Meta’s net income for the quarter marked a massive 201% 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 3.19 billion, up by 8% compared to last year.
Driving that quarterly growth, in part, was a 21% jump in ad impressions across Meta’s family of apps, with the average price paid per ad ticking up by 2%. For the full year, however, ad impressions rose 28% while the price per ad fell 9%.
If foreign exchange rates remained constant with the Q4 of 2022, revenue would have been $816 million and $374 million lower, an increase of 22% and 15% on a constant currency basis for the fourth quarter and full year 2023, respectively, the company said Thursday.
Analysts surveyed by Zacks Investment Research were expecting Meta to report earnings of $4.83 per share and revenue of $38.99 billion.
In the fourth quarter of 2022, Meta reported revenues of $32.17 billion which was down 4% from the same period in 2021. Net income fell 55% to $4.7 billion for the fourth quarter of 2022, compared to the year prior.
On Thursday’s shareholders call, Zuckerberg emphasized the company’s intentions to improve and develop AI technology, saying “Overall, we’re playing to win here.”
Zuckerberg noted that Meta’s efforts to slim down the company in the “year of efficiency,” have been successful, “making Meta a stronger technology company, and improving our business to give us the stability to deliver our ambitious long-term vision for AI and the metaverse.”
Meta saw a revenue bump from facilities consolidation, more so than from cutting staffers. Overall restructuring costs totaled $1.15 billion in the quarter, with $1.1 billion of that coming from facilities. Meta decreased its headcount 22% year-over-year. The company said that at year-end it had completed its data center initiatives and planned employee layoffs, and “substantially completed the facilities consolidation initiatives.”
Zuckerberg’s efforts to slim down Meta are connected to his desire to pursue more ambitious AI development. “We’ve been working on general intelligence research for more than a decade,” Zuckerberg said. “But now, general intelligence will be the theme of our product work as well.”
The Meta CEO also highlighted the performance of social media platform Threads, with the platform currently boasting more than 130 million monthly active users, more people actively using it than when it launched in July. “So that one’s I think on track to be a major success,” Zuckerberg said.
Looking ahead, Meta expects the first quarter of 2024 total revenue to be in the range of $34.5 to $37 billion. The company is also anticipating higher infrastructure-related costs during 2024, as Meta continues to increase capital investments.
Meta is expecting AI and non-AI hardware to drive growth in 2024, as well as further investment in new data center architecture. The company reiterated that its efforts will increasingly focus on AI research and product development, which will require consistent investment beyond a one-year period.
Even as Meta doubles down keeping up with its Big Tech rivals in AI development, the company is still pouring investment into the metaverse. Meta’s Reality Labs unit saw a Q4 operating loss of $4.6 billion, due to higher headcount expenses and research and development spending. Reality labs expenses were $5.7 billion, up 14% year over year.
The company is anticipating more losses for Reality Labs in 2024, as investment into AI development grows. “We expect Reality Labs operating losses to increase meaningfully year over year,” Meta CFO Susan Li said Thursday.
Meta revenue soars as it pivots to AI and announces dividends for investors
Kari Paul
THE GUARDIAN
Thu, February 1, 2024
The Meta logo in Brussels, Belgium
Thu, February 1, 2024
The Meta logo in Brussels, Belgium
Photograph: Yves Herman/Reuters
Meta shares soared 15% in after-hours trading following a strong fourth-quarter earnings report released the day after Mark Zuckerberg was roundly condemned in a contentious congressional hearing.
The company also announced it will pay a 50¢-per-share dividend to investors for the first time, and has authorized a $50bn share buyback program.
Overall, Meta reported fourth-quarter revenue of $40.1bn, beating the predicted $39.18bn and up 25% year-over-year. The report comes as Meta, like many of its big tech peers, is seeking to integrate artificial intelligence tools into its core products. In a statement accompanying the report, Zuckerberg said Meta has “made a lot of progress on our vision for advancing AI and the metaverse”.
“We expect our ambitious long-term AI research and product development efforts will require growing infrastructure investments beyond this year,” the company’s press release read.
Related: ‘It was forced’: grieving parents unfazed by sorry tech CEOs at US Senate hearing
In the previous quarter’s earnings call, Zuckerberg touted Meta’s plans to invest in AI, stating that it would be the company’s biggest investment area in 2024. Zuckerberg said in a video shared to Instagram earlier in January that the company would be acquiring $9bn worth of Nvidia chips to support its push to scale AI
AI will be used to enhance advertising campaigns and fuel advertising revenue as well as support new Meta products, including AI chatbots, Zuckerberg has said. Revenue from advertising, the company’s core business, was $38.7bn, compared with $31.25bn for the same time period the prior year. Meta’s hardware products such as the Quest 3 VR headset have yet to contribute any sizable percentage of the company’s revenue. Zuckerberg said on Thursday’s call he expects Meta to begin rolling out AI services more widely in coming months.
Meta laid off more than 20,000 workers in 2023 as part of what Zuckerberg branded a “year of efficiency”, focusing on cost-cutting measures. Those efforts appeared to have paid off, with Meta’s operating margin doubling to 41% from 20% in the same quarter of 2022. Meanwhile, expenses decreased 8% year over year to $23.73bn. Chief financial officer Susan Li stated on the call that Meta had more than 67,300 employees at the end of quarter four, down 22% from the same time a year prior but up 2% from quarter three after “hiring efforts have resumed”.
Regulatory headwinds appear to be top of mind for investors following Meta’s public browbeating at a congressional hearing on Wednesday, which was convened to interrogate Zuckerberg and other tech executives over their platforms’ impact on young users. He offered condolences to parents in the crowd whose children had died after online exploitation.
Throughout the hearing, Congress members touted legislation that could strip Meta and other platforms of legal immunity for content posted on its platforms and comes months after Meta was hit with a massive lawsuit by attorneys general of 41 states suing the company over its impact on young users. New Mexico’s attorney general has additionally sued the company for allegedly failing to prevent child sexual exploitation and trafficking.
As a result of regulatory concerns, Meta has sought to diversify its core business – which has historically relied on advertising by way of collecting huge amounts of user data. Reality Labs, the segment responsible for developing its virtual reality products, faced losses of $4.65bn in the fourth quarter, up from $4.28bn for the same period the previous year and contributing to an overall loss of $16.12bn for the year of 2023. In a press release, Meta said it expected operating losses for Reality Labs to “increase meaningfully year-over-year” as it continues to try to scale the ecosystem.
In addition to regulatory concerns, Meta has seen a squeeze on user numbers for its platforms as young users in particular defect to newer platforms like TikTok. The company’s platforms are seeing more rapid growth outside of the US, said Insider Intelligence principal analyst Jasmine Enberg.
“On the usage front, Facebook continued to squeeze user growth, but as expected, most new users came from outside of North America,” she said. “In the US, popularity among teens has become a liability in the eyes of lawmakers, which could hamper both Facebook’s and Instagram’s growth efforts there.
Meta's Reality labs had its best quarter, but still lost more than $4 billion
Meta will also no longer report on how many people use Facebook.
Karissa Bell
·Senior Editor
Thu, February 1, 2024
JOSH EDELSON via Getty Images
Reality Labs, Meta’s division for AR, VR and the metaverse, just had its best quarter yet despite continuing its multibillion-dollar losing streak. Reality Labs generated more than $1 billion in revenue during the final quarter of 2023 thanks to its Quest headsets and the Ray-Ban Meta smart glasses.
While crossing $1 billion in revenue is a new milestone for the company’s metaverse group, it’s still expected to continue racking up massive losses for the foreseeable future. Reality Labs lost $4.6 billion in the quarter, and more than $16 billion in 2023. Meta CFO Susan Li said that these losses are expected to “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.”
The fourth-quarter, which encompasses the holiday shopping season, has typically been when reality does the best. During a call with analysts, Mark Zuckerberg suggested that the company’s smart glasses had done particularly well, saying that Ray-Ban maker EssilorLuxottica was “planning on making more [smart glasses] than we'd both expected due to high demand.” He added that both Quest 2 and Quest 3 were “performing well,” calling Quest 3 the “most popular mixed reality device.”
Reality Labs aside, Meta had a strong quarter, reporting $40.1 billion to close out 2023, bringing its total revenue for the year to just under $135 billion. Facebook’s user base also grew to 2.1 billion daily active users (DAUs). Meta CFO Susan Li said that the company was “transitioning away” from sharing the metric and would no longer report on Facebook’s daily or monthly active users or its “family monthly active people.”
The company had shared that it would eventually stop reporting user numbers back in 2019 as Facebook’s growth began to slow. But the change shows how Facebook’s position in the company’s “family of apps” has changed in recent years. A report from Pew Research earlier this week found that Instagram is continuing to grow in the US while Facebook use remains flat.
Meta’s newest app, Threads, is still growing, however. Zuckerberg said the service has 130 million monthly users, up from “just under” 100 million last fall. “Threads now has more people actively using it today than it did during its initial launch peak," Zuckerberg said, referring to the app’s initial, but short-lived, surge in growth.
Zuckerberg also talked more about his newly-stated ambition to create artificial general intelligence, or AGI at Meta, saying it would be the “theme” of the company’s product work going forward. “This next generation of services requires building full general intelligence,” he said. “It's clear that we're going to need our models to be able to reason, plan, code, remember and many other cognitive abilities in order to provide the best versions of the services that we envision.”
The Meta CEO also indicated the company would be unlikely to offer any of its apps in alternative app stores in Europe, following Apple's controversial new developer policies. "The way that they've implemented it, I would be very surprised if any developer chose to go into the alternative app stores," he said. "They've made it so onerous, and I think so at odds with the intent of what the EU regulation was, that I think it's just going to be very difficult for anyone, including ourselves, to really seriously entertain."
Meta's soaring profits just paid for its first-ever dividend
Meta shares soared 15% in after-hours trading following a strong fourth-quarter earnings report released the day after Mark Zuckerberg was roundly condemned in a contentious congressional hearing.
The company also announced it will pay a 50¢-per-share dividend to investors for the first time, and has authorized a $50bn share buyback program.
Overall, Meta reported fourth-quarter revenue of $40.1bn, beating the predicted $39.18bn and up 25% year-over-year. The report comes as Meta, like many of its big tech peers, is seeking to integrate artificial intelligence tools into its core products. In a statement accompanying the report, Zuckerberg said Meta has “made a lot of progress on our vision for advancing AI and the metaverse”.
“We expect our ambitious long-term AI research and product development efforts will require growing infrastructure investments beyond this year,” the company’s press release read.
Related: ‘It was forced’: grieving parents unfazed by sorry tech CEOs at US Senate hearing
In the previous quarter’s earnings call, Zuckerberg touted Meta’s plans to invest in AI, stating that it would be the company’s biggest investment area in 2024. Zuckerberg said in a video shared to Instagram earlier in January that the company would be acquiring $9bn worth of Nvidia chips to support its push to scale AI
AI will be used to enhance advertising campaigns and fuel advertising revenue as well as support new Meta products, including AI chatbots, Zuckerberg has said. Revenue from advertising, the company’s core business, was $38.7bn, compared with $31.25bn for the same time period the prior year. Meta’s hardware products such as the Quest 3 VR headset have yet to contribute any sizable percentage of the company’s revenue. Zuckerberg said on Thursday’s call he expects Meta to begin rolling out AI services more widely in coming months.
Meta laid off more than 20,000 workers in 2023 as part of what Zuckerberg branded a “year of efficiency”, focusing on cost-cutting measures. Those efforts appeared to have paid off, with Meta’s operating margin doubling to 41% from 20% in the same quarter of 2022. Meanwhile, expenses decreased 8% year over year to $23.73bn. Chief financial officer Susan Li stated on the call that Meta had more than 67,300 employees at the end of quarter four, down 22% from the same time a year prior but up 2% from quarter three after “hiring efforts have resumed”.
Regulatory headwinds appear to be top of mind for investors following Meta’s public browbeating at a congressional hearing on Wednesday, which was convened to interrogate Zuckerberg and other tech executives over their platforms’ impact on young users. He offered condolences to parents in the crowd whose children had died after online exploitation.
Throughout the hearing, Congress members touted legislation that could strip Meta and other platforms of legal immunity for content posted on its platforms and comes months after Meta was hit with a massive lawsuit by attorneys general of 41 states suing the company over its impact on young users. New Mexico’s attorney general has additionally sued the company for allegedly failing to prevent child sexual exploitation and trafficking.
As a result of regulatory concerns, Meta has sought to diversify its core business – which has historically relied on advertising by way of collecting huge amounts of user data. Reality Labs, the segment responsible for developing its virtual reality products, faced losses of $4.65bn in the fourth quarter, up from $4.28bn for the same period the previous year and contributing to an overall loss of $16.12bn for the year of 2023. In a press release, Meta said it expected operating losses for Reality Labs to “increase meaningfully year-over-year” as it continues to try to scale the ecosystem.
In addition to regulatory concerns, Meta has seen a squeeze on user numbers for its platforms as young users in particular defect to newer platforms like TikTok. The company’s platforms are seeing more rapid growth outside of the US, said Insider Intelligence principal analyst Jasmine Enberg.
“On the usage front, Facebook continued to squeeze user growth, but as expected, most new users came from outside of North America,” she said. “In the US, popularity among teens has become a liability in the eyes of lawmakers, which could hamper both Facebook’s and Instagram’s growth efforts there.
Meta's Reality labs had its best quarter, but still lost more than $4 billion
Meta will also no longer report on how many people use Facebook.
Karissa Bell
·Senior Editor
Thu, February 1, 2024
JOSH EDELSON via Getty Images
Reality Labs, Meta’s division for AR, VR and the metaverse, just had its best quarter yet despite continuing its multibillion-dollar losing streak. Reality Labs generated more than $1 billion in revenue during the final quarter of 2023 thanks to its Quest headsets and the Ray-Ban Meta smart glasses.
While crossing $1 billion in revenue is a new milestone for the company’s metaverse group, it’s still expected to continue racking up massive losses for the foreseeable future. Reality Labs lost $4.6 billion in the quarter, and more than $16 billion in 2023. Meta CFO Susan Li said that these losses are expected to “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.”
The fourth-quarter, which encompasses the holiday shopping season, has typically been when reality does the best. During a call with analysts, Mark Zuckerberg suggested that the company’s smart glasses had done particularly well, saying that Ray-Ban maker EssilorLuxottica was “planning on making more [smart glasses] than we'd both expected due to high demand.” He added that both Quest 2 and Quest 3 were “performing well,” calling Quest 3 the “most popular mixed reality device.”
Reality Labs aside, Meta had a strong quarter, reporting $40.1 billion to close out 2023, bringing its total revenue for the year to just under $135 billion. Facebook’s user base also grew to 2.1 billion daily active users (DAUs). Meta CFO Susan Li said that the company was “transitioning away” from sharing the metric and would no longer report on Facebook’s daily or monthly active users or its “family monthly active people.”
The company had shared that it would eventually stop reporting user numbers back in 2019 as Facebook’s growth began to slow. But the change shows how Facebook’s position in the company’s “family of apps” has changed in recent years. A report from Pew Research earlier this week found that Instagram is continuing to grow in the US while Facebook use remains flat.
Meta’s newest app, Threads, is still growing, however. Zuckerberg said the service has 130 million monthly users, up from “just under” 100 million last fall. “Threads now has more people actively using it today than it did during its initial launch peak," Zuckerberg said, referring to the app’s initial, but short-lived, surge in growth.
Zuckerberg also talked more about his newly-stated ambition to create artificial general intelligence, or AGI at Meta, saying it would be the “theme” of the company’s product work going forward. “This next generation of services requires building full general intelligence,” he said. “It's clear that we're going to need our models to be able to reason, plan, code, remember and many other cognitive abilities in order to provide the best versions of the services that we envision.”
The Meta CEO also indicated the company would be unlikely to offer any of its apps in alternative app stores in Europe, following Apple's controversial new developer policies. "The way that they've implemented it, I would be very surprised if any developer chose to go into the alternative app stores," he said. "They've made it so onerous, and I think so at odds with the intent of what the EU regulation was, that I think it's just going to be very difficult for anyone, including ourselves, to really seriously entertain."
Meta's soaring profits just paid for its first-ever dividend
Sarah Jackson
Updated Fri, February 2, 2024
Meta's soaring profits just paid for its first-ever dividend
Mark Zuckerberg's Meta announced its first-ever dividend in its earnings release Thursday.BRENDAN SMIALOWSKI / Getty Images
Meta says it's going to start paying its first-ever dividend.
The company's earnings blew expectations out of the water on Thursday.
Mark Zuckerberg's social media giant also announced a $50 billion stock buyback.
With profits soaring and its shares hitting record highs, Meta has announced its first-ever dividend.
The company declared a dividend of $0.50 per share in its earnings report Thursday for the fourth quarter and fiscal year of 2023.
The cash dividend will be paid quarterly "subject to market conditions and approval by our board of directors," the earnings release said.
Meta CFO Susan Li said in an earnings call Thursday that the payouts would be regular dividends, pending board approval.
It'll be paid on March 26 to stockholders of record as of the close of business on February 22.
Meta joins other tech firms like Microsoft, Apple, and Oracle in paying a dividend. The company also announced it has authorized a $50 billion buyback boost.
Last February, Meta said it would buy back another $40 billion worth of shares from investors.
Meta's stock was up nearly 14% after-hours Thursday, cruising to a new all-time high.
The company reported $134.9 billion in revenue for the year, up 16% from 2022, and $39.1 billion in net income, up 69% year-over-year.
"We had a good quarter as our community and business continue to grow," CEO Mark Zuckerberg said in the earnings release.
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