Facebook’s parent company Meta reported an annual 16 per cent surge in second-quarter net profit, driven by an increase in user numbers and a surge in advertising impressions across its family of apps.
The California-based company earned a net profit of nearly $7.8 billion in the quarter that ended on June 30. It was 36.4 per cent more compared to the quarter that ended on March 31.
The social media company’s second-quarter revenue surged an annual 11 per cent to $32 billion, exceeding analysts’ estimates of $31.12 billion. It was nearly 12 per cent up on a quarterly basis.
This is the first time the company has reported double-digit revenue growth since the last quarter of 2021.
In the April-June period, advert impressions delivered across Meta’s family of apps increased 34 per cent on an annual basis while the average price for an ad decreased 16 per cent year on year.
Meta’s family of apps includes Facebook, Instagram, Messenger, WhatsApp and other services.
“Meta’s sales growth accelerated amid signs of better conditions in the digital advertising market,” Jesse Cohen, senior analyst at Investing.com, told The National.
“Meta’s solid quarter adds further evidence to the view that advertisers are choosing to spend their budget on the so-called market leaders, such as Facebook and Instagram.
"Investors have been encouraged by aggressive cost-cutting initiatives implemented by CEO Mark Zuckerberg in recent months."
Meta's shares jumped 1.4 per cent to $298.57 at market close on Wednesday and gained almost 7 per cent in after-hours trading.
The stock has gained nearly 140 per cent so far this year and the company had a market value of about $765.15 billion at the close on Wednesday.
The company’s earnings a share jumped 21 per cent annually to $2.98 in the last quarter.
“We had a good quarter,” said Mr Zuckerberg, also Meta’s founder.
"We continue to see strong engagement across our apps and we have the most exciting road map I have seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall."
Meta, which employs 71,469 people, expects its September quarter total sales to be in the range of $32 billion to $34.5 billion.
The number of Facebook’s daily active users, which declined for the first time in the company’s 19-year history in the fourth quarter of 2021, jumped 5 per cent yearly in the last quarter.
It reached 2.06 billion, exceeding StreetAccount’s estimates of 2.04 billion. Meanwhile, Facebook’s monthly active users rose 3 per cent on an annual basis to 3.03 billion as of June 30.
The company incurred an expense of $22.6 billion, up 10 per cent on an annual basis in the last quarter. This also included legal expenses of $1.87 billion and restructuring charges of $780 million.
As part of its restructuring efforts in March, Meta announced it would lay off 10,000 employees and close about 5,000 open roles.
In November, the company laid off 11,000 employees – equal to 13 per cent of its workforce.
The company's advertising sales contributed more than 98 per cent to overall sales in the second quarter, growing by about 12 per cent on an annual basis to almost $31.5 billion in the June quarter.
Revenue from other streams – including reality labs – dropped more than 25 per cent on an annual basis to nearly $501 million.
The company’s reality labs, which include augmented and virtual reality-related consumer hardware, software and content for the metaverse, also reported an operating loss, of more than $3.7 billion.
Meta’s chief financial officer Susan Li said operating losses in the reality labs division is expected to increase this year.
The company said it expects 2023's total expenses to be in the range of $88 billion to $91 billion, updated from its prior outlook provided in April.
Some of the expense drivers include AI and metaverse, the company said.
This is also increased due to legal-related expenses recorded in the last quarter, Ms Li said.
It also included about $4 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs.
The platform's capital expenditures are expected to be in the range of $27 billion to $30 billion for the 2023 full financial year, lowered from the prior estimate of between $30 billion and $33 billion.
“The reduced forecast is due to both cost savings, particularly on non-AI servers, as well as shifts in capital expenditures into 2024 from delays in projects and equipment deliveries, rather than a reduction in overall investment plans,” Ms Li said.
The company repurchased $793 million of its common stock in the last quarter. As of June 30, it had $40.91 billion available and authorised for repurchases, Meta said.
Facebook’s cash, cash equivalents and marketable securities stood at $53.45 billion at the end of the last quarter.