Shares of Facebook parent company Meta rose briefly in after-hours trading after the company reported a 164 per cent increase in third-quarter net profit, driven by a recovery in its core digital advertising revenue and a surge in user numbers.
The California-based company posted a net profit of about $11.6 billion in the quarter that ended on September 30, up 48.7 per cent compared with the second quarter.
Revenue for the three-month period surged by an annual 23 per cent to more than $34.1 billion, exceeding analyst estimates of $33.5 billion.
This is the second consecutive quarter that the company has reported double-digit revenue growth since the fourth quarter of 2021.
Meta's shares initially gained 4.4 per cent in after-hours trading on Wednesday, although the gains were later erased.
The stock has gained about 140.12 per cent so far this year and the company had a market value of about $770.74 billion at close on Wednesday.
In the third quarter, advertising impressions delivered across Meta’s family of apps increased 31 per cent on an annual basis while the average price for an advertisement fell by 6 per cent year on year.
Meta’s family of apps includes Facebook, Instagram, Messenger, WhatsApp and other services.
“We had a good quarter for our community and business,” said Mark Zuckerberg, Meta founder and chief executive.
“I am proud of the work our teams have done to advance AI [artificial intelligence] and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses and our AI studio.”
The company’s earnings per share jumped 168 per cent annually to $4.39 in the third quarter.
Meta, which employs 66,185 people, expects its December quarter total revenue to be in the range of $36.5 billion to $40 billion.
“Meta's strong guidance for fourth-quarter revenue is another indicator that the company may be starting to come out of the woods,” Jesse Cohen, senior analyst at Investing.com, told The National.
“Investors have been encouraged by aggressive cost-cutting initiatives implemented by Mark Zuckerberg in recent months.”
In the third quarter, the company's costs and expenses stood at $20.4 billion, down 7 per cent on an annual basis, while its capital expenditure, including principal payments on finance leases, stood at more than $6.7 billion.
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 last year, the company laid off 11,000 employees, or 13 per cent of its workforce.
Meta said restructuring charges in the third quarter totalled $380 million and $2.3 billion year to date and said it had “substantially completed planned employee layoffs”.
The company's advertising sales contributed more than 98.5 per cent to overall sales in the third quarter, growing by about 23.5 per cent on an annual basis to more than $33.6 billion.
Revenue from other streams – including the Reality Labs unit – jumped 5.4 per cent on an annual basis to about $503 million.
Reality Labs, which includes augmented and virtual reality-related consumer hardware, software and content for the metaverse, reported an operating loss of more than $3.7 billion.
The unit's operating 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 [up] our ecosystem”, said Susan Li, Meta’s chief financial officer.
The company expects total expenses this year to be in the range of $87 billion to $89 billion, lowered from its previous outlook in July.
It expects its 2023 capital expenditure to hover in the range of $27 billion and $29 billion.
“We anticipate our full-year 2024 capex will be in the range of $30 billion and $35 billion, with growth driven by investments in servers, including both non-AI and AI hardware, and data centres as we ramp up construction on sites,” Ms Li said.