Meta reports better-than-expected results and issues optimistic guidance for third quarter
The company reported double-digit revenue growth for the first time since the fourth quarter of 2021.

Analysts had expected a better forecast for the third quarter from the company.

Meta reported better-than-expected earnings and revenue for the second quarter and issued a better-than-expected forecast for the current period, reflecting a rebound in digital advertising.

A 7% gain was recorded in extended trading for the stock.

The company’s revenue increased 11% from a year earlier, marking the first double-digit growth since 2021. The company had experienced revenue declines in three consecutive quarters due to a sputtering economy and Apple’s iOS privacy changes, which limited ad targeting.

According to Facebook’s parent company, revenue for the third quarter is anticipated to be between $32 billion and $34.5 billion. According to Refinitiv, analysts expected guidance of $31.3 billion before the report. Based on that, there has been a growth of at least 15% since last year.

In 2023, investors expect a rebound in the advertising market and better profitability following Meta’s mass layoffs. The stock was up 159% this year before Wednesday’s close, compared to 19% for the S&P 500. Last year, Meta shares lost about two-thirds of their value.

Mark Zuckerberg, CEO of Meta, said in a statement that the company had a good quarter. We continue to see strong engagement across our apps and have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, and new AI products in the pipeline, as well as Quest 3.

In the year-ago period, earnings were $6.69, or $2.46 per share, while in the current period, they were $7.79 billion, or $2.98.

In the second quarter, Meta’s total costs and expenses were $22.61 billion, an increase of 10% from a year ago.

Zuckerberg has been pushing Meta to become more efficient, implementing a cost-savings plan that resulted in about 21,000 job cuts. There appears to be success with the plan.

Based on current estimates, the company will spend $27 billion to $30 billion on capital expenditures in 2023, down from $30 billion to $33 billion previously.

According to the company, the reduced forecast reflects both cost savings, particularly on non-AI servers, and shifting capital expenditures into 2024 due to delays in projects and equipment deliveries rather than a reduction in overall investment plans.

Data centers and artificial intelligence investments are expected to drive expenses in 2024, Meta said.

In June 2023, the company reported 71,469 employees, with approximately half of those affected by the 2023 layoffs included in our headcount.

Meta now says it plans to spend more on payroll expenses as it shifts staff to higher-paying technical roles, suggesting that some staffers who are moved into technical roles might earn more income.

During the second quarter, Reality Labs, which develops metaverses, generated $276 million in sales while incurring a $3.7 billion loss. Despite ongoing development efforts in virtual reality/augmented reality and investments to scale our ecosystem, unit losses will continue to “increase meaningfully year-over-year.”