Meta's Strong Ad Revenue and Cost-Cutting Drive Earnings Outperformance
Meta Platforms (META)'s third-quarter net income and revenue topped analysts' predictions as the company reported healthy advertising revenue and continued efforts to cut costs.
The parent of Facebook and Instagram reported earnings of $11.6 billion, or $4.39 per diluted share, up 164% year-over-year. Meta's revenue came in at $34.1 billion for the quarter, an improvement of 23% compared with the prior-year period, beating lofty predictions from analysts on the strength of ad revenue gains.
Meta said ad revenue rose 24% as the company recovers from a volatile 2022, where advertising revenue seesawed.
While Meta has been somewhat slower than tech peers like Microsoft (MSFT) and Alphabet (GOOG) to adopt AI technology into its offerings, it has moved to entice advertisers with AI. Earlier this month the company unveiled generative AI tools allowing advertisers to automatically create new ad copy, background images, and more.
While tech companies have so far not managed to turn their newfound interest in AI into substantial profit, the move seems to be encouraging advertisers on Facebook and Instagram.
Meta is also moving to eke out gains through cost-cutting measures. Starting last November the company engaged in multiple rounds of layoffs to reduce its headcount by at least 21,000.The most recent round of layoffs took place just this month.
«Beginning in 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities,» the company said in its earnings report. «As of Sept. 30, 2023, we have substantially completed planned employee layoffs while continuing to assess facilities consolidation and data center restructuring initiatives.»
Along with cost-cutting maneuvers,
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