According to news on April 25, on Wednesday U.S. time, Facebook parent company Meta released its first quarter financial report for 2024 as of March 31 after the U.S. stock market closed. The financial report shows that Meta's revenue in the first quarter was US$36.455 billion, a year-on-year increase of 27%; net profit was US$12.369 billion, a year-on-year increase of 117%; diluted earnings per share reached US$4.71, a year-on-year increase of 114%. As Meta plans to continue to increase investment in the field of artificial intelligence and its Reality Labs continues to suffer losses, Meta's stock price plummeted more than 16% in after-hours trading.
1. Key points of Meta’s first quarter financial report
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—— Revenue reached US$36.455 billion, an increase of 27% from US$28.645 billion in the same period last year, exceeding analysts’ average forecast of US$36.16 billion;
——Net profit was US$12.369 billion, an increase of 117% from US$5.709 billion in the same period last year;
——Diluted earnings per share were US$4.71, an increase of 114% from US$2.2 in the same period last year, exceeding analysts' average estimate of US$4.32;
——Operating profit reached US$13.818 billion, an increase of 91% from US$7.227 billion in the same period last year. Gross profit margin increased to 38%, higher than 25% in the same period last year;
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——Total costs and expenses were US$22.637 billion, an increase of 6% from US$21.42 billion in the same period last year. Specifically, the cost of revenue was US$6.64 billion, higher than US$6.108 billion in the same period last year; R&D expenses were US$9.978 billion, higher than US$9.381 billion in the same period last year; marketing and sales expenses were US$2.564 billion, lower than the previous year. 3.044 billion US dollars in the same period last year; general and administrative expenses were 3.455 billion US dollars, higher than 2.885 billion US dollars in the same period last year.
——Capital expenditures (including principal payments on finance leases) were US$6.72 billion, down from US$7.09 billion in the same period last year;
–Meta repurchased $14.64 billion worth of Class A common stock in the first quarter, a significant increase from $9.22 billion in the same period last year. As of March 31, 2024, the company paid $1.27 billion in dividends;
——As of March 31, 2024, Meta’s total cash, cash equivalents and marketable securities held were US$58.12 billion, and free cash flow was US$12.53 billion;
——As of March 31, 2024, Meta’s number of employees was 69,329, a decrease of 10% compared with the same period last year.
By business
——Advertising revenue reached US$36.535 billion, a significant increase from US$28.1 billion in the same period last year;
——The revenue of the application family (including services such as Facebook, Instagram, WhatsApp and Messenger) was US$36 billion, compared with US$28.3 billion last year; operating profit reached US$17.664 billion, a significant increase from US$11.219 billion in the same period last year;
——Reality Labs’ revenue was US$440 million, down 51% from US$339 million in the same period last year; operating loss in the quarter was US$3.846 billion, slightly lower than the US$3.992 billion operating loss in the same period last year;
——The average number of daily active users (DAP) of the application family reached 3.24 billion, a year-on-year increase of 7%;
——Ad impressions provided by the application family increased by 20% year-on-year, compared with a growth rate of 26% in the same period last year.
2. Executive comments
Mark Zuckerberg, founder and CEO of Meta, said: “This year has started well. The new version of Meta AI (intelligent assistant) and Llama 3 (open source large language model) mark our continued progress in building The world's leading field of artificial intelligence has taken an important step. Our applications continue to grow healthily, and we are also steadily advancing the construction of the metaverse.”
3. Performance Outlook
Meta expects total revenue in the second quarter of 2024 to be between $36.5 billion and $39 billion. The company's guidance assumes that foreign exchange will have an adverse impact of approximately 1% on year-over-year revenue growth based on current exchange rates.
Meta expects total expenses for full-year 2024 to be between $96 billion and $99 billion, compared with its previous forecast of $94 billion to $99 billion, due to increased infrastructure and legal costs. For Reality Labs, operating losses are expected to continue to grow significantly as Meta drives investments in product development and further expands its ecosystem.
Meta also expects full-year 2024 capital expenditures to be between $35 billion and $40 billion, up from the previous range of $30 billion to $37 billion, as the company accelerates infrastructure investments to support its artificial intelligence (AI) development roadmap. Forecasts have increased. Although no specific guidance was provided beyond 2024, capital expenditures are expected to continue to increase in the coming years to support the company's investments in artificial intelligence research and product development.
If the tax environment remains unchanged, Meta expects the tax rate for full-year 2024 to be around 15%.
In addition, Meta will continue to closely monitor the active regulatory environment, particularly in the European Union and the United States, where increasing legal and regulatory pressures could have a material impact on the Company's business and financial performance.
Overall, the first quarter is a good start to the year. Meta's various applications are developing strongly, and long-term artificial intelligence and reality laboratory plans have also made significant progress. These plans are expected to change people's relationship with Meta in the next few years. How the service interacts.
4. Financial report interpretation
After Meta released its latest financial report, investors expressed concern about the company's forecast of continued rise in artificial intelligence-related costs. According to Meta, spending levels are expected to increase by up to $10 billion this year to support investment in infrastructure and artificial intelligence.
Meta's revenue increased significantly, reaching $36.5 billion, a year-on-year increase of more than 27%, setting a new high in the first quarter and exceeding analysts' expectations. This performance was mainly due to the company's breakthroughs in artificial intelligence technology, which significantly improved its ad targeting capabilities. It is these technological advances that helped Meta overcome the challenges posed by Apple's 2022 privacy policy update, which resulted in a $10 billion reduction in Meta's revenue.
In April this year, Meta released its latest large language model, Llama 3, and announced that it would begin to increase the application of this technology in popular applications such as Instagram and WhatsApp.
However, Paul Marino, chief revenue officer of exchange-traded fund issuer GraniteShares, said investors are concerned about the risks of Meta's large-scale investment in artificial intelligence, especially in the context of Zuckerberg's announcement of 2023. This comes after significant cost cutting in 2017 during the “Year of Efficiency”. He added that while the release of Llama 3 puts Meta in a strong position against the competition, shareholders would naturally expect to see higher revenue growth if the company continues to increase spending.
With the release of Llama 3 by Meta, the artificial intelligence race in Silicon Valley has become increasingly fierce, with startups such as Google, OpenAI, and Anthropic and Mistral also launching their own popular artificial intelligence products and chatbots. Shareholders are full of expectations for the potential of artificial intelligence, and are also paying close attention to how companies invest in building artificial intelligence models and applications, and how they can use this new technology to achieve profitability.
Expenditures of global technology giants continue to rise, especially the huge computing power required to support artificial intelligence models, driving companies to increase investment in servers and new generation artificial intelligence chips.
Although Meta's revenue growth has far outpaced other tech giants over the past nine months and rivaled the peaks of Apple, Microsoft, Google and Amazon during the pandemic, Reality Labs' loss-making status has still unnerved investors . Although the division achieved revenue growth of more than 29% year-on-year, operating losses exceeded $3.8 billion.
Some investors have expressed disappointment with Meta's huge investment in the metaverse, but others believe that the company's investment in artificial intelligence and real-life laboratories shows its long-term vision and positive attitude.
Stephen Lee, a Meta investor and partner at Logan Capital Management, said: “One of the reasons we have always been a long-term shareholder in Meta is the team's willingness to invest in next-generation platforms even when the prospects are unclear. Artificial Intelligence The next step in intelligence lies with companies that can leverage this technology to generate sales and profits. We think Meta is one of the companies that is really well positioned.”
5. Stock price changes
Meta's financial performance has improved in recent quarters, raising investor expectations, and its stock price has nearly tripled last year and is up about 40% so far this year.
On Wednesday local time in the United States, Meta shares fell 0.52% in regular trading on the Nasdaq Securities Market, closing at $493.5 per share. After the earnings report was released, the stock price plummeted more than 16% in after-hours trading as investors became increasingly concerned about the risks of Meta's heavy investment in artificial intelligence. As of this writing, Meta is trading at $414.2 per share.
In the past 52 weeks, Meta's stock price has been as high as $510 and as low as $484.58. Based on Wednesday's closing price, Meta's current market value is approximately $1.25 trillion.