Meta (META) reported its third quarter earnings on Wednesday after the bell, beating on the top and bottom lines.
The company’s shares rose as much as 4% in after hours trading.
The Facebook and Instagram parent has been in the process of shoring up two key areas of interest for investors — its AI efforts, and its position in the digital advertising market, which has been in a prolonged slump and is just showing signs of a rebound.
Meta’s Q3 advertising revenue came in at $33.64 billion, compared to the expected $32.94 billion. The company beat on ad impressions estimate, clocking an increase of 31% year-over-year, versus the expected 29.6%.
Meta shares have risen about 140% year to date, massively outperforming both the S&P 500 and the Nasdaq Internet Index, which are up around 9% and 34% this year, respectively.
Meta’s near future could be mired in legal risks, as the company is staring down federal and state lawsuits from 42 attorneys general, who are alleging that Facebook and Instagram’s features geared toward children are addictive.
“We’re disappointed that instead of working productively with companies across the industry to create clear, age-appropriate standards for the many apps teens use, the attorneys general have chosen this path,” a Meta spokesperson said in a statement.
Currently, Wall Street analysts’ recommendations for Meta break down to 60 buys, seven holds, and two sells.
The earnings rundown
Here are the key numbers that Meta reported, as compared to analysts’ estimates compiled by Bloomberg:
Revenue: $34.15 billion actual, up 23% year-over-year, versus $33.52 billion expected
Earnings per share: $4.39 actual, up 168% year-over-year, versus $3.60 expected
Facebook daily active users: 2.09 billion actual, versus 2.07 billion expected
Reality Labs operating loss: $3.74 billion actual, versus $3.94 billion expected
Q4 revenue outlook: $36.5 billion-$40 billion actual, versus $38.76 billion expected
The company is also decreasing its 2023 capital expenditures outlook, revising the range to be between $27 and $29 billion, a decline from the previously announced $27 billion to $30 billion.
Meta’s Family of Apps business, which also includes WhatsApp, raked in over $33 billion in revenue.
But Reality Labs, the company’s mixed reality business, has been a subject of controversy. To date, Meta has lost more than $20 billion running Reality Labs, with $13.7 billion of that number coming from 2022. The company said it expects these losses to continue, and will increase notably year-over-year in 2023.
“We had a good quarter for our community and business,” Meta CEO Mark Zuckerberg said in a statement. “I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.”
This is breaking news, check back for updates.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn.
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