Meta shares soar almost 20% on fourth-quarter revenue beat


Meta said that its headcount increased 20% year-over-year to 86,482 as of December 31, 2022. That number includes a large chunk of the over 11,000 workers that Meta said it would lay off last November…reports Asian Lite News

Meta shares popped in extended trading on Wednesday after the company reported fourth-quarter revenue that topped estimates and announced a $40 billion stock buyback.

The company also reported restructuring charges for its Family of Apps segment and Reality Labs unit of $3.76 billion and $440 million, respectively during the fourth quarter of 2022. Because of those charges, it’s difficult to compare the company’s earnings per share to analyst estimates of $2.22 per share.

Meta said it expects revenue in the first quarter of between $26 billion and $28.5 billion.  Analysts were expecting sales of $27.1 billion, according to Refinitv. Sales in the first quarter of 2021 came in at $27.9 billion. Should Meta reach the high end of its guidance range, the company could end its streak of year-over-year declines.

“Our community continues to grow and I’m pleased with the strong engagement across our apps,” Meta CEO Mark Zuckerberg said in a statement. “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”

Meta said that its headcount increased 20% year-over-year to 86,482 as of December 31, 2022. That number includes a large chunk of the over 11,000 workers that Meta said it would lay off last November.

The company expects that its total expenses in 2023 will be in the range of $89 billion to $95 billion, which is lower than its prior outlook of $94 billion to $100 billion for the year. Meta attributed the adjustment to “slower anticipated growth in payroll expenses and cost of revenue.”

Meta also said that it’s lowering its capital expenditure estimates for the year to be in the range of $30 billion to $33 billion, down from $34 billion to $37 billion. That’s partly due to the company spending less money on data center construction. Instead, Meta said it’s shifting to a different kind of data center architecture intended to be more cost efficient while acting as the backbone of its various artificial intelligence projects.

Meta said on Wednesday that it authorized a $40 billion increase to its stock repurchase plan. The company bought back $27.9 billion worth of its shares last year.

Earlier this week, Snap reported fourth quarter earnings that missed on sales, sending its shares tumbling. While much smaller than Meta, Snap faces some of the same challenges, including a slowdown in online advertising spend, increased competition from TikTok and a weakened targeting advertising system due to Apple’s 2021 iOS privacy update.

Meta shares plummeted by over 60% last year, as Zuckerberg struggled to sell Wall Street on his plan to pivot the company towards the yet-to-be-developed world of the metaverse. Zuckerberg has said the metaverse, which would include virtual reality and augmented reality technologies, could represent the next major way people interact.

The big bet has frustrated investors, who worry the company is putting too much focus on a futuristic endeavor while its core ad business struggles to revive growth. Meta’s Reality Labs unit, home to the metaverse ambitions, lost $4.28 billion in the fourth quarter, bringing its total operating loss for the year to $13.72 billion.

Meta said last year that “Reality Labs operating losses in 2023 will grow significantly year-over-year.”

Here are some other key numbers

Daily Active Users (DAUs): 2 billion vs 1.99 billion expected, according to StreetAccount

Monthly Active Users (MAUs):  2.96 billion vs 2.98 billion expected, according to StreetAccount

Average Revenue per User (ARPU): $10.86 vs $10.63 expected, according to StreetAccount

Revenue in the fourth quarter fell 4% from a year earlier, marking a third straight quarter of declining sales. The company’s cost and expenses ballooned 22% year-over-year to $25.8 billion.

Meta’s Reality Labs loses $13.7 bn on VR-AR projects

Meta (formerly Facebook) lost a whopping $13.7 billion in operating losses for Reality Labs for 2022, giving its AR-VR and Metaverse dream a huge jolt.

Within the Reality Labs segment, Q4 revenue was $727 million, down 17 per cent due to lower Quest 2 sales. Reality Labs expenses were $5 billion, up 20 per cent primarily due to employee-related costs and restructuring-related expenses.

Reality Labs operating loss was $4.3 billion in the holiday quarter of 2022. Meta bought AR hardware company Oculus for $2 billion back in 2014.

Last year, Meta Founder and CEO Mark Zuckerberg said the company will invest $10 billion for its Metaverse dream. Meta CFO Susan Li said that the company expects its annual losses for Reality Labs to be even higher in 2023.

“We’re going to continue to invest meaningfully in this area given the significant long-term opportunities that we see. It is a long-duration investment,” said Li. Zuckerberg said that the company shipped Quest Pro at the end of last year.

“It’s the first mainstream mixed reality device, and we’re setting the standard for the industry with our Meta Reality system,” he said.

“Beyond MR, the broader VR ecosystem continues growing. There are now over 200 apps on our VR devices that have made more than $1 million in revenue,” the Meta CEO informed.

The company launched avatars on WhatsApp last quarter and more than 100 million people have already created avatars in the app.

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