Facebook parent Meta projects significant acceleration in revenue and profit

31/10/2024 5:58

        Facebook owner Meta Platforms
        beat analysts' estimates for third-quarter revenue and
        profit on Wednesday, but warned of "significant acceleration" in
        infrastructure expenses related to its artificial-intelligence
        buildout, sending mixed signals about whether higher digital ad
        sales from its core social media business would continue to
        cover its massive AI investments.
        
        Shares of the Menlo Park, California-based firm fell 2.5% in
        after-hours trading.
        
        The world's biggest social media company reported
        third-quarter profit of $6.03 per share, compared with estimates
        of $5.25 per share, according to data compiled by LSEG.
        Third-quarter revenue stood at $40.59 billion, compared with
        analysts' estimates of $40.29 billion.
        
        The company also forecast between $45 billion and $48
        billion in fourth-quarter revenue, compared with analysts'
        estimates of $46.31 billion, according to data from LSEG.
        
        Advertising accounts for the vast majority of Meta's
        revenue, meaning higher marketing spending during the holiday
        season could provide a crucial boost to the company's bottom
        line, according to analysts.
        
        Meta's earnings come after encouraging results from digital
        ad bellwethers Alphabet and Snap, which both
        beat third-quarter revenue estimates on Tuesday thanks in part
        to rising sales of AI-assisted ads.
        
        Like its Big Tech peers, it has invested heavily in data
        centers to capitalize on the generative AI boom. Unlike
        providers of cloud services, however, it does not expect to earn
        money from those investments right away and therefore is more
        subject to scrutiny from investors around its spending.
        
        The company kept costs in check in the third quarter, with
        total costs of $23.2 billion and capital expenditure of $9.2
        billion. It projected a slightly improved expense picture for
        the year as well, narrowing its total expense forecast to $96 to
        $98 billion.
        
        In its press release, however, it warned of "a significant
        acceleration in infrastructure expense growth next year as we
        recognize higher growth in depreciation and operating expenses
        of our expanded infrastructure fleet."