The performance of "Efficiency Year" exceeded expectations, coupled with the company's announcement of its first dividend payout, the stock price of social media giant Meta surged by 15% after hours.
On February 1st local time, Meta announced its fourth quarter financial performance for the fiscal year ended December 31, 2023, with revenue of $40.111 billion, a 25% increase from the same period last year and higher than market expectations of $38.9 billion; Net profit increased by 201% year-on-year to $14.017 billion, higher than market expectations of $12.89 billion; Diluted earnings per share increased by 203% year-on-year to $5.33, higher than market expectations of $4.95. Meta's annual revenue in 2023 was $134.902 billion, a year-on-year increase of 16%; Net profit increased by 69% year-on-year to $39.098 billion.
In the fourth quarter, Meta achieved a 25% revenue growth, which is also its largest revenue growth since the third quarter of 2021. Meta expects its revenue to reach between $34.5 billion and $37 billion in the next fiscal quarter, exceeding analysts' expectations of $33.64 billion.
In addition, Meta announced an increase of $50 billion in stock repurchases and will distribute its first-ever dividend in March this year, including $0.50 in cash per share for Class A and Class B common shares.
Meta CEO Mark Zuckerberg said, "As the community and business continue to grow, we have had a good quarter. We have made significant progress in driving the vision of AI (artificial intelligence) and the metaverse."
Meta Q4 and full year performance for 2023. Source: Meta Financial Report
Meta's stock price closed at $394.78 per share on the 1st, with an after market increase of over 15% and a total market value of $1.01 trillion. In the past 2023, Meta's stock price has increased by 194%.
From a business perspective, advertising revenue from social media platforms remains the main component of Meta's fourth quarter revenue, with a revenue of $38.706 billion, accounting for over 96% of the total revenue. Relying on advertising revenue, the Meta app series Family of Apps (FoA), including Instagram, Facebook, and WhatsApp, achieved revenue of $39.04 billion in the fourth quarter, a year-on-year increase of 24%.
The financial report shows that Facebook's daily active users (DAU) reached 2.11 billion in December last year, and monthly active users reached 3.07 billion, both exceeding research institution expectations.
On the other hand, the relevant departments of the metaverse, as well as Reality Labs responsible for AR (augmented reality) and VR (virtual reality) businesses, still suffered a huge loss of $4.646 billion in the fourth quarter, up from $4.279 billion in the same period last year. In 2023, the total loss of the department reached $16.12 billion, higher than the previous year's $13.717 billion.
Meta Q4 and full year business performance for 2023. Source: Meta Financial Report
In recent years, Meta has been striving to balance its massive spending on technologies such as AI and VR, ensuring that its core business, digital advertising, can maintain growth. At the beginning of 2023, after the company laid off tens of thousands of employees, Zuckerberg referred to 2023 as the "year of efficiency", which will significantly reduce the company's operating costs through opening up resources and reducing costs.
Meta's implementation of the "Year of Efficiency" has indeed been quite effective. According to the financial report, as of December 31, 2023, Meta has completed its data center plan, layoff plan, and facility integration plan. The company's total costs and expenses for the fourth quarter decreased by 8% year-on-year to $23.7 billion, and its operating profit margin increased from 25% last year to 35% for the full year of 2023.
While reducing costs, Meta will continue to increase its investment in AI. At the post earnings conference call, the company expects its capital expenditures for the full year of 2024 to be between $30 billion and $37 billion, an increase from the guidance given three months ago of $30 billion to $35 billion. Meta expects its investment in servers to drive this growth, as well as the company accelerating the construction of new data center architecture sites and deploying new self-developed custom chips within the data center.
Zuckerberg also emphasized that training and running AI models will "require more computing resources" in the future, and stated that the company "aims to win in AI and will continue to make large-scale investments in this field.".
Two weeks ago on January 18th, Zuckerberg announced that Meta was planning to build its own AGI (General Artificial Intelligence) and promised to make this technology available to the public. Meta plans to acquire approximately 350000 H100 GPUs from Nvidia by the end of this year. Including other GPUs, the company's total computing power will be close to the computing power that 600000 H100 can provide. The selling price of the star chip H100 is set between $25000 and $30000, and even if calculated at $25000, Meta will still pay approximately $8.75 billion for the 350000 H100.
In November last year, a coalition of Attorney General's from 41 states in the United States and Washington D.C. sued Meta, accusing its social media platforms such as Facebook of illegally collecting personal account information and data from users under the age of 13, with addictive features built in, and posing a threat to children's mental health. On January 31st, social media companies such as Meta testified before the Senate Judiciary Committee in the United States, and Zuckerberg apologized to the families of some child victims on site.