Meta Platforms, the parent company of Facebook and Instagram, has been on a tear for the past year and continued its strong performance in the third quarter of 2023, as the company’s earnings report beat Wall Street expectations on the back of its booming advertising operation.
Meta posted a net income of $11.58 billion for the quarter, a 164% increase year over year. The company reported quarterly revenue of $34.15 billion, a 23% increase over last year, which exceeded analyst estimates of $33.56 billion.
The company’s stock jumped by more than 4% in after-hours trading following its positive earnings report. The boost came after Meta stock dropped by about 4% during regular trading hours on Wednesday.
While Meta has spent the past few years talking up technological advancements, first in the metaverse and more recently in artificial intelligence, advertising continues to be its bread and butter. The company reported $33.64 billion in revenue from the ad business, beating Wall Street expectations of $32.94 billion. It also reported a 31% year-over-year increase in ad impressions, even as the average price per ad decreased by 6% during the same period.
A good quarter for digital ads
Meta’s strong showing in the advertising department follows an industry-wide trend. Google parent Alphabet and Snapchat both reported growth in digital advertising, signaling a turnaround in the sector that was hit hard by declining spending during and after the pandemic.
The third-quarter earnings report also provided a first indication of the success of Threads, Meta’s Twitter competitor that launched in July and racked up users but struggled to keep them on the platform. While the company did not break out specific data for Threads, it did report its daily active users across its full family of apps increased to 3.14 billion for September 2023—an increase of 7% year-over-year and 70 million more than it reported for the second quarter of this year.
Although Meta’s core business continues to grow, its bet on the metaverse is still a money pit. Reality Labs, Meta’s metaverse division, reported losses of $3.7 billion in third quarter. Its revenue is also down, reporting $210 million this quarter compared to $285 million during the same time last year.
Meta’s earnings report comes one day after the company was sued by the attorneys general of 33 states for allegedly harming the mental health of young people.
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