Meta, the parent company of Facebook, has released better-than-expected earnings, causing its stock price to rise over 6% in after-hours trading. Following Alphabet and Microsoft (MS), which also reported surprising strong results the previous day, another major U.S. tech company has delivered impressive earnings.
On the 26th (local time), Meta announced in its earnings report that its revenue for the second quarter reached $32 billion. This exceeded market expectations ($31.06 billion) and represented an 11% increase compared to the same period last year ($28.8 billion).
This is the first time since Q4 2021, when Meta benefited from the COVID-19 pandemic boom with a 20% growth, that the company has recorded double-digit quarterly revenue growth. Earnings per share were $2.98, also surpassing market expectations of $2.92.
Meta's Q2 revenue growth was driven by an increase in advertising revenue, its core income source. Facebook and Instagram ad revenues in Q2 reached $31.5 billion, significantly exceeding market expectations of $30.43 billion. Daily active users on Facebook also slightly surpassed market expectations, reaching 2.06 billion compared to the expected 2.03 billion.
Mark Zuckerberg, Meta's CEO, said in a statement after the earnings release, "We had a good quarter," adding, "We now have an exciting roadmap including the new AI product 'Llama 2,' the virtual reality (VR) headset 'Quest 3,' and the social media platform 'Threads.'"
However, the metaverse business, a 3D virtual world initiative aimed at diversifying beyond social media like Facebook, continued to incur massive losses. Meta's metaverse division, Reality Labs, recorded a net loss of $3.74 billion in Q2.
In its earnings press release, Meta projected Q3 revenue between $32 billion and $34.5 billion. This represents a 3% increase year-over-year at current exchange rates and significantly exceeds market expectations of $31.2 billion.
Meta also forecasted that total annual expenses would rise to between $88 billion and $91 billion, up from the previous estimate of $86 billion to $90 billion, due to investments in AI and one-time costs of $4 billion related to workforce restructuring.
Meta stated, "As we continue to invest in business opportunities such as AI and the metaverse, we expect costs to increase this year and next year as well."
The strong earnings were well received by the market. Meta's stock closed up 1.39% during regular trading and surged over 6% in after-hours trading following the earnings release, surpassing $300 per share.
The previous day, Alphabet and MS also reported earnings that beat market expectations. Google (Alphabet) announced that both its Q2 revenue ($74.6 billion) and earnings per share ($1.44) exceeded forecasts, while MS reported revenue ($56.19 billion) and earnings per share ($2.69) above expectations.
Contrary to initial predictions that advertising business would shrink due to the ChatGPT craze and economic recession, advertising revenue grew 3.3% year-over-year, demonstrating Google's dominance in the advertising market.
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