Shares in Meta Platforms were up more than 8% before US markets opened, compared with revenue forecast to rise by as much as 20% this quarter.
With a 16% increase in net profit and 11% in net revenue in the three months ended June 30, Meta Platforms (NASDAQ:META), owner of social networks Facebook, Instagram, Threads and the messaging application WhatsApp, had “a good quarter,” according to Mark Zuckerberg, co-founder and CEO of the company.
“We continue to see strong engagement in our apps and have the most exciting schedule I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline and the launch of Quest 3 this fall,” Zuckerberg said in a statement. , referring to the company’s innovations in generative artificial intelligence, social networks and virtual reality glasses.
Meta posted net income of $7.78 billion in the second quarter, up 16% year-on-year. Earnings per share of $2.98 beat market analysts’ forecast of $2.91. Second-quarter revenue of $31.99 billion was up 11% year-on-year.
Advertising on Meta’s platforms generated revenue of US$ 31.5 billion in the second quarter, an increase of 11.9% over the result obtained a year earlier.
For the third quarter, which ends on September 30, the Target projects revenues between US$ 32 billion and US$ 34.5 billion, considering the positive impact of 3% from the exchange variation.
On the 5th, Meta launched the Threads social network, a rival microblog to Twitter, which allows sharing texts and public conversations. The application linked to Instagram reached 100 million users in five days, but has not yet reached the European Union, where Meta is awaiting definitions to comply with data protection legislation.
Zuckerberg also entered the generative AI race to compete with OpenAI’s ChatGPT and Google’s Bard. On the 13th, it announced Llama 2, an open source Large Language Model (LLM) available to researchers and companies.
The mass layoffs announced since the end of last year reduced Meta’s global team by 14%, which ended June with 71,469 employees.
The company said it had completed “substantially planned employee layoffs” on June 30 and was continuing to evaluate “facility consolidation and data center restructuring initiatives.”
Meta’s charges for restructuring totaled US$ 1.9 billion in the first half, of which US$ 780 million in the second quarter.
For the 2023 fiscal year, which ends in December, the Target forecasts total expenses in the range of $88 billion to $91 billion, up from the previous range of $86 to $90 billion due to legal expenses recorded in the second trimester.
“This outlook includes approximately $4 billion in restructuring costs related to facility consolidation charges and severance and other personnel costs,” said Susan Li, Meta’s chief financial officer.
Li added that he anticipates an increase in Reality Labs’ operating losses. In the second quarter, the division that encompasses virtual reality and metaverse projects posted an operating loss of $3.7 billion, compared with losses of $2.8 billion a year earlier.
“We expect a number of factors to drive total spend growth in 2024 as we continue to invest in our most compelling opportunities, including artificial intelligence and the metaverse,” said Li.
MARKET REACTION
RBC is positive on the stock with a Buy rating. The target price has been lifted and is now set at USD 400 compared to USD 330 before.