MetaMeta Platforms Inc. posted stronger-than-expected third-quarter results on Wednesday. This was fueled by advertising revenue growth and the push to incorporate artificial intelligence. For the three months ended on Sept. 30, the company earned $15.69 billion, or $6.03 per share, up 35% from a year earlier. Revenue rose 19% to $40.59 billion.
However, the Instagram and Facebook parent company warned of a ‘significant acceleration’ in infrastructure spending next year as it continues to invest in developing AI. Nearly all of Meta’s revenue comes from advertising on its platforms. A slight shortfall in user numbers put a dent in an otherwise strong quarter. Meta said its ‘family daily active people’ was 3.29 billion on average for September, while analysts had expected 3.31 billion.
Emarketer analyst Jasmine Enberg said the miss in user metric is concerning as Meta will need to squeeze more revenue out of existing users as growth slows. But she added that the company is in a good position to do so as its AI-powered tools are boosting engagement and making ads more effective.
CEO Mark Zuckerberg said in a statement that they had a good quarter driven by AI progress across apps and business. Meta is forecasting revenue of $45 billion to $48 billion for the current quarter, while analysts expect $46.18 billion.
Investing.com analyst Jesse Cohen said Meta’s solid quarter shows digital advertisers are choosing to spend on market leaders like Facebook and Instagram. But investors appear disappointed over the company’s forward guidance and rising costs for developing AI features.
Meta said it expects 2024 operating losses at its Reality Labs segment to increase due to product development costs and other investments. Last month, Meta teased a prototype for Orion, its holographic augmented reality glasses.
Meta’s shares slipped about 3% in after-market trading following the earnings report.
