Facebook-Parent Meta Reports Sales Increase In Q1, Sends Stocks Soaring

Meta saw a 3 per cent increase in sales in the first quarter from the same period last year.

Meta's shares saw a rise of 12 per cent in after-hours trading on Wednesday, after the company reported a surprise increase in sales for the first quarter and better-than-expected guidance for the current quarter. The company's earnings for the first quarter came in at $2.20 per share, surpassing analysts' expectations of $2.03 per share, as per Refinitiv. Meta's revenue for the quarter stood at $28.65 billion, exceeding the expected $27.65 billion. 

The company, which has popular social media platforms such as Facebook and Instagram under its belt along with WhatsApp, reported that its daily active users (DAUs) came in at 2.04 billion, while monthly active users (MAUs) were at 2.99 billion, both higher than expected figures from StreetAccount. The average revenue per user (ARPU) stood at $9.62 compared to the expected $9.30 from StreetAccount.

The company saw a 3 per cent increase in sales in the first quarter from the same period last year, which marks a reversal of three consecutive quarters of revenue decline. 

For the second quarter, Meta has projected revenue between $29.5 billion and $32 billion, exceeding the estimated $29.5 billion, as per Refinitiv.

The company's Reality Labs unit, which is working on developing virtual and augmented reality technologies for the metaverse, generated $339 million in sales but incurred an operating loss of $3.99 billion. Meta has also revealed that operating losses for Reality Labs are expected to increase this year.

Meta's net income fell by 24 per cent to $5.71 billion, or $2.20 per share, from $7.47 billion, or $2.72 per share, in the same quarter last year. This was mainly due to restructuring charges, which reduced the company's earnings per share by 44 cents.

The social media giant has disclosed that its total expenses for 2023 are expected to range between $86 billion to $90 billion, which includes restructuring costs ranging from $3 billion to $5 billion. The company's capital expenditures will remain in the range of $30 billion to $33 billion, accounting for increased artificial intelligence investments and its ad-supported products, such as the newsfeed and Reels.

CEO Mark Zuckerberg expressed satisfaction with the company's performance in a statement, stating that the company is becoming more efficient to deliver its long-term vision. The shares had been on an upward trend since Zuckerberg's announcement in February that 2023 would be the company's "year of efficiency." 

The shares had lost two-thirds of their value in 2022 but had seen a 74 per cent increase this year before the earnings report. The shares were up approximately 164 per cent from their November 2022 low of around $89. Investors have rallied behind Zuckerberg's plans to reduce the size of the company, which will result in about 21,000 expected job cuts.