Meta reported quite solid results, however all that has been already priced in as the stock price have increased by 24.6% since the previous earnings release (S&P500 +5.3% over the same period).
My key takeaways:
1) Meta beat revenue growth expectations in Q3 2024 on almost all lines (except Reality Labs, which is not significant because it only accounts for 0.7% of total revenue). Total Revenue grew by 18.9% YoY in Q3 – see Figure 1.
2) Meta has no intention of slowing down in Q4 2024 – it has given a revenue growth guidance for Q4 above Wall Street expectations. In Q4, Meta expects revenue in the range of $45-48 billion, and looking at the history of beating its own forecasts (Figure 2), the upper range of the forecast ($48 billion) means YoY growth of as much as 19.7%! This is impressive for a company of this size...
3) Meta intends to continue to invest aggressively, Susan Li, CFO:
“We anticipate our full year 2024 capital expenditures will be in the range of $38-40 billion, updated from our prior range of $37-40 billion. We continue to expect significant capital expenditures growth in 2025. Given this, along with the back-end weighted nature of our 2024 capex, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet”.
Mark Zuckerberg on Meta’s AI models:
“The Llama 3 models have been something of an inflection point in the industry, but I'm even more excited about Llama 4, which is now well into its development. We're training the Llama 4 models on a cluster that is bigger than 100k H100s or bigger than anything that I've seen reported for what others are doing. I expect that the smaller Llama 4 models will be ready first, and they’ll be ready, we expect sometime early next year, and I think that they're going to be a big deal on several fronts -- new modalities, capabilities, stronger reasoning, and much faster”.
All in all: solid results, solid growth outlook, increased CAPEX and wide AI adoption and ongoing intense AI-related investments.
Figure 3 shows Advertising segment revenues.
Figure 4 shows Other Revenue segment revenues.
Figure 5 shows Family of Apps segment revenues (Advertising + Other Revenue).
Total Revenue: Family of Apps + Reality Labs (Figure 1).
Figure 6 shows Reality Labs segment revenues.
Figure 7 shows Reality Labs segment revenues and operating loss.
Figure 8 shows how much of the operating profit (of the Family of Apps segment) is the operating loss of the Reality Labs.
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