Meta Reports Fourth Quarter and Full Year 2023 Results; Initiates Quarterly Dividend
- Strong revenue growth of 25% to $40.11 billion in Q4 2023
- Net income surged by 201% to $14.02 billion in Q4 2023
- Quarterly cash dividend of $0.50 per share and $50 billion increase in share repurchase authorization
- Expectation of higher expenses in 2024 due to infrastructure-related costs, payroll expenses, and increased capital expenditures
Insights
The reported growth in Meta Platforms, Inc.'s revenue and net income signifies a robust financial performance, particularly noting the 25% revenue increase in Q4 and 16% for the full year. This demonstrates the company's resilience and adaptability in monetizing its user base despite broader industry challenges such as privacy changes and competition. The expansion in operating margin from 20% to 41% in Q4 and from 25% to 35% for the full year is a strong indicator of improved operational efficiency, which is critical for investor confidence.
Meta’s user growth metrics, including the 8% year-over-year increase in Daily Active People (DAP) and 6% in Monthly Active People (MAP), suggest sustained platform engagement. This is a positive signal for advertisers, as it indicates a stable and potentially growing audience for ad placements. However, the slight decrease in the average price per ad year-over-year could be a concern if it suggests a need to lower prices to maintain ad sales volume.
The initiation of a quarterly cash dividend is a significant development, reflecting Meta's transition to a more mature company phase, prioritizing shareholder returns. This move could attract a new class of income-focused investors and potentially stabilize the stock price. The share repurchase activity, with an additional $50 billion authorization, underscores the management's belief in the company's intrinsic value and commitment to returning value to shareholders. This could be perceived as a positive signal regarding the company's future financial health.
However, investors should be mindful of the restructuring charges totaling $3.45 billion for the year, which are significant one-time costs that impact net income. While these costs are aimed at realigning the business, they also highlight the ongoing transformation within Meta, which includes a 22% reduction in headcount. The long-term impact of these changes on innovation and operational capacity remains to be seen.
The CFO's outlook commentary reveals concerns about the regulatory environment, especially with the Federal Trade Commission (FTC) seeking to modify Meta's consent order. The potential for increased regulatory headwinds in the EU and U.S. could have material impacts on the company's operations and financial results. Investors should consider the risks associated with heightened regulatory scrutiny, which could lead to increased legal costs, fines, or constraints on business practices. The ongoing litigation with the FTC, in particular, may have significant implications for Meta's operational freedom and could influence the company's strategic decisions.
"We had a good quarter as our community and business continue to grow," said Mark Zuckerberg, Meta founder and CEO. "We've made a lot of progress on our vision for advancing AI and the metaverse."
Fourth Quarter and Full Year 2023 Financial Highlights
Three Months Ended December 31, | % Change | Twelve Months Ended December 31, | % Change | ||||||||||||
In millions, except percentages and per share amounts | 2023 | 2022 | 2023 | 2022 | |||||||||||
Revenue | $ | 40,111 | $ | 32,165 | 25 % | $ | 134,902 | $ | 116,609 | 16 % | |||||
Costs and expenses | 23,727 | 25,766 | (8) % | 88,151 | 87,665 | 1 % | |||||||||
Income from operations | $ | 16,384 | $ | 6,399 | 156 % | $ | 46,751 | $ | 28,944 | 62 % | |||||
Operating margin | 41 % | 20 % | 35 % | 25 % | |||||||||||
Provision for income taxes | $ | 2,791 | $ | 1,497 | 86 % | $ | 8,330 | $ | 5,619 | 48 % | |||||
Effective tax rate | 17 % | 24 % | 18 % | 19 % | |||||||||||
Net income | $ | 14,017 | $ | 4,652 | 201 % | $ | 39,098 | $ | 23,200 | 69 % | |||||
Diluted earnings per share (EPS) | $ | 5.33 | $ | 1.76 | 203 % | $ | 14.87 | $ | 8.59 | 73 % | |||||
Fourth Quarter and Full Year 2023 Operational and Other Financial Highlights
- Family daily active people (DAP) – DAP was 3.19 billion on average for December 2023, an increase of
8% year-over-year. - Family monthly active people (MAP) – MAP was 3.98 billion as of December 31, 2023, an increase of
6% year-over-year. - Facebook daily active users (DAUs) – DAUs were 2.11 billion on average for December 2023, an increase of
6% year-over-year. - Facebook monthly active users (MAUs) – MAUs were 3.07 billion as of December 31, 2023, an increase of
3% year-over-year. - Ad impressions and price per ad – In the fourth quarter of 2023, ad impressions delivered across our Family of Apps increased by
21% year-over-year and the average price per ad increased by2% year-over-year. For the full year 2023, ad impressions increased by28% year-over-year and the average price per ad decreased by9% year-over-year. - Revenue – Revenue was
$40.11 billion $134.90 billion 25% and16% year-over-year for the fourth quarter and full year 2023, respectively. Had foreign exchange rates remained constant with the same periods of 2022, revenue would have been$816 million $374 million 22% and15% on a constant currency basis for the fourth quarter and full year 2023, respectively. - Costs and expenses – Total costs and expenses were
$23.73 billion $88.15 billion 8% and an increase of1% year-over-year, respectively. Restructuring charges included in costs and expenses were$1.15 billion $3.45 billion - Capital expenditures – Capital expenditures, including principal payments on finance leases, were
$7.90 billion $28.10 billion - Share repurchases – We repurchased
$6.32 billion $20.03 billion $30.93 billion $50 billion - Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were
$65.40 billion $11.50 billion $43.01 billion - Long-term debt – Long-term debt was
$18.39 billion - Headcount – Headcount was 67,317 as of December 31, 2023, a decrease of
22% year-over-year.
Meta Initiates Quarterly Dividend
Today, Meta's board of directors declared a cash dividend of
Restructuring
Beginning in 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities. As of December 31, 2023, we have completed the data center initiatives and the employee layoffs, and substantially completed the facilities consolidation initiatives.
A summary of our restructuring charges, including subsequent adjustments, for the three and twelve months ended December 31, 2023 by major activity type is as follows (in millions):
Three Months Ended December 31, 2023 | Twelve Months Ended December 31, 2023 | |||||||||||||||
Facilities | Severance | Data Center | Total | Facilities | Severance | Data Center | Total | |||||||||
Cost of revenue | $ 86 | $ — | $ 7 | $ 93 | $ 177 | $ — | $ (224) | $ (47) | ||||||||
Research and development | 710 | 28 | — | 738 | 1,581 | 413 | — | 1,994 | ||||||||
Marketing and sales | 162 | 16 | — | 178 | 396 | 307 | — | 703 | ||||||||
General and administrative | 142 | (3) | — | 139 | 352 | 450 | — | 802 | ||||||||
Total | $ 1,100 | $ 41 | $ 7 | $ 1,148 | $ 2,506 | $ 1,170 | $ (224) | $ 3,452 | ||||||||
During the three and twelve months ended December 31, 2022, we recorded total restructuring charges of
CFO Outlook Commentary
We expect first quarter 2024 total revenue to be in the range of
We expect full-year 2024 total expenses to be in the range of
- First, we expect higher infrastructure-related costs this year. Given our increased capital investments in recent years, we expect depreciation expenses in 2024 to increase by a larger amount than in 2023. We also expect to incur higher operating costs from running a larger infrastructure footprint.
- Second, we anticipate growth in payroll expenses as we work down our current hiring underrun and add incremental talent to support priority areas in 2024, which we expect will further shift our workforce composition toward higher-cost technical roles.
- Finally, for Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem.
We anticipate our full-year 2024 capital expenditures will be in the range of
Absent any changes to
In addition, we continue to monitor the active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the
This was a pivotal year for our company. We increased our operating discipline, delivered strong execution across our product priorities, and improved advertising performance for the businesses who rely on our services. We will look to build on our progress in each of those areas in 2024 while advancing our ambitious, longer-term efforts in AI and Reality Labs.
Webcast and Conference Call Information
Meta will host a conference call to discuss the results at 1:30 p.m. PT / 4:30 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck), Instagram account (instagram.com/zuck) and Threads profile (threads.net/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (800) 770-2030 or +1 (647) 362-9199, conference ID 8032328.
Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.
About Meta
Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.
Contacts
Investors:
Kenneth Dorell
investor@meta.com / investor.fb.com
Press:
Ryan Moore
press@meta.com / about.fb.com/news/
Forward-Looking Statements
This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; our ability to manage our scale and geographically-dispersed operations; and market conditions or other factors affecting the payment of dividends. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on October 26, 2023, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2023. In addition, please note that the date of this press release is February 1, 2024, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.
For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in our most recent quarterly or annual report filed with the SEC.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in
We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.
We exclude the following items from our non-GAAP financial measures:
Foreign exchange effect on revenue. We translated revenue for the three months and full year ended December 31, 2023 using the prior year's monthly exchange rates for our settlement or billing currencies other than the
Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.
For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release.
META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited) | ||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenue | $ 40,111 | $ 32,165 | $ 134,902 | $ 116,609 | ||||
Costs and expenses: | ||||||||
Cost of revenue | 7,695 | 8,336 | 25,959 | 25,249 | ||||
Research and development | 10,517 | 9,771 | 38,483 | 35,338 | ||||
Marketing and sales | 3,226 | 4,574 | 12,301 | 15,262 | ||||
General and administrative | 2,289 | 3,085 | 11,408 | 11,816 | ||||
Total costs and expenses | 23,727 | 25,766 | 88,151 | 87,665 | ||||
Income from operations | 16,384 | 6,399 | 46,751 | 28,944 | ||||
Interest and other income (expense), net | 424 | (250) | 677 | (125) | ||||
Income before provision for income taxes | 16,808 | 6,149 | 47,428 | 28,819 | ||||
Provision for income taxes | 2,791 | 1,497 | 8,330 | 5,619 | ||||
Net income | $ 14,017 | $ 4,652 | $ 39,098 | $ 23,200 | ||||
Earnings per share attributable to Class A and Class B | ||||||||
Basic | $ 5.46 | $ 1.76 | $ 15.19 | $ 8.63 | ||||
Diluted | $ 5.33 | $ 1.76 | $ 14.87 | $ 8.59 | ||||
Weighted-average shares used to compute earnings per | ||||||||
Basic | 2,566 | 2,638 | 2,574 | 2,687 | ||||
Diluted | 2,630 | 2,640 | 2,629 | 2,702 | ||||
META PLATFORMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) | ||||
December 31, 2023 | December 31, 2022 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 41,862 | $ 14,681 | ||
Marketable securities | 23,541 | 26,057 | ||
Accounts receivable, net | 16,169 | 13,466 | ||
Prepaid expenses and other current assets | 3,793 | 5,345 | ||
Total current assets | 85,365 | 59,549 | ||
Non-marketable equity securities | 6,141 | 6,201 | ||
Property and equipment, net | 96,587 | 79,518 | ||
Operating lease right-of-use assets | 13,294 | 12,673 | ||
Intangible assets, net | 788 | 897 | ||
Goodwill | 20,654 | 20,306 | ||
Other assets | 6,794 | 6,583 | ||
Total assets | $ 229,623 | $ 185,727 | ||
Liabilities and stockholders' equity | ||||
Current liabilities: | ||||
Accounts payable | $ 4,849 | $ 4,990 | ||
Partners payable | 863 | 1,117 | ||
Operating lease liabilities, current | 1,623 | 1,367 | ||
Accrued expenses and other current liabilities | 24,625 | 19,552 | ||
Total current liabilities | 31,960 | 27,026 | ||
Operating lease liabilities, non-current | 17,226 | 15,301 | ||
Long-term debt | 18,385 | 9,923 | ||
Other liabilities | 8,884 | 7,764 | ||
Total liabilities | 76,455 | 60,014 | ||
Commitments and contingencies | ||||
Stockholders' equity: | ||||
Common stock and additional paid-in capital | 73,253 | 64,444 | ||
Accumulated other comprehensive loss | (2,155) | (3,530) | ||
Retained earnings | 82,070 | 64,799 | ||
Total stockholders' equity | 153,168 | 125,713 | ||
Total liabilities and stockholders' equity | $ 229,623 | $ 185,727 | ||
META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Cash flows from operating activities | ||||||||
Net income | $ 14,017 | $ 4,652 | $ 39,098 | $ 23,200 | ||||
Adjustments to reconcile net income to net cash provided by | ||||||||
Depreciation and amortization | 3,172 | 2,376 | 11,178 | 8,686 | ||||
Share-based compensation | 3,424 | 3,008 | 14,027 | 11,992 | ||||
Deferred income taxes | (1,161) | (1,173) | 131 | (3,286) | ||||
Impairment charges for facilities consolidation, net | 1,091 | 1,805 | 2,432 | 2,218 | ||||
Data center assets abandonment | 7 | 1,341 | (224) | 1,341 | ||||
Other | 124 | 572 | 635 | 641 | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (2,843) | (1,698) | (2,399) | 231 | ||||
Prepaid expenses and other current assets | 700 | 854 | 559 | 162 | ||||
Other assets | (111) | 54 | (80) | (106) | ||||
Accounts payable | 595 | 876 | 51 | 210 | ||||
Partners payable | 76 | 102 | (271) | 90 | ||||
Accrued expenses and other current liabilities | (350) | 1,303 | 5,352 | 4,210 | ||||
Other liabilities | 663 | 439 | 624 | 886 | ||||
Net cash provided by operating activities | 19,404 | 14,511 | 71,113 | 50,475 | ||||
Cash flows from investing activities | ||||||||
Purchases of property and equipment | (7,665) | (9,043) | (27,266) | (31,431) | ||||
Proceeds relating to property and equipment | 73 | 55 | 221 | 245 | ||||
Purchases of marketable debt securities | (1,171) | (741) | (2,982) | (9,626) | ||||
Sales and maturities of marketable debt securities | 2,359 | 2,263 | 6,184 | 13,158 | ||||
Acquisitions of businesses and intangible assets | (64) | (62) | (629) | (1,312) | ||||
Other investing activities | (4) | (3) | (23) | (4) | ||||
Net cash used in investing activities | (6,472) | (7,531) | (24,495) | (28,970) | ||||
Cash flows from financing activities | ||||||||
Taxes paid related to net share settlement of equity awards | (2,223) | (656) | (7,012) | (3,595) | ||||
Repurchases of Class A common stock | (5,942) | (6,863) | (19,774) | (27,956) | ||||
Proceeds from issuance of long-term debt, net | — | — | 8,455 | 9,921 | ||||
Principal payments on finance leases | (307) | (235) | (1,058) | (850) | ||||
Other financing activities | 71 | 695 | (111) | 344 | ||||
Net cash used in financing activities | (8,401) | (7,059) | (19,500) | (22,136) | ||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 396 | 424 | 113 | (638) | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | 4,927 | 345 | 27,231 | (1,269) | ||||
Cash, cash equivalents, and restricted cash at beginning of the period | 37,900 | 15,251 | 15,596 | 16,865 | ||||
Cash, cash equivalents, and restricted cash at end of the period | $ 42,827 | $ 15,596 | $ 42,827 | $ 15,596 | ||||
Reconciliation of cash, cash equivalents, and restricted cash to the | ||||||||
Cash and cash equivalents | $ 41,862 | $ 14,681 | $ 41,862 | $ 14,681 | ||||
Restricted cash, included in prepaid expenses and other current assets | 99 | 294 | 99 | 294 | ||||
Restricted cash, included in other assets | 866 | 621 | 866 | 621 | ||||
Total cash, cash equivalents, and restricted cash | $ 42,827 | $ 15,596 | $ 42,827 | $ 15,596 | ||||
META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Supplemental cash flow data | ||||||||
Cash paid for income taxes, net | $ 4,591 | $ 1,760 | $ 6,607 | $ 6,407 | ||||
Cash paid for interest, net of amounts capitalized | $ 146 | $ — | $ 448 | $ — | ||||
Non-cash investing and financing activities: | ||||||||
Property and equipment in accounts payable and accrued expenses and other current liabilities | $ 4,105 | $ 3,319 | $ 4,105 | $ 3,319 | ||||
Acquisition of businesses in accrued expenses and other current liabilities and other liabilities | $ 119 | $ 291 | $ 119 | $ 291 | ||||
Repurchases of Class A common stock in accrued expenses and other current liabilities | $ 474 | $ 310 | $ 474 | $ 310 | ||||
Segment Results
We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented, mixed, and virtual reality related consumer hardware, software, and content.
The following table presents our segment information of revenue and income (loss) from operations:
Segment Information (In millions) (Unaudited) | ||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenue: | ||||||||
Advertising | $ 38,706 | $ 31,254 | $ 131,948 | $ 113,642 | ||||
Other revenue | 334 | 184 | 1,058 | 808 | ||||
Family of Apps | 39,040 | 31,438 | 133,006 | 114,450 | ||||
Reality Labs | 1,071 | 727 | 1,896 | 2,159 | ||||
Total revenue | $ 40,111 | $ 32,165 | $ 134,902 | $ 116,609 | ||||
Income (loss) from operations: | ||||||||
Family of Apps | $ 21,030 | $ 10,678 | $ 62,871 | $ 42,661 | ||||
Reality Labs | (4,646) | (4,279) | (16,120) | (13,717) | ||||
Total income from operations | $ 16,384 | $ 6,399 | $ 46,751 | $ 28,944 | ||||
Reconciliation of GAAP to Non-GAAP Results (In millions, except percentages) (Unaudited) | ||||||||
Three Months Ended | Twelve Months Ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
GAAP revenue | $ 40,111 | $ 32,165 | $ 134,902 | $ 116,609 | ||||
Foreign exchange effect on 2023 revenue using 2022 rates | (816) | (374) | ||||||
Revenue excluding foreign exchange effect | $ 39,295 | $ 134,528 | ||||||
GAAP revenue year-over-year change % | 25 % | 16 % | ||||||
Revenue excluding foreign exchange effect year-over-year change % | 22 % | 15 % | ||||||
GAAP advertising revenue | $ 38,706 | $ 31,254 | $ 131,948 | $ 113,642 | ||||
Foreign exchange effect on 2023 advertising revenue using 2022 rates | (809) | (379) | ||||||
Advertising revenue excluding foreign exchange effect | $ 37,897 | $ 131,569 | ||||||
GAAP advertising revenue year-over-year change % | 24 % | 16 % | ||||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 21 % | 16 % | ||||||
Net cash provided by operating activities | $ 19,404 | $ 14,511 | $ 71,113 | $ 50,475 | ||||
Purchases of property and equipment, net | (7,592) | (8,988) | (27,045) | (31,186) | ||||
Principal payments on finance leases | (307) | (235) | (1,058) | (850) | ||||
Free cash flow | $ 11,505 | $ 5,288 | $ 43,010 | $ 18,439 | ||||
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