Meta Q1 2024 Earnings Review
$META Q1'24 Results:
Financial Results:
↗️$36,455M rev (27.3% YoY, +24.7% LQ) beat est by 0.9%
↗️GM (81.8%, +3.1%pp YoY)
↗️Operating Margin (37.9%, +12.7%pp YoY)
↗️FCF Margin (34.4%, +10.3%pp YoY)
↗️Net Margin (33.9%, +14.0%pp YoY)
↗️EPS $4.71 beat est by 9.3%
Segment Revenue
➡️Family of Apps $36,015M rev (+27.2% YoY, 49.0% Gross Margin)🟡
↗️Reality Labs $440M rev (+29.8% YoY, -874.1% Gross Margin)
➡️Advertising $35,635M rev (+26.8% YoY)🟡
↗️Other revenue $380M rev (+85.4% YoY)🟢
KPI
➡️Family daily active people (DAP) $3.2B on average (+2.0% YoY)
Operating expenses
↘️S&M/Revenue 7.0% (8.0% LQ)
↗️R&D/Revenue 27.4% (26.2% LQ)
↗️G&A/Revenue 9.5% (5.7% LQ)
Headcount
↗️69,329 Total Headcount (-10% YoY, +2012 added)
Dilution
↗️SBC/rev 10%, +1.2%pp QoQ
↗️Basic shares down -1.6% YoY, +1.1%pp QoQ🟢
↗️Diluted shares up 1.1% YoY, +1.5%pp QoQ
Guidance
➡️Q2'24 $36,500.0 - $39,000.0M guide (+18.0% YoY) in line with est
Key points from Meta’s First Quarter 2024 Earnings Call:
Strong Performance and User Growth:
Meta Platforms reported robust revenue growth of 27% year-over-year, with strong user engagement. Daily active users across Meta apps continue to increase, showing healthy growth in the US, particularly with WhatsApp.
Investments in Reality Labs:
Meta continues to invest in Reality Labs, focusing on developing AR glasses and advancing the Metaverse. The company sees overlap between AI initiatives and Reality Labs, particularly in enhancing immersive experiences through AI.
The company is also focusing on strategic partnerships, as seen in their collaboration with Ray-Ban for smart glasses.
Investment in AI:
Increase investment in AI, particularly in building advanced AI models and infrastructure to support AI-driven products and services. This includes scaling AI models and integrating AI-driven features across its platforms, which are seen as long-term strategic bets to maintain competitive advantage.
Develop AI assistants and AI tools for businesses and creators to drive engagement and productivity.
Advertising:
Develop new advertising formats and optimize ad placement through AI to improve user experience and advertiser results.
Expand the use of AI in creating more engaging and personalized ad content, particularly through generative AI features.
Focus on User Engagement:
Leverage AI to improve advertising outcomes and user experience, making ads more relevant and engaging through better targeting and personalization.
Enhance tools for advertisers, focusing on automation and efficiency to improve ad performance and ROI.
AI-Driven Business Messaging and Tools:
Meta is focusing on AI-driven tools for business messaging and interactions. This includes automating customer interactions for businesses on Messenger and WhatsApp and providing AI tools for creators to engage with their communities.
Regulatory and Legal Considerations:
Meta is mindful of the regulatory landscape, particularly in the EU and US, which could impact their business operations and financial outcomes. Proactive management of legal and regulatory issues is crucial to their ongoing business strategy.
Future Growth Opportunities:
Looking ahead, Meta sees significant opportunities in using AI to drive further engagement and improve monetization efficiencies. The company remains optimistic about the long-term potential of its investments in AI and the Metaverse, which are expected to transform user interactions and open new revenue streams.
Management comments on the earnings call.
Reality Labs and AI:
Mark Zuckerberg: "Our other long-term focus is the Metaverse. It's been interesting to see how these two themes have come together. This is clearest when you look at glasses. I used to think that AR glasses wouldn't really be a mainstream product until we had full holographic displays."
Susan Li: "We are also starting to see our AI initiatives increasingly overlap with our Reality Labs work. For example, with Ray-Ban Meta smart glasses, people in the US and Canada can now use our multimodal meta AI assistant for daily tasks without pulling out their phone."
Metaverse:
Mark Zuckerberg: "On the upside, once our new AI services reach scale, we have a strong track record of monetizing them effectively. There are several ways to build a massive business here, including scaling business messaging, introducing ads or paid content into AI interactions and enabling people to pay to use bigger AI models and access more compute."
Advertising:
Susan Li: "We continue to direct the majority of our investments toward the development and operation of our Family of Apps. In Q1, Family of Apps expenses were $18.4 billion, representing approximately 81% of our overall expenses."
WhatsApp:
Mark Zuckerberg: "And I want to call out WhatsApp specifically where the number of daily actives and message sends in the US keeps gaining momentum and I think we're on a good path there."
Future Growth:
Susan Li: "We continue to see compelling investment opportunities to both improve our core business in the near term and capture significant longer term opportunities in Generative AI and Reality Labs."
Investments:
Mark Zuckerberg: "We believe that Meta AI with Llama 3 is now the most intelligent AI assistant that you can freely use and now that we have the superior quality product, we are making it easier for lots of people to use it within WhatsApp, Messenger, Instagram and Facebook."