Meta Platforms Inc., formerly known as Facebook Inc., reported a substantial increase in advertising revenue for the second quarter, surpassing Wall Street’s expectations. Furthermore, the company projects better revenue performance for the upcoming quarter.
Meta’s results follow a day after Alphabet Inc., the parent company of Google, also showed robust performance, proving that advertisers and consumers continue to spend despite broad economic concerns. However, Meta anticipates an increase in expenses for 2023 and 2024, attributing it to costs including legal expenses and increased spending on crucial infrastructure to stay competitive in the heated artificial intelligence race in the tech sector.
This spending follows significant cost cuts in other areas of the company, including safety teams and core job functions. Post-closure trading saw Meta’s shares surge by 7.5%.
“We continue to see strong engagement across our applications, and we have the most exciting roadmap I have seen in a while, with Llama2, Threads, Reels, new AI products under development, and the launch of Quest 3 this fall,” said Mark Zuckerberg, Meta’s CEO.
WhatsApp’s parent company saw an 11% year-on-year revenue increase to $32 billion, exceeding analysts’ average estimate of $31.12 billion for the reported quarter. Advertising revenues jumped 12% in the second quarter, outpacing Google, which had a 3% revenue increase for ads.
Meta’s earnings per share amounted to $2.98, against the estimated $2.91 per share for the three months ending in June. The company that owns Threads predicts third-quarter revenues to range between $32 billion and $34.5 billion.
The parent company of Facebook reported a net profit increase of 16% year-on-year to $7.79 billion for the three months ending last June. This is the first time Meta has reported double-digit growth since Q4 of 2021, with revenues having decreased for three consecutive quarters prior to Q1 amid increasing challenges for the company during the economic downturn.
