Meta shares soar almost 20% on fourth-quarter revenue beat

Meta shares popped in extended trading on Wednesday after the company reported fourth-quarter revenue that topped estimates and announced a $40 billion stock buyback. Here are the results.

• Earnings: $1.76 per share
• Revenue: $32.17 billion vs $31.53 billion expected, according to Refinitiv

The company also reported restructuring charges for its Family of Apps segment and Reality Labs unit of $3.76 billion and $440 million, respectively during the fourth quarter of 2022. Because of those charges, it’s difficult to compare the company’s earnings per share to analyst estimates of $2.22 per share. Here are some other key numbers:

• Daily Active Users (DAUs): 2 billion vs 1.99 billion expected, according to StreetAccount
• Monthly Active Users (MAUs):  2.96 billion vs 2.98 billion expected, according to StreetAccount
• Average Revenue per User (ARPU): $10.86 vs $10.63 expected, according to StreetAccount

Revenue in the fourth quarter fell 4% from a year earlier, marking a third straight quarter of declining sales. The company’s cost and expenses ballooned 22% year-over-year to $25.8 billion. Meta said it expects revenue in the first quarter of between $26 billion and $28.5 billion. Analysts were expecting sales of $27.1 billion, according to Refinitv. Sales in the first quarter of 2021 came in at $27.9 billion. Should Meta reach the high end of its guidance range, the company could end its streak of year-over-year declines. “Our community continues to grow and I’m pleased with the strong engagement across our apps,” Meta CEO Mark Zuckerberg said in a statement. “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.” Meta said that its headcount increased 20% year-over-year to 86,482 as of December 31, 2022. That number includes a large chunk of the over 11,000 workers that Meta said it would lay off last November. The company expects that its total expenses in 2023 will be in the range of $89 billion to $95 billion, which is lower than its prior outlook of $94 billion to $100 billion for the year. Meta attributed the adjustment to “slower anticipated growth in payroll expenses and cost of revenue.” Meta also said that it’s lowering its capital expenditure estimates for the year to be in the range of $30 billion to $33 billion, down from $34 billion to $37 billion. That’s partly due to the company spending less money on data center construction. Instead, Meta said it’s shifting to a different kind of data center architecture intended to be more cost efficient while acting as the backbone of its various artificial intelligence projects. Meta said on Wednesday that it authorized a $40 billion increase to its stock repurchase plan. The company bought back $27.9 billion worth of its shares last year. Earlier this week, Snap reported fourth quarter earnings that missed on sales, sending its shares tumbling. While much smaller than Meta, Snap faces some of the same challenges, including a slowdown in online advertising spend, increased competition from TikTok and a weakened targeting advertising system due to Apple’s 2021 iOS privacy update. Alphabet and Amazon will wrap up earnings reports from the major online ad platforms on Thursday, followed by Pinterest next week. Meta shares plummeted by over 60% last year, as Zuckerberg struggled to sell Wall Street on his plan to pivot the company towards the yet-to-be-developed world of the metaverse. Zuckerberg has said the metaverse, which would include virtual reality and augmented reality technologies, could represent the next major way people interact. The big bet has frustrated investors, who worry the company is putting too much focus on a futuristic endeavor while its core ad business struggles to revive growth. Meta’s Reality Labs unit, home to the metaverse ambitions, lost $4.28 billion in the fourth quarter, bringing its total operating loss for the year to $13.72 billion. Meta said last year that “Reality Labs operating losses in 2023 will grow significantly year-over-year.”