Meta shares pop 12% after company reports first sales increase in four quarters, issues optimistic guidance
- Meta reported an unexpected increase in revenue for the first quarter after three straight periods of declines.
- The company's forecast for the second quarter also exceeded expectations.
- The stock extended its 2023 rally.
Meta shares jumped 12% in extended trading on Wednesday after the company reported an unexpected increase in sales for the first quarter and issued better-than-expected guidance for the current period.
Here are the key numbers:
- Earnings: $2.20 per share vs. $2.03 per share expected by analysts, according to Refinitiv
- Revenue: $28.65 billion vs. $27.65 billion expected by analysts, according to Refinitiv.
- Daily Active Users (DAUs): 2.04 billion vs. 2.01 billion expected, according to StreetAccount.
- Monthly Active Users (MAUs): 2.99 billion vs 2.99 billion expected, according to StreetAccount.
- Average Revenue per User (ARPU): $9.62 vs. $9.30 expected, according to StreetAccount.
Meta's first-quarter sales rose 3% from $27.91 billion a year earlier, after three straight periods in which revenue declined.
For the second quarter, Facebook parent Meta expects revenue of between $29.5 billion and $32 billion, while analysts were expecting sales of $29.5 billion, according to Refinitiv.
"We had a good quarter and our community continues to grow," Meta CEO Mark Zuckerberg said in a statement. The company is "becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision," he said.
Meta's Reality Labs unit, which is developing the virtual reality and augmented reality technologies for the metaverse, brought in $339 million in sales but logged an operating loss of $3.99 billion. The company added that operating losses in Reality Labs will increase this year.
Net income companywide fell 24% to $5.71 billion, or $2.20 per share, from $7.47 billion, or $2.72 per share, in the same quarter last year.
Restructuring charges reduced Meta's earnings per share by 44 cents.
Meta said that total expenses for 2023 will be in the range of $86 billion to $90 billion. That figure includes restructuring costs that range between $3 billion to $5 billion.
Capital expenditures will remain in the range of $30 billion to 33 billion. That figure accounts for its increased artificial intelligence investments and its ad-supported products like the newsfeed and Reels, the company said.
The after-market rally further boosted a stock that's been on an upward trend since Zuckerberg announced in February that 2023 would be the company's "year of efficiency."
The shares lost two-thirds of their value in 2022, but were up 74% this year, prior to the earnings report. Including the post-report surge on Wednesday to over $234, the shares are up about 164% from their November 2022 low of around $89.
Investors have rallied around Zuckerberg's plans to slim down his company through a series of layoffs, resulting in some 21,000 expected job cuts. The revenue base had been shrinking from a battered online advertising market and the lingering effects of Apple's 2021 iOS privacy update that dramatically limited ad-targeting capabilities.
Google parent Alphabet, which dominates the online ad market along with Meta, reported first-quarter results on Tuesday that beat analysts' expectations, though ad revenue fell from the prior year.
Executives will address analysts and investors on an earnings call beginning at 5 p.m. ET.