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Shares rise after better-than-expected earnings, buyback announcement

Meta ( META ) reported its Q4 2022 earnings today after-hours, with the Facebook parent beating key revenue expectations and widening losses at its metaverse operation. It also announced a $40 billion share buyback plan.

Here’s how the key numbers looked, compared to analysts’ estimates compiled by Bloomberg.

Q4 Revenue – $32.17 billion actually versus $31.65 billion expected

Advertising revenue – $31.25 billion actual versus $30.86 billion expected

Adjusted earnings per share (EPS) – $1.76 actual versus $2.26 expected

Facebook Daily Active Users (DAUs) – 2 billion actually against 1[ads1].98 billion expected

Family of Apps Daily Active Users (DAUs) – 2.96 billion actually against 2.92 billion expected

Reality Labs operating loss – -$4.28 billion actual versus -$3.99 billion expected

The company’s shares fell around 14% in after-hours trading.

Good headline numbers aside, there’s a lot to question about Meta’s results today, as metaverse division Reality Labs posted a bigger-than-expected loss of -$4.28 billion, more than $200 million more than Wall Street expected.

Perhaps more than exceeding revenue expectations, Meta has successfully cut costs.

“We expect our total expenses for full 2023 to be in the range of $89-95 billion, down from our previous outlook of $94-100 billion due to lower expected growth in labor expenses and cost of revenue,” said Meta CFO Susan Li. in a statement.

The company is in strong pursuit of efficiency, and appears to have been ruthless in its cost-cutting efforts.

“We expect capital expenditures to be in the range of $30-33 billion, down from our previous estimate of $34-37 billion,” Li’s statement continued. “The reduced outlook reflects our updated plans for lower data center construction in 2023 as we shift to a new data center architecture that is more cost-effective and can support both AI and non-AI workloads.”

Meta’s buyback was a strong move, given that the company laid off 11,000 workers in November and more jobs are reportedly on the table even now. Also, the company’s C-suite underwent a significant reshuffle last year, with longtime COO Sheryl Sandberg officially leaving the company in September.

Shares rise after better-than-expected earnings, buyback announcement

Meta Platform CEO Mark Zuckerberg leaves federal court after participating in the Facebook parent company’s defense of its acquisition of virtual reality app developer Within Inc., in San Jose, California, U.S. December 20, 2022. REUTERS/Laure Andrillon

Meta has a lot of moving parts

Still, on the face of it, these numbers provide a better-than-expected close to what has been an exceptionally difficult year for Meta, which also owns Instagram and WhatsApp. In 2022, the company’s shares fell roughly 63% as the company battled macroeconomic headwinds and a sluggish ad market.

All in all, it’s been a solid day for Meta, which reportedly won its case against the Federal Trade Commission (FTC) this morning, getting the green light to buy VR developer Within. Meta’s proposed acquisition of Within, which makes the popular VR app Supernatural, has been in the works since October 2021. However, they’re not out of the woods yet. The FTC will be able to appeal going forward and will likely continue to scrutinize Meta’s future deals under Chairman Lina Khan.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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