Social network operator Meta Platforms (NASDAQ:META) has reported strong Q4 FY2023 sales that exceeded analysts’ estimates, leading to a surge in its stock price. The company, which operates popular platforms such as Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse-focused Facebook Reality Labs, saw its revenue increase by 24.7% year on year to $40.11 billion. Additionally, Meta’s GAAP profit per share improved from $3.14 in the same quarter last year to $5.33 per share.
The growth of social networks has become increasingly important for businesses, as users spend more time on these platforms. In 2020, users spent over 2.5 hours a day on social networks, prompting businesses to shift their advertising and marketing efforts online.
Meta has consistently demonstrated solid revenue growth, with an average annual growth rate of 18.1% over the past three years. In Q4, the company surpassed analysts’ expectations with a 24.7% year-on-year revenue growth, indicating its ability to meet and exceed market demands.
Guidance for the next quarter indicates that Meta expects robust revenue growth, projecting a 24.8% year-on-year increase to $35.75 billion. This improvement is a significant jump from the 2.6% year-on-year growth seen in the same quarter last year.
To drive revenue growth, Meta focuses on expanding its user base and charging advertisers higher rates for ad placements. In the past two years, the company’s monthly active users increased by 5.2% annually, reaching a total of 3.98 billion. While this growth lags behind some of the hottest consumer internet apps, in Q4, Meta added 240 million monthly active users, representing a 6.4% year-on-year growth.
Average revenue per user (ARPU) is another essential metric for Meta, measuring the company’s earnings from ads displayed to users and demonstrating the value advertisers find in Meta’s platform. Despite average ARPU growth averaging 1.9% over the past two years, this quarter, ARPU surged by 17.2% year on year to $10.08 per user.
Meta’s Q4 results exceeded analysts’ expectations across various metrics, including revenue, operating income, and EPS growth. The company experienced better-than-expected daily and monthly active users, along with a 21% year-on-year increase in ad impressions. These results were also supported by a 2% tailwind in advertising pricing, indicating positive market conditions.
Looking ahead, Meta’s Q1 2024 revenue guidance beats Wall Street’s forecast, and the company anticipates slightly higher capital expenditures for the full year, driven by investments in servers, including AI and non-AI hardware, and data centers.
In an unexpected move, Meta announced its first-ever quarterly dividend, signaling its confidence in its financial performance. Shareholders of record as of February 22, 2024, will receive $0.50 per share per quarter.
Overall, Meta’s Q4 results pleased shareholders, leading to an 8.3% increase in the company’s stock price. The stock currently trades at $427.75 per share. With strong revenue growth, growing user base, improving ARPU, and optimistic guidance, Meta appears to be in a favorable position.
