Meta Platforms Inc., the parent company of Facebook, Instagram, and WhatsApp, has announced its first-ever dividend and exceeded expectations with strong financial results for the first quarter of 2024.
Following a year of streamlining operations in 2023, which included downsizing the workforce by over 20%, Meta has successfully positioned itself for growth and profitability. The company’s shares jumped by 13.8% after hours, reaching near-record highs.
The surge in digital advertising played a pivotal role in Meta’s impressive performance. Recognizing the importance of artificial intelligence (AI) capabilities for both users and businesses, Meta plans to invest between $30 billion and $37 billion in technology infrastructure, primarily focusing on servers and data centers. These investments aim to support the company’s long-term objectives and the development of the metaverse.
Mark Zuckerberg, CEO of Meta, highlighted the company’s transition to a leaner structure, enabling them to make significant investments in AI and the metaverse. He also acknowledged the volatility of the technology landscape and emphasized the need for profitability to successfully navigate the next five to ten years.
Despite challenges such as the congressional hearing regarding child safety concerns on Instagram and Facebook, Meta remains committed to addressing these issues. Zuckerberg publicly apologized to families who accused the company of inadequate protection for children. Additionally, Meta faced a dispute with the Federal Trade Commission over data collection revenue from individuals under 18.
Nevertheless, Meta declared its inaugural cash dividend of 50 cents per share, payable in March. The company also authorized a $50 billion share-buyback program. Susan Li, Chief Financial Officer of Meta, stressed the company’s commitment to an active stock buyback program and introduced regular dividends as a modest evolution in their investor payout approach.
Meta’s revenue for the first quarter grew by 25% to $40.11 billion, surpassing analysts’ expectations. The rebound in advertising, successful monetization of Instagram and Reels, and AI-powered ad targeting and measurement all contributed to Meta’s strong performance. This achievement aligns with the impressive quarter experienced by Google parent company Alphabet Inc.
Looking ahead, Meta executives forecasted first-quarter revenue between $34.5 billion and $37 billion, outperforming analysts’ average estimates. Facebook’s user base has continued to expand, with 2.11 billion daily active users and 3.07 billion monthly active users.
Although Meta did not provide forecasts beyond the first quarter, concerns were raised during the earnings call about potentially tougher comparisons throughout the year. The company’s CFO acknowledged the influence of macro conditions and the challenge of predicting revenue further into the future. Despite these uncertainties, Meta’s shares have risen by an outstanding 109% over the past 12 months, surpassing the broader S&P 500 index.
Meta Platforms Inc.’s breakthrough achievements, including its first-ever dividend payment and surpassing expectations with robust first-quarter results, demonstrate its commitment to growth and innovation. The company’s investments in AI and the metaverse, as well as its emphasis on profitability, position it strongly for future success in the ever-evolving technology landscape.
