MetaPlatforms, the US social media giant that controls Facebook, Instagram and WhatsApp, has registered financial results beyond expectations in the second quarter of 2024. With a revenue growth of 22% and a increase in net profit by 73%, the company greatly exceeded analysts' expectations, confirming its position as a leader in the technology sector.
In Q2024 XNUMX, Mark Zuckerberg's company reported rrevenues equal to 39,1 billion dollars, exceeding analysts' expectations of $38,3 billion. L'Net income rose 73% to $13,47 billion, or $5,16 per share, up from $7,79 billion, or $2,98 per share, a year earlier. Analysts had expected earnings per share of $4,73.
“We had a strong quarter and Meta AI is on track to become the most used AI assistant in the world by the end of the year,” he said Zuckerberg – “We released the first frontier open source AI model, continue to see good success with our Ray-Ban Meta AI glasses, and are driving good growth across our apps.”
Digital advertising grows with AI
The balance sheet for the April-June period was driven primarily by digital advertising, which represents 98% of revenue. The use of artificial intelligence tools has significantly improved advertising targeting, offsetting past losses due to Apple's privacy changes, estimated at $10 billion in 2022.
But Meta's commitment to AI has been all-round. Recently, the company launched the language model of large size Llama 3.1 and made Meta AI available in more markets and languages. Zuckerberg announced that the next Llama 4 will require ten times the computing resources compared to its predecessor, demonstrating a constant improvement in machine learning and AI. “I'd rather take a risk on building technology capacity before it's needed rather than too late, given the time it takes,” Zuckerberg said.
And Meta's commitment to artificial intelligence has been appreciated by Wall Street, despite the high costs that have penalized rivals such as Microsoft and Alphabet. The Meta shares they gained 7% in the aftermarket, reflecting investor optimism about the company's ability to monetize AI better than other companies. The shares are up 37% since January and by approximately 50% in one year.
Meta: 1,4 billion dollars to settle facial recognition lawsuit
Expenses in the second quarter were $24,2 billion, including a sum to settle a lawsuit. Half will pay $1,4 billion to the State of Texas to resolve a lawsuit over the unauthorized use of biometric data of millions of citizens. The proceeding, initiated by Texas prosecutor Ken Paxton in February 2022, concerned the facial recognition system used by Facebook until 2021, which collected biometric data without users' informed consent. A similar lawsuit in Illinois had already resulted in a $650 million fine for Meta in 2021.
The $1,4 billion fine, one of the heaviest ever imposed for privacy concerns, will be paid in five years. Meta had already received a $5 billion fine in 2019 for misusing user data after the Cambridge Analytica scandal.
Capital expenditures were $8,47 billion, lower than the $9,51 billion estimate. Meta increased the minimum investment threshold for 2024 to 37 billion dollars, maintaining the maximum cap at 40 billion. In recent months, the company had anticipated cost increases of up to ten billion for the development of AI infrastructures.
La Reality Labs division, responsible for the metaverse, reported an operating deficit of $4,5 billion, with larger losses expected in the future. Despite bets on AI and rising expenses, investors remained confident thanks to the positive march of digital advertising.
Users are growing
Meta reported 3,27 billion daily active people (DAP) in the quarter, a 7% increase year-over-year. The platforms include Facebook to Instagram, Messenger and WhatsApp and Threads. The latter, a rival of Elon Musk's X, expected to reach 200 million users compared to 150 million in April.
Forecasts for the third quarter and 2025
For third quarter of 2024, Meta expects revenue of $38,5 billion to $41 billion, beating analysts' estimates of $39,1 billion. Total expenditures for the full year 2024 are estimated to be between $96 and $99 billion. Meta expects capital expenditures to grow significantly in 2025, supporting research and development efforts in AI.
As for expenses by the end of the year Meta could face a record fine of more than $13 billion, equivalent to 10% of its 2023 global turnover, imposed by the European Commission. According to Reuters sources, the fine is due to Meta's abuse of its dominant position in the market for online classifieds services. If confirmed, it would be one of the highest ever imposed on a technology company.
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