Meta reported solid first-quarter earnings, driven largely by AI-powered ad targeting.
The social media giant posted $36.4 billion in revenues, which represents an increase of 27% compared to the first three months of 2023. Earnings per share were $4.71, more than the $4.32 expected. These earnings results follow the positive figures the company recorded in the previous quarter.
The parent company of Facebook, Instagram and WhatsApp also experienced growth in advertising sales. It reported revenue of $35.6 billion, while it posted $28.1 billion last year. Ad impressions increased 20% year-over-year, while the average price per ad grew 6%. During the last quarter of 2023, ad impressions rose 21% and the price per ad was up by 2%
Meta said its advances in AI technology drove the strong first quarter results. In early April, the company introduced its latest large language model Llama 3 to Facebook, Instagram, WhatsApp and Messenger. The tech, which can generate images and summarize articles, enhances the company’s ad targeting capabilities, allowing advertising strategies to be more precise and effective.
Meta also launched this month its free artificial intelligence assistant, Meta AI, on the same platfroms to compete with other similar models in the market, including OpenAI’s ChatGPT and Google’s Gemini. The assistant, based on Llama 3 technology, can answer questions, create animations and generate images.
“It’s been a good start to the year,” said Mark Zuckerberg, Meta founder and CEO. “The new version of Meta AI with Llama 3 is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.”
However, it wasn’t all positive for Meta. Its Reality Labs unit, which produces virtual reality and augmented reality hardware and software, posted first-quarter sales of $440 million and $3.85 billion in losses.
Meta’s second-quarter outlook also fell short of analysts’ expectations, leading to a 19% drop in the company’s shares in extended trading on Wednesday. The company forecasts its second-quarter revenue to range between $36.5 billion and $39 billion.
“Our guidance assumes foreign currency is a 1% headwind to year-over-year total revenue growth, based on current exchange rates,” Meta said.
It also expects total expenses for the full year 2024 to decline to $96 billion to $99 billion due to higher legal and infrastructure costs. Its previous forecast was between $94 billion and $99 billion.
