After closing a bad year in 2022, the founder and boss of Meta, Mark Zuckerberg, proclaimed that the time had come to tighten his belt. After undertaking massive layoffs at the company, he declared 2023 as the year of austerity. Meta, which manages Facebook, Instagram and WhatsApp, closed the year with record profits, partly due to cost containment, but above all due to strong revenue growth. Zuckerberg attributes this, in part, to the improvements in advertising management achieved through artificial intelligence.
Meta closed the year with revenues of 134,902 million dollars (about 124,000 million euros at the current exchange rate), with a growth of 16% compared to 2022, according to the accounts published this Thursday by the company. Its profit skyrocketed to 39,098 million, 69% above the 23,200 million of the previous year, but also above the record of 33,364 million set in 2021. The last quarter, in addition, has been brilliant, with an increase in income of 25% and profit of 201%.
The increase in profit for the year occurs despite the fact that the company has incurred restructuring charges amounting to $3,452 million, derived mainly from severance pay and real estate reorganization. Meta has reduced its workforce by 22% in one year and closed the year with 67,317 employees. The company has been able to grow 16% in revenue with a cost increase of only 1%.
Advertising revenue, which accounts for almost the entire business of the group founded by Mark Zuckerberg, has been boosted by improvements in rating and recommendation systems thanks to investments in artificial intelligence. AI-recommended content from unfollowed accounts has become the fastest-growing category on Facebook. The company suffered in 2022 from the deterioration of the digital advertising market, but also from the exchange rate impact (due to the strength of the dollar) and the stricter privacy rules imposed by Apple, which blocked advertising tracking and made its business difficult. Added to this is the competition from TikTok, the social network that has triumphed among young people. After suffering the first drop in income in its history in 2022, Meta has managed to overcome these difficulties.
The advertising bonanza, in turn, makes it easier for Meta to invest in artificial intelligence and virtual reality. The applications business segment, where Facebook and Instagram are located, continues to be very profitable, with an operating profit of 62,871 million dollars in 2023, with a strong increase compared to 42,661 million in 2022. On the other hand, the Reality Labs, which encompasses the metaverse and virtual reality devices, continues to be in the red, with strong operating losses of 16,120 million in 2023, which add to the 13,717 million of the previous year.
Brilliant quarter
The company also ends the year in good shape, with an increase in revenue of 25% in the fourth quarter, to $40,111 million, which is compatible with an 8% cost cut. With this, the net profit triples, up to 14,017 million in those three months.
“We had a good quarter as our community and business continue to grow,” said Mark Zuckerberg, founder and CEO of Meta, in a statement. “We have come a long way in our vision to advance AI and the metaverse.”
Meta has appreciated 158% on the stock market in the last 12 months. Its price is moving in the zone of historical highs and its market capitalization has exceeded the trillion-dollar mark. The company's shares soared an additional 15% this Thursday after the publication of the results, which exceed all Wall Street expectations.
The company has announced that it is launching a quarterly dividend distribution plan. The board of directors has already approved a first cash dividend of $0.50 per share, payable on March 26, 2024 to shareholders of record at the close of business on February 22, 2024. “We intend to pay a cash dividend quarterly in the future, subject to market conditions and the approval of our board of directors,” the company states.
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