Facebook owner Meta, Amazon beat expectations with stellar results

San Francisco - Meta and Amazon.com on Feb 1 blew through expectations in their latest quarterly results as Big Tech continued to impress Wall Street.

Meta – which owns Facebook, Instagram and WhatsApp – reported a 25 per cent increase in quarterly revenue while profit more than tripled, a rise fuelled by its ads business after a shaky 18 months of layoffs and a rocky digital advertising market.

Meta also said it would issue its first dividend, of 50 US cents a share. Dividends are typically associated with mature and slower-growth companies.

The company also authorised an additional US$50 billion (S$66.8 billion) in share buybacks.

Meta shares jumped more than 14 per cent to top US$445 in after-market trade.

“We had a good quarter as our community and business continue to grow,” said Mr Mark Zuckerberg, Meta’s founder and chief executive. “We’ve made a lot of progress on our vision for advancing artificial intelligence and the metaverse.”

For the three months ended Dec 31, Meta’s revenue was US$40.1 billion, up from US$32.2 billion a year ago and exceeding Wall Street estimates of $39 billion, according to data compiled by FactSet.

Profit was US$14 billion, up from US$4.65 billion a year earlier.

The company benefited from a continued rebound in digital ads, though marketers remain cautious about where they allocate their advertising budgets.

On Jan 30, Google reported search revenue and a profit margin for its latest quarter that fell short of Wall Street expectations because of modest advertising growth.

Mr Zuckerberg has shifted the company into the immersive digital world of the metaverse.

In 2023, he also embarked on what he called a “year of efficiency” to cut costs,

including laying off tens of thousands of employees.

The company’s workforce has shrunk by 22 per cent since December 2022 and now stands at 67,317 employees.

Meta remains under pressure to rein in harmful content across its platforms, which are regularly used by more than four billion people. On Jan 31, Mr Zuckerberg – along with other tech CEOs – was grilled in a congressional hearing over the proliferation of online child sexual abuse material.

Despite that, more people are regularly coming back to Meta’s services. The company hosts more than 3.98 billion users across its apps each month, up 6 per cent from a year ago.

It also continues to invest heavily in artificial intelligence and redesigning its data centres to keep up with other tech giants in the highly competitive field.

Meta said part of its increased operating expenses came from attracting top technical talent in AI.

Meta said it expected to continue growing in the current quarter, with revenue in the range of US$35 billion to US$37 billion.

The company also bumped up its forecasts on capital expenditures to US$30 billion to US$37 billion over the course of 2024.

Much of that will include building out and maintaining its infrastructure, as well as the ballooning cost of AI research and development.

Amazon

Amazon also impressed investors with sales up to a more-than-expected US$170 billion in the last quarter of 2023, after a record-beating holiday season.

It, too, embraced “efficiency” in 2023, eliminating some 27,000 jobs in a move it said at the time was necessary, after years of sustained hiring.

Amazon’s shares have risen by 50 per cent in the past 12 months as investors applauded its aggressive cost-cutting and an increase in sales.

“This fourth quarter was a record-breaking holiday shopping season and closed out a robust 2023 for Amazon,” CEO Andy Jassy said in a statement.

The company said more than one billion items were purchased worldwide during the company’s Black Friday and Cyber Monday holiday shopping events.

Amazon said its employee count stood at 1.525 million at the end of 2023, down 1 per cent from a year before.

Amazon’s cloud business AWS, often described as the company’s cash cow, grew 13 per cent in the fourth quarter.

This was weaker than the blistering performance of cloud computing colossus Microsoft, which announced growth of about 30 per cent in its Azure cloud business as customers signed up for AI services.

“The mild acceleration of growth from previous quarters leaves some lingering doubts about whether the cloud unit will be able to hold its own against rivals,” said Insider Intelligence analyst Sky Canaves.

Amazon saw an impressive increase of 26 per cent in its advertising business as it bolsters its position as a rival to ad behemoths Meta and Google.

Much like Meta, the company founded by Mr Jeff Bezos is also expanding into AI and on Jan 30 said it was testing a chatbot named Rufus that would provide shopping tips to United States mobile app customers. NYTIMES. AFP