- Meta Platforms saw revenue grow 23% year-over-year to $34.1 billion in Q3 2023, in line with an earnings statement. Daily and monthly use of its family of apps each increased 7% year-over-year.
- Online commerce, CPG and gaming verticals were the most important contributors to year-over-year ad revenue growth. The total variety of ad impressions served across Meta’s services increased 31% while the typical price per ad decreased 6% because of strong impression growth.
- Reels is now neutral to overall ad revenue, and the corporate is constant to enhance monetization because the feature is estimated to have driven a greater than 40% increase in time spent on Instagram since launch. Meta continues to expand AI capabilities for advertisers, with Advantage+ shopping campaigns reaching a $10 billion run rate.
Meta’s yr of efficiency, coupled with a rebounding ad market, have helped the corporate rating its highest revenue growth rate since 2021. Executives attributed the revenue performance to its ability to deliver engaging experiences as Facebook and Instagram engagement stays strong and Reels and other video content drive incremental engagement.
To turn that engagement into revenue, the corporate is working to enhance Reels monetization, create recent on-platform ad experiences, help advertisers connect with marketing data and leverage AI across ads and products.
Reels has “graduated” to being a core app offering, in line with CEO Mark Zuckerberg, and is now net neutral to overall company ad revenue — a milestone it hit sooner than expected. However, Meta isn’t planning to breakout its net revenue contribution in the long run. Instead, the corporate plans to enhance ad performance and interactivity, while trying to balance engagement and growth, in Reels and video more holistically across its portfolio.
AI was a spotlight of the earnings call, as Meta looks to take a position and expand a spread of tools across promoting, feeds, messaging, hardware and beyond as the world becomes a significant theme in 2024. The company is seeing “strong traction” with its Advantage+ Shopping solution, especially around online commerce and CPG advertisers, and greater than half of its advertisers are using Advantage+ creative tools to optimize images and text in ad creative.
While Reels and AI are contributing to the corporate’s growth, other areas haven’t taken off. Zuckerberg said that Threads, the corporate’s competitor to X (formerly Twitter), remains to be specializing in growing the community because it seeks to grow to be “a billion person public conversations app that may be a bit more positive.” And despite recent launches around its Quest 3 headset and Ray-Ban Meta smart glasses and expanding testing of its Horizons software, the metaverse experiments that give the corporate formerly referred to as Facebook its name are still within the red: Reality Labs saw an operating lack of $3.7 billion.
Meta expects Q4 2023 total revenue to be within the range of $36.5 billion to $40 billion. The company has been seeing strong advertiser demand in key segments, but also more volatility. While it doesn’t have material direct revenue exposure to Israel and the Middle East, the corporate has observed softer ad spend at first of Q4 that correlates to the beginning of the conflict.
Meta can be monitoring a regulatory landscape that could “significantly” impact its business in the long run, and executives specifically called out the FTC’s efforts to switch its consent order and impose additional restrictions on the corporate.
“We are contesting this matter, but if we’re unsuccessful it will have an adversarial impact on our business,” said CFO Susan Li.
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