Meta Reports Third Quarter 2023 Results

October 25, 2023

MENLO PARK, Calif., Oct. 25, 2023 /PRNewswire/ -- Meta Platforms, Inc. (Nasdaq: META) today reported financial results for the quarter ended September 30, 2023.

"We had a good quarter for our community and business," said Mark Zuckerberg, Meta founder and CEO. "I'm proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio."

Third Quarter 2023  Financial Highlights


Three Months Ended September 30,  




In millions, except percentages and per share amounts          

2023


2022


% Change


Revenue

$

34,146


$

27,714


23 %


Costs and expenses


20,398



22,050


(7) %


Income from operations

$

13,748


$

5,664


143 %


Operating margin


40 %



20 %




Provision for income taxes

$

2,437


$

1,181


106 %


Effective tax rate


17 %



21 %




Net income

$

11,583


$

4,395


164 %


Diluted earnings per share (EPS)

$

4.39


$

1.64


168 %


Third Quarter 2023  Operational and Other Financial Highlights

  • Family daily active people (DAP) – DAP was 3.14 billion on average for September 2023, an increase of 7% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.96 billion as of September 30, 2023, an increase of 7% year-over-year.
  • Facebook daily active users (DAUs) – DAUs were 2.09 billion on average for September 2023, an increase of 5% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 3.05 billion as of September 30, 2023, an increase of 3% year-over-year.
  • Ad impressions and price per ad – In the third quarter of 2023, ad impressions delivered across our Family of Apps increased by 31% year-over-year and the average price per ad decreased by 6% year-over-year.
  • Revenue – Revenue was $34.15 billion, an increase of 23% year-over-year, and an increase of 21% year-over-year on a constant currency basis.
  • Costs and expenses – Total costs and expenses were $20.40 billion, a decrease of 7% year-over-year.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $6.76 billion for the third quarter of 2023.
  • Share repurchases – We repurchased $3.70 billion of our Class A common stock in the third quarter of 2023. As of September 30, 2023, we had $37.22 billion available and authorized for repurchases.
  • Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $61.12 billion as of September 30, 2023. Free cash flow was $13.64 billion in the third quarter of 2023.
  • Long-term debt – Long-term debt was $18.38 billion as of September 30, 2023.
  • Headcount – Headcount was 66,185 as of September 30, 2023, a decrease of 24% year-over-year. A substantial majority of the employees impacted by the layoffs are no longer included in our reported headcount as of September 30, 2023.

Restructuring

Beginning in 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities. As of September 30, 2023, we have substantially completed planned employee layoffs while continuing to assess facilities consolidation and data center restructuring initiatives.

A summary of our restructuring charges, including subsequent adjustments, for the three and nine months ended September 30, 2023 by major activity type is as follows (in millions):


Three Months Ended September 30, 2023


Nine Months Ended September 30, 2023



Facilities
Consolidation


Severance
and Other
Personnel
Costs


Data Center
Assets


Total


Facilities
Consolidation


Severance
and Other
Personnel
Costs


Data Center
Assets


Total


Cost of revenue

$           25


$          —


$        (12)


$          13


$           92


$          —


$      (232)


$     (140)


Research and development     

228


(70)



158


871


385



1,256


Marketing and sales

54


69



123


233


290



523


General and administrative

45


41



86


210


454



664


Total

$         352


$          40


$        (12)


$        380


$      1,406


$     1,129


$      (232)


$    2,303


During the three and nine months ended September 30, 2023, we recorded total restructuring charges of $305 million and $1.94 billion under our FoA segment, respectively, and $75 million and $360 million under our RL segment, respectively.

CFO Outlook Commentary

We expect fourth quarter 2023 total revenue to be in the range of $36.5-40 billion. Our guidance assumes a foreign currency tailwind of approximately 2% to year-over-year total revenue growth in the fourth quarter, based on current exchange rates.

We anticipate that our full-year 2023 total expenses will be in the range of $87-89 billion, lowered from our prior range of $88-91 billion. This outlook includes approximately $3.5 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs. We expect Reality Labs operating losses to increase year-over-year in 2023.

We are also sharing a preliminary outlook for 2024 expenses, capital expenditures and our tax rate. We expect full-year 2024 total expenses to be in the range of $94-99 billion. We continue to expect a few factors to be drivers of total expense growth in 2024:

  • First, we expect higher infrastructure-related costs next year. Given our increased capital investments in recent years, we expect depreciation expenses in 2024 to increase by a larger amount than in 2023. We also expect to incur higher operating costs from running a larger infrastructure footprint.
  • Second, we anticipate growth in payroll expenses as we work down our current hiring underrun and add incremental talent to support priority areas in 2024, which we expect will continue to shift our workforce composition toward higher-cost technical roles.
  • Finally, for Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem.

We expect 2023 capital expenditures to be in the range of $27-29 billion, updated from our prior estimate of $27-30 billion.

We anticipate our full-year 2024 capital expenditures will be in the range of $30-35 billion, with growth driven by investments in servers, including both non-artificial intelligence (AI) and AI hardware, and data centers as we ramp up construction on sites with the new data center architecture we announced late last year.

Absent any changes to U.S. tax law, we expect our fourth quarter 2023 and full-year 2024 tax rates to be similar to the third quarter of 2023.

Please note that our outlook for 2024 expenses, capital expenditures and tax rate are preliminary estimates. In the future, we expect to provide our initial forward year expense, capital expenditures and tax rate outlooks on the fourth quarter call.

In addition, we continue to monitor the active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and our financial results. Of note, the Federal Trade Commission is seeking to substantially modify our existing consent order and impose additional restrictions on our ability to operate. We are contesting this matter, but if we are unsuccessful it would have an adverse impact on our business.

Webcast and Conference Call Information

Meta will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck), Instagram account (instagram.com/zuck) and Threads profile (threads.net/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (800) 633-8284 or +1 (402) 977-9140, conference ID 22028137.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

About Meta

Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.

Contacts

Investors:
Kenneth Dorell
investor@meta.com / investor.fb.com

Press:
Ryan Moore
press@meta.com / about.fb.com/news/

Forward-Looking Statements

This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; and our ability to manage our scale and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on July 27, 2023, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. In addition, please note that the date of this press release is October 25, 2023, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in our most recent Quarterly Report on Form 10-Q filed with the SEC.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

We exclude the following items from our non-GAAP financial measures:

Foreign exchange effect on revenue. We translated revenue for the three and nine months ended September 30, 2023 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release.

META PLATFORMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,



2023


2022


2023


2022


Revenue

$           34,146


$           27,714


$           94,791


$           84,444


Costs and expenses:









Cost of revenue

6,210


5,716


18,264


16,913


Research and development

9,241


9,170


27,966


25,567


Marketing and sales

2,877


3,780


9,075


10,688


General and administrative

2,070


3,384


9,119


8,731


Total costs and expenses

20,398


22,050


64,424


61,899


Income from operations

13,748


5,664


30,367


22,545


Interest and other income (expense), net

272


(88)


254


125


Income before provision for income taxes

14,020


5,576


30,621


22,670


Provision for income taxes

2,437


1,181


5,540


4,123


Net income

$           11,583


$              4,395


$           25,081


$           18,547


Earnings per share attributable to Class A and Class B common stockholders:









Basic

$               4.50


$                1.64


$               9.73


$               6.86


Diluted

$               4.39


$                1.64


$               9.56


$               6.82


Weighted-average shares used to compute earnings per share attributable to Class A
and Class B common stockholders: 









Basic

2,576


2,682


2,577


2,703


Diluted

2,641


2,687


2,623


2,718


 

META PLATFORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 



September 30, 2023


December 31, 2022


Assets





Current assets:





Cash and cash equivalents

$                  36,890


$                  14,681


Marketable securities

24,233


26,057


Accounts receivable, net

12,944


13,466


Prepaid expenses and other current assets

4,311


5,345


Total current assets

78,378


59,549


Non-marketable equity securities

6,142


6,201


Property and equipment, net

91,772


79,518


Operating lease right-of-use assets

13,033


12,673


Intangible assets, net

813


897


Goodwill

20,668


20,306


Other assets

5,468


6,583


Total assets

$                216,274


$                185,727







Liabilities and stockholders' equity





Current liabilities:





Accounts payable

$                    4,372


$                    4,990


Partners payable

770


1,117


Operating lease liabilities, current

1,460


1,367


Accrued expenses and other current liabilities                                   

23,929


19,552


Total current liabilities

30,531


27,026


Operating lease liabilities, non-current

16,374


15,301


Long-term debt

18,383


9,923


Other liabilities

8,113


7,764


Total liabilities

73,401


60,014


Commitments and contingencies





Stockholders' equity:





Common stock and additional paid-in capital

71,224


64,444


Accumulated other comprehensive loss

(3,556)


(3,530)


Retained earnings

75,205


64,799


Total stockholders' equity

142,873


125,713


Total liabilities and stockholders' equity

$                216,274


$                185,727


 

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 



Three Months Ended 
September 30,


Nine Months Ended 
September 30,



2023


2022


2023


2022


Cash flows from operating activities









Net income

$      11,583


$        4,395


$     25,081


$     18,547


Adjustments to reconcile net income to net cash provided by operating activities:                                             









Depreciation and amortization

2,858


2,175


8,006


6,310


Share-based compensation

3,492


3,134


10,603


8,984


Deferred income taxes

3,049


(1,097)


1,292


(2,113)


Impairment charges for facilities consolidation, net

340


413


1,342


413


Other

75


104


278


71


Changes in assets and liabilities:









Accounts receivable

(678)


(105)


444


1,930


Prepaid expenses and other current assets

(907)


(830)


(141)


(693)


Other assets

(36)


(27)


31


(160)


Accounts payable

611


(22)


(543)


(666)


Partners payable

9


20


(347)


(12)


Accrued expenses and other current liabilities

78


998


5,702


2,942


Other liabilities

(72)


533


(39)


411


Net cash provided by operating activities

20,402


9,691


51,709


35,964


Cash flows from investing activities









Purchases of property and equipment

(6,543)


(9,375)


(19,601)


(22,388)


Proceeds relating to property and equipment

47


20


148


190


Purchases of marketable debt securities

(1,008)


(2,597)


(1,810)


(8,885)


Maturities and sales of marketable debt securities

1,475


2,269


3,825


10,895


Acquisitions of businesses and intangible assets

(38)


(34)


(565)


(1,250)


Other investing activities

(10)


16


(20)


(1)


Net cash used in investing activities

(6,077)


(9,701)


(18,023)


(21,439)


Cash flows from financing activities









Taxes paid related to net share settlement of equity awards

(2,087)


(1,011)


(4,789)


(2,938)


Repurchases of Class A common stock

(3,570)


(6,354)


(13,832)


(21,093)


Proceeds from issuance of long-term debt, net


9,921


8,455


9,921


Principal payments on finance leases

(267)


(163)


(751)


(615)


Other financing activities

49


(246)


(182)


(351)


Net cash provided by (used in) financing activities

(5,875)


2,147


(11,099)


(15,076)


Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(354)


(364)


(283)


(1,063)


Net increase (decrease) in cash, cash equivalents, and restricted cash

8,096


1,773


22,304


(1,614)


Cash, cash equivalents, and restricted cash at beginning of the period

29,804


13,478


15,596


16,865


Cash, cash equivalents, and restricted cash at end of the period

$      37,900


$      15,251


$     37,900


$     15,251











Reconciliation of cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets 









Cash and cash equivalents

$      36,890


$      14,308


$     36,890


$     14,308


Restricted cash, included in prepaid expenses and other current assets

152


232


152


232


Restricted cash, included in other assets

858


711


858


711


Total cash, cash equivalents, and restricted cash

$      37,900


$      15,251


$     37,900


$     15,251


 

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 



Three Months Ended 
September 30,


Nine Months Ended 
September 30,



2023


2022


2023


2022


Supplemental cash flow data









Cash paid for income taxes, net

$            509


$         2,006


$         2,016


$         4,647


Cash paid for interest, net of amounts capitalized

$            120


$              —


$            302


$              —


Non-cash investing and financing activities:









Property and equipment in accounts payable and accrued expenses and other current liabilities                 

$         4,506


$         4,130


$         4,506


$         4,130


Acquisition of businesses in accrued expenses and other current liabilities and other liabilities

$            182


$            294


$            182


$            294


Repurchases of Class A common stock in accrued expenses and other current liabilities

$            122


$            265


$            122


$            265


 

Segment Results

We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual reality related consumer hardware, software, and content.

The following table presents our segment information of revenue and income (loss) from operations:

 

Segment Information
(In millions)
(Unaudited)
 



Three Months Ended 
September 30,


Nine Months Ended 
September 30,



2023


2022


2023


2022


Revenue:









Advertising

$      33,643


$      27,237


$      93,242


$      82,387


Other revenue

293


192


724


624


Family of Apps

33,936


27,429


93,966


83,011


Reality Labs

210


285


825


1,433


Total revenue

$      34,146


$      27,714


$      94,791


$      84,444











Income (loss) from operations:









Family of Apps

$      17,490


$        9,336


$      41,841


$      31,983


Reality Labs

(3,742)


(3,672)


(11,474)


(9,438)


Total income from operations

$      13,748


$        5,664


$      30,367


$      22,545








Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
 



Three Months Ended 
September 30,


Nine Months Ended 
September 30,



2023


2022


2023


2022


GAAP revenue

$      34,146


$       27,714


$      94,791


$      84,444


Foreign exchange effect on 2023 revenue using 2022 rates

(647)




442




Revenue excluding foreign exchange effect

$      33,499




$      95,233




GAAP revenue year-over-year change %

23 %




12 %




Revenue excluding foreign exchange effect year-over-year change %

21 %




13 %




GAAP advertising revenue

$      33,643


$       27,237


$      93,242


$      82,387


Foreign exchange effect on 2023 advertising revenue using 2022 rates

(645)




431




Advertising revenue excluding foreign exchange effect

$      32,998




$      93,673




GAAP advertising revenue year-over-year change %

24 %




13 %




Advertising revenue excluding foreign exchange effect year-over-year change %

21 %




14 %













Net cash provided by operating activities

$      20,402


$         9,691


$      51,709


$      35,964


Purchases of property and equipment, net

(6,496)


(9,355)


(19,453)


(22,198)


Principal payments on finance leases

(267)


(163)


(751)


(615)


Free cash flow

$      13,639


$            173


$      31,505


$      13,151


 

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