Shares of Meta Platforms rose in late trading on Wednesday after the company reported fourth-quarter financial results and announced a new cut in its spending plan for 2023.
In another shareholder-friendly move, the Facebook parent is taking a more aggressive approach to buying back shares. The company said it bought back $6.91 billion in shares in the latest quarter, bringing its full-year total to $27.93 billion. The company said the board approved a new buyback authorization of $40 billion, on top of the $10.87 billion remaining in the previous buyback program.
Shares rose 18% in late trading.
The sharp rally in the fourth quarter report is in stark contrast to the 25% decline caused by the third quarter results. The decline was driven by concerns that Wall Street was spending too aggressively on Meta (ticker: META). Two weeks later, Meta announced 11,000 job cuts and other cost cuts — and now Meta is making deeper cuts, and investors are noting the company’s renewed focus on costs.
“Our management theme for 2023 is ‘The Year of Efficiency,’ and we’re focused on becoming a stronger and more agile organization,” Meta CEO Mark Zuckerberg said in a statement.
Meta lowered its forecast for full-year total spending from $85 billion to $95 billion, down from $94 billion to $100 billion previously. The company is now cutting capital spending for the year to $30 billion to $33 billion, down from a previous estimate of $34 billion to $37 billion.
For the fourth quarter, Meta reported revenue of $32.2 billion, down 4% from a year ago, but toward the high end of the $30 billion to $32.5 billion guidance range and the Wall Street consensus estimate of $31.6 billion. The company earned $1.76 per share for the quarter, missing the consensus estimate of $2.27.
Meta said it took restructuring charges of $3.76 billion in its Family of Applications segment and $440 million in its Reality Labs segment in the fourth quarter. Without those charges, the company said earnings in the quarter would have been $1.24 a share higher. But Meta also said that “the impact of severance and other personnel costs recorded in the fourth quarter of 2022 was not material after being offset by savings from lower salary, bonus and other benefit costs.”
The company forecast first-quarter revenue of $26 billion to $28.5 billion, which was about $27.1 billion in line with the Wall Street consensus and down about 2.4% year-over-year at the midpoint of the range.
Revenue from the company’s “family of apps” segment was $31.3 billion, beating the Wall Street consensus of $31 billion, while Reality Labs, which includes VR headsets and its nascent metaverse business, had $727 million. 713 million dollars. The company posted operating income from apps of $10.68 million, below Wall Street’s estimate of $12.35 billion, while Reality Labs posted a loss of $4.28 billion, slightly below analysts’ forecast of $4.39 billion.
Meta has shown strong growth in user metrics. The company’s social networks, which include Facebook, Instagram and WhatsApp, had 2.96 billion daily active users in December, up 5% from a year earlier. Monthly assets increased by 4% to 3.74 billion. The company also said that Facebook’s daily active users reached 2 billion for the first time, up 4% from a year ago.
The company said ad impressions delivered across apps rose 23% year-over-year in the fourth quarter, while cost per ad fell 22%.
On a call with investors, Zuckerberg said conversion rates in the fourth quarter were up more than 20% from a year ago, meaning more Facebook users are taking action after viewing ads.
He also said the company made significant progress in the adoption of Reels, a short-form video service that competes with TikTok, which more than doubled in the fourth quarter from a year ago.
Zuckerberg also commented on the company’s plans to enter the market for generative artificial intelligence tools, such as the popular ChatGPT chatbot from OpenAI. “This is a really exciting field,” Zuckerberg said. “We have a lot of different workflows to use big language models” to create both textual and visual content. According to him, the company will “launch a number of different things” in the field of generative artificial intelligence this year.
Meta said revenue in the quarter was down about $2 billion due to currency fluctuations.
The company said the number of employees at the end of the year was 86,482, up 20% year-on-year – but added that the total still included most of the 11,000 people affected by the cuts.
The company’s revenue for the full year 2022 was $116.6 billion, down 1% from a year ago. The company earned $8.59 per share for the year, down 38% from $13.77 a year ago.
Write to Eric J. Savitz at firstname.lastname@example.org