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Meta’s Q3 Earnings Report: A Remarkable Turnaround Achieving Beyond Expectations

Meta reported impressive profits in the September quarter, doubling them as their ongoing turnaround effort continued to deliver results that exceeded Wall Street’s expectations. The company’s “year of efficiency” turnaround strategy remains in progress.

The Facebook parent company posted quarterly revenue gains of 23% year-over-year, surpassing the projected $33.5 billion with revenue totaling over $34 billion. Meta also reported more than doubling its profits compared to the previous year’s quarter, stating a net income of nearly $11.6 billion, while the prior year had seen a 50% drop in profits.

Following the report, Meta shares surged as much as 4% in after-hours trading. The stock had already risen by 140% year-to-date as of the close on Wednesday.

Advertisement senior analyst Jesse Cohen commented on the report, describing it as a “blowout quarter” and Meta’s most profitable in years.

In February, Mark Zuckerberg unveiled the “year of efficiency” following a third quarterly revenue decline and a challenging year for the company, marked by Apple’s app privacy changes and reduced digital ad spending amid economic uncertainty. The company had also experienced slowing user growth due to stiff competition from platforms like TikTok.

Meta disclosed robust user growth for both its family of apps and its core Facebook platform. Facebook’s monthly active users increased by 3% year-over-year, surpassing 3 billion, up from the 2% growth rate in the previous year’s quarter.


Positive signals emerged for the company’s core advertising business as well. Ad impressions across all of Meta’s apps grew by 31% year-over-year in the September quarter, with a 6% year-over-year reduction in the average price per ad. This decline was less steep than in the prior year when the average price per ad had fallen by 18%.

Meta's Reels revenue narrows in on TikTok, boosted by AI | Reuters

Meta has been actively enhancing its ad targeting technology with artificial intelligence to improve advertiser ROI and to better monetize Instagram’s popular Reels feature. Mark Zuckerberg highlighted the transformation of Reels from an early initiative into a core element of their apps during an analyst call on Wednesday.


As macroeconomic conditions stabilize, Meta appears to be benefiting from advertisers returning to higher spending. Jesse Cohen suggested that Meta’s strong quarter supported the notion that advertisers are opting to allocate their budgets to established market leaders like Facebook and Instagram, at the expense of smaller social media networks.

Snap, a fellow social media platform, reported a temporary pause in ad spending following the Israel-Hamas conflict during its Tuesday earnings report, prompting questions about potential implications for the broader digital advertising industry. Meta’s CFO, Susan Li, noted that Meta also observed a softer ad spend early in the fourth quarter, corresponding with the timing of the conflict’s outbreak. However, Li emphasized that it’s challenging to attribute this demand softness to any specific geopolitical event.

Meta has invested substantial sums into its Reality Labs unit for metaverse development, despite reporting losses in this area. While the company revised its 2023 expense guidance, it anticipates ongoing operating losses in Reality Labs for 2023 and 2024.


Meta foresees year-over-year revenue growth between 13.5% and 24% for the final quarter of 2023. Zuckerberg emphasized that Meta’s focus on efficiency will persist, with artificial intelligence being the company’s primary investment area in 2024. He also mentioned that Threads, Meta’s competitor to Twitter, boasts just under 100 million monthly active users, with the potential to reach 1 billion users if it continues to grow over the next few years.

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