4Q23 results exceeds expectations; initiates quarterly dividend
- 4Q23 earnings of US$14.0bn (+201% y-o-y) beats consensus by 8%, on margin surprise and revenue beat
- META announces quarterly dividend of US$0.50; annualized dividend of US$2.0 translates to a 0.5% yield. Raises share buyback by an additional US$50.0bn
- 1Q24F revenue guidance of US$34.5bn-US$37.0bn, ~2% higher than consensus and implies a 25% y-o-y growth at the mid-point. FY24F expense outlook is 10% higher than FY23 and 8.3% higher than consensus.
In 4Q23, reported earnings of US$14.0bn (+201% y-o-y), ~8% higher than consensus expectations. Meta Platforms (META) reported earnings of US$14.0bn (+201% y-o-y) in 4Q23 (Dec YE), ~8% above consensus estimates. Marketing and sales and general and admin expenses were 13% and 15% below consensus respectively. Net income margin in 4Q23 was 35% vs consensus expectations of 33%. Higher than expected advertisement income more than offsett higher than expected losses in Reality Labs. META recorded revenue of US$40.1bn (+25% y-o-y), ~3% higher than consensus. META’s core advertising revenue which contributed 96% to total revenue, rose by 24% y-o-y to US$38.7bn. Reality Labs revenue increased by 47% y-o-y crossing the US$1.0bn mark, with Quest 3 sales exhibiting a strong performance due to the holidays. Horizon, Ray-Ban META exhibited improved performance in 4Q23. There is a sustained growth in Reels and video overall, rising by 25% y-o-y in 4Q23. Threads has seen its user base increasing to more than 130 monthly active users (MAU) (net addition of 30m). Huge focus area in FY24F will be Llama 3 and keeping META’s AI Llama open source is expected to be the industry standard enabling Llama to become the most popular Large Language Model (LLM) and allow META to hire the best talent. On META’s operating metrics, Facebook’s daily active users (DAUs) increased to 2.11bn in 4Q23 (net addition of 25m q-o-q). META announces its first ever dividend and raises the share buyback authorization by another US$50.0bn. META declared a quarterly cash dividend of US$0.50, where the annualized dividend of US$2.00 translates to a yield of 0.5%. In 4Q23, META repurchased US$6.3bn worth of shares, bring the total buyback for FY23 to US$20.0bn. META had US$30.9bn remaining on prior authorization and raised it by US$50bn.
1Q24F revenue and operating expenses guidance are higher than consensus. META has guided its revenue for 1Q24F to range between US$34.5bn-US$37.0bn, where the mid-point is 2% higher than consensus and implies a y-o-y growth of 25%. On the expenses outlook for FY24F, META expects it to be in the range of US$94bn-US$99bn, unchanged from the previous estimate. The operating expenses is 10% higher than FY23 and 8.3% higher than consensus projections. The higher expense projection is due to i) higher infrastructure-related costs this year on increasing capital investments which will result in significant increase in depreciation expenses, ii) higher operating costs from running a larger infrastructure footprint, iii) higher payroll expenses as META adds incremental talent in priority areas and iv) operating losses in Reality Labs increasing meaningfully y-o-y on ongoing product development efforts in AR/VR and further scaling of ecosystem. FY24F capex to be in the range of US$30bn-US$37bn, where the higher end of the range has been raised by US$2bn. The mid-point guidance of FY24F capex is 20% higher than FY23 capex of US$28bn.