Meta Q3 Earnings Soar, But Middle East Conflict Casts Shadow



Key Takeaways

  • Meta posts better-than-expected Q3 results with a 23% revenue increase and impressive user metrics.
  • Caution arises as the Middle East conflict causes softer ads in Q4, highlighting potential ad demand unpredictability.

Meta’s Q3 Earnings Exceed Expectations

Meta, the parent company of Facebook and Instagram, has reported robust Q3 earnings, surpassing expectations with a 23% rise in revenue. This marks the company’s fastest growth rate since 2021, initially boosting its stock in extended trading.


Investors closely monitored several key metrics in Meta’s report. The company’s daily active users (DAUs) reached 2.09 billion, exceeding expectations, while monthly active users (MAUs) stood at 3.05 billion, in line with projections. The average revenue per user (ARPU) reached $11.23, slightly surpassing expectations.


Meta’s core digital advertising business has outperformed competitors like Google and Snap. Google’s recent earnings report showed a 9.5% growth in ad revenue, while Snap reported a 5% increase. Meta’s substantial investments in artificial intelligence have attracted retailers seeking targeted promotions.

Navigating Challenges and Strong Growth in Global Markets

The company’s ability to rebound is attributed to its progress in enhancing online ad effectiveness, especially after Apple’s iOS privacy changes in 2021. CEO Mark Zuckerberg highlighted a 7% increase in time spent on Facebook and a 6% boost on Instagram, largely due to recommendation improvements.


Among Meta’s geographic regions, the rest of the world displayed the strongest growth at 36%, with China playing a significant role. Meta’s platforms, such as Facebook and Instagram, have been instrumental for Chinese companies targeting advertising to a global audience.


Despite its strong performance, Meta faces uncertainty in the Middle East due to the Israel-Hamas conflict. The conflict’s onset in Q4 resulted in softer ads, causing the company to widen its revenue guidance range. Susan Li, Meta’s finance chief, stated that attributing demand softness to specific geopolitical events is challenging, emphasizing the potential for future volatility.

Future Investments and Growth

Meta’s investment priorities for 2024 include a significant focus on artificial intelligence in engineering and computer resources. The company’s Reality Labs division, specializing in virtual and augmented reality, reported operating losses but is expected to experience substantial growth due to ongoing product development efforts.


Meanwhile, Meta’s cost-cutting measures have reduced total costs and expenses by 7% year-over-year, aligning with CEO Mark Zuckerberg’s “year of efficiency” initiative. The company’s stock price has surged approximately 150% this year, positioning it as one of the top performers in the S&P 500.


Meta’s impressive Q3 performance underscores its resilience in the digital advertising market. However, caution arises from softer ads linked to the Middle East conflict, highlighting the challenges of navigating a dynamic global landscape.