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Meta Platforms:Quarterly Results/2024 Q3: Difference between revisions
Meta Platforms:Quarterly Results/2024 Q3 (view source)
Revision as of 13:39, 31 October 2024
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== Earnings call summary == | == Earnings call summary == | ||
Sources: [https://seekingalpha.com/article/4731243-meta-platforms-inc-meta-q3-2024-earnings-call-transcript Q3 2024 Meta Platforms Earnings Call Transcript] | [https://events.q4inc.com/earnings/META/2024 Q3 2024 Meta Platforms Webcast] | Sources: [https://seekingalpha.com/article/4731243-meta-platforms-inc-meta-q3-2024-earnings-call-transcript Q3 2024 Meta Platforms Earnings Call Transcript] | [https://events.q4inc.com/earnings/META/2024 Q3 2024 Meta Platforms Webcast] | ||
Here are the main insights from Meta's third quarter earnings call; | |||
=== Artificial Intelligence (AI) === | === Artificial Intelligence (AI) === | ||
* CEO Mark Zuckerberg said improvements to their AI driven feed and video recommendations have driven a 8% increase in time spent on Facebook and 6% in Instagram this year alone. | * CEO Mark Zuckerberg said improvements to their AI driven feed and video recommendations have driven a 8% increase in time spent on Facebook and 6% in Instagram this year alone. | ||
* Last month, more than a million advertisers used Gen AI tools to create more than 15 million ads, Zuckerberg said. | * Last month, more than a million advertisers used Gen AI tools to create more than 15 million ads, Zuckerberg said. | ||
* Businesses that use image generation tools see a 7% increase in conversion and there is likely to be more upside, Zuckerberg pointed out. | * Businesses that use image generation tools see a 7% increase in conversion and there is likely to be more upside, Zuckerberg pointed out. | ||
* | * Li said they are seeing strong retention with advertisers who use generative AI-powered image expansion, background generation, and text generation tools in Advantage+. | ||
* Zuckerberg said they are seeing rapid adoption of Meta AI and Llama, which are becoming industry standards. | * Zuckerberg said they are seeing rapid adoption of Meta AI and Llama, which are becoming industry standards. | ||
*Zuckerberg pointed out that Meta AI now has more than 500 million monthly actives. | *Zuckerberg pointed out that Meta AI now has more than 500 million monthly actives. | ||
*Frequent user cases they are seeing include people using it to gather information on how-to task (the largest user case), to look for content and for image generation (Q&A) | |||
* Zuckerberg said Llama token usage has grown exponentially this year. | * Zuckerberg said Llama token usage has grown exponentially this year. | ||
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* Zuckerberg indicated that smaller Llama 4 models will probably be ready early next year and they are going to be a big deal on several areas such as new modalities capabilities, stronger reasoning and much faster. | * Zuckerberg indicated that smaller Llama 4 models will probably be ready early next year and they are going to be a big deal on several areas such as new modalities capabilities, stronger reasoning and much faster. | ||
* Zuckerberg said it has become clear to him that new AI will be incremental to the core business. "It's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years, so I think we should invest more there." | * Zuckerberg said it has become clear to him that new AI will be incremental to the core business. "It's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years, so I think we should invest more there." | ||
* | *'''Zuckerberg said in the Q&A that they see a broad number of user cases for AI. "I think the main point here is just that it seems broadly applicable to a very wide variety of products. There are areas that are more part of our core business from making feed more relevant and reels more relevant to making ads more relevant, to helping advertisers generate better ads, to helping people create the content that they want, helping our integrity operations and compliance and the work that we do there," he said. "...there's a lot of opportunities that I think will see ramp more over the next year in terms of both consumer and business use cases for people interacting with a wide variety of different AI agents, consumer ones with AI Studio around whether it's different creators or different kind of agents that people create for entertainment. Or on the business side, we do want to continue making progress on this vision of making it so that any small business or any business over time can, with a few clicks, stand up an AI agent that can help do customer service and sell things to all of their customers around the world."''' | ||
*Li couldn't exactly quantify how they are deploying AI to help with productivity. "On the use of AI and employee productivity, it's certainly something that we're very excited about. I don't know that we have anything particularly quantitative that we're sharing right now. I think there are different efficiency opportunities with AI that we've been focused on in terms of where we can reduce costs over time and generate savings through increasing internal productivity in areas like coding for example, it's early, but we're seeing a lot of adoption internally of our internal assistant and coding agent. And we continue to make Llama more effective at coding, which should also make this use case increasingly valuable to developers over time. There are also places where we hope over time that we'll be able to deploy these tools against a lot of our content moderation efforts to help make the big body of content moderation work that we undertake to help it make it more efficient and effective for us to do so." | |||
*Zuckerberg also said in the Q&A that open source will help them to lower costs since researchers are likely to find ways of doing things more efficiently. | |||
=== Capital expenditures and total expenses === | |||
* Zuckerberg said it's clear that their AI infrastructure requires serious investments. He expects to continue investing significantly there. | |||
* Li said that they continue to be flexible in their AI investments so that they can react to market developments. " Within generative AI, we expect significantly scaling up our infrastructure capacity now while also prioritizing its fungibility will similarly position as well to respond to how the technology and market develop in the years ahead." | |||
* Li couldn't comment on the headcount growth in 2025. "So we don't have specifics to share about headcount growth in 2025," she said. She, however, pointed out that they continue to push for efficiency in the company. "We're really focused across the company on our efficiency efforts broadly and making sure that we feel like we're continuing to push the whole company, including areas in which we expect that we will be making additional headcount investments to think about how they can be more efficient in 2025 than they were in 2024." | |||
* Li said in the Q&A that the step up in capex in Q4 compared to Q3 is due to the timing effects and the lumpiness quarter-to-quarter. "The expected step up in Q4 CapEx from Q3 is that part of that comes from increases in server spend and to a lesser extent data center CapEx, but with servers, there are these timing dynamics at play that you referred to because we had these server deliveries that landed late in Q3, and so the cash doesn't go out the door basically till Q4, and that's when you'll see the CapEx show up. And given the nature of capital expenditures generally, there is some actually quite a bit of lumpiness quarter-to-quarter. So it's a little bit hard to sort of extrapolate from any particular quarter. Overall, I'd say we're growing our infrastructure investments significantly this year, and we expect significant growth again in 2025" | |||
=== | === Q3 results and outlook === | ||
* | * CFO Susan Li said that online commerce was the biggest contributor of ad revenue growth in Q3, followed by healthcare and entertainment and media. | ||
* Li said ad revenue growth was strongest in North America and Europe (21%), followed by Rest of World (17%) and Asia Pacific (15%). | |||
* Li pointed out that ad revenue growth decelerated in Asia Pacific from 28% due to lapping of a stronger demand from China-based advertisers. | |||
* Ad impressions increased 7% while the average price per ad increased 11%. | |||
* Ad impression was mainly driven by Asia Pacific and Rest of World. | |||
* Pricing growth was mainly driven by increased advertiser demand, in part due to improved ad performance but offset by increased impression, particularly from lower monetizing regions and surfaces. | |||
* Daily usage continue to grow Y/Y across Facebook and Instagram, both globally and in the U.S. | |||
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* Zuckerberg pointed out that global growth remains strong at Instagram. | * Zuckerberg pointed out that global growth remains strong at Instagram. | ||
* Zuckerberg said Threads now has 275 million monthly actives. That it's achieving more than 1 million signups per day. He added that engagement at Threads is growing too. | * Zuckerberg said Threads now has 275 million monthly actives. That it's achieving more than 1 million signups per day. He added that engagement at Threads is growing too. | ||
* | * Li said they are seeing strong results in Facebook from their global rollout of unified video player in June. Since introducing the new experience and prediction system that powers it, they have seen a 10% increase in time spent on Facebook video player. | ||
* Li pointed out that Reels continue to see good traction. | |||
* Li said they are making ongoing progress with their focus on promoting original content. More than 60% of recommendations now come from original content in U.S. | |||
* Li said there are still opportunities to grow ad supply within lower monetizing surfaces such as video. | |||
* Li pointed out that video engagement in Facebook continue to shift to short form video and this should continue with the translation of video tab to a full screen format. This leads to organic video impressions growing faster than video time on Facebook, which provides further opportunities for serving of ads. | |||
* They launched a targeting model that predicts the action that a person is likely to take after seeing an ad. Since introducing it in the first half of the year, they have seen a 2% to 4% increase in conversions (when tested on selected segments). | |||
* In Q3, they made changes to ads ranking and recommendations system, which should increase ad attributions. | |||
* Li avoided answering the question on whether they are thinking of launching their own search. She said that they partner with Google and Bing to enable Meta AI to use them. | |||
=== Reality Labs === | |||
* Zuckerberg said demand for Ray Ban glasses continue to be very strong. | |||
* Zuckerberg pointed out that reviews for the Quest 3S are great so far. | |||
== Management expectations and analysts estimates == | == Management expectations and analysts estimates == | ||