Facebook parent Meta has seen a strong start to the year, increasing its total revenue by 27% to $36.5 billion and growing its daily active users by 7% to 3.2 billion.
During a conference call discussing the company’s first-quarter earnings of 2024, Meta CFO Susan Li shared that the company derives most of its revenue from ads, explaining that two primary factors account for this growth.
“Our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time,” Li said.
These factors were able to produce the following results, making up for Reality Labs’ operating loss of $3.8 billion and higher expenses due to restructuring:
- Ad revenue made up 97% ($35.6 billion) of Meta’s total revenue
- Ad impressions from Meta apps increased by 20%
- The average price per ad is up by 6%
“We are getting better at adjusting the placement and number of ads in real-time, based on our perception of a user’s interest in ad content and to minimize disruption from ads, as well as innovating on new creative ad formats,” Li explained.
Meta’s AI Efforts Are Paying Off
Meta CEO Mark Zuckerberg also gave his report, focusing more on how well the tech giant’s AI initiatives are doing.
Meta AI has recently been upgraded with the latest model Llama 3. Zuckerberg is optimistic about its future success, announcing that it will start rolling out the product in other languages and countries in the coming months.
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“Tens of millions of people have already tried it. The feedback is very positive and, when I first checked in with our teams, the majority of feedback we were getting was people asking us to release Meta AI for them wherever they are,” Zuckerberg revealed.
Last Tuesday, the company released Skyler – a new and more feminine style of its popular Ray-Ban Meta smart glasses, which are selling out fast.
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“If we want everyone to use wearable AI, I think eyewear is a bit different from phones or watches in that people are going to want very different designs. So I think our approach of partnering with the leading eyewear brands will help us serve more of the market,” Zuckerberg said.
The company is also using AI to improve app engagement and ads to create value for both users and advertisers.
While a top-rated AI company like Meta can invest millions of dollars in AI innovations, businesses can also utilize the technology with much smaller budgets for simpler initiatives to enhance the efficiency of their systems and processes.
Balancing Investment and Revenue
The Facebook creator shared that Meta plans to invest significantly more in AI and the Metaverse over the coming years, aiming to build technology that people can interact with.
With this, Meta’s projected 2024 capital expenditure (CapEx) will range from $35 billion to $40 billion. Its previous forecast range was only $30 to $37 billion.
To balance this out, Meta is exploring more ways to monetize its AI services, including scaling business messaging, introducing ads or paid content into AI interactions, and enabling people to pay to use bigger AI models.
“We’re seeing strong momentum within our Family of Apps and are making important progress in our longer-term AI and Reality Labs initiatives that have the potential to transform the way people interact with our services over the coming years,” Li concluded.
