Meta Earnings Announcement Goes Big on AI

If anyone had any doubts about Meta’s long-term commitment to artificial intelligence (AI), they were erased in the first minute of the company’s earnings call on Wednesday (April 24).

While analysts were waiting to hear about the return on investment in the technology would bring, CEO Mark Zuckerberg made it clear that AI is on a two-to-three-year development roadmap. AI and the metaverse were front and center well before a number was even mentioned by a Meta executive.

“So, let’s start with AI and the metaverse,” Zuckerberg said, less than a minute into the call. “We’re building a number of different AI services, from our AI assistant to augmented reality apps and glasses, to APIs [application programming interfaces] that help creators engage their communities and that fans can interact with, to business APIs that we think every business eventually on our platform will use.

“AI will help customers buy things and get customer support, it will write internal coding and development APIs for hardware, and a lot more,” he added.

The only statement from the company that preceded Zuckerberg’s comments from Meta was a press release that detailed better-than-expected earnings and customer engagement metrics, all of which, he said, had been positively impacted by current usage of AI on the company’s various platforms.

AI Investments

The earnings showed that, far from accelerating ROI on its AI efforts, the company will spend $5 billion more than it initially forecasted developing new AI products for consumers, developers, businesses and hardware manufacturers.

Capital expenditures on AI and the Metaverse-development division Reality Labs will range between $35 billion and $40 billion by the end of 2024.

Referring to last week’s introduction of the latest version of its AI assistant, Meta AI, which is powered by the latest advances of its large language model (LLM) Meta Llama 3, Zuckerberg said: “I expect that our models are just going to improve further from open source contributions.

“Overall … our teams have achieved another key milestone in showing that we have the talent data and ability to scale infrastructure to build the world’s leading AI models and services. And this leads me to believe that we should invest significantly more over the coming years to build even more advanced models and the largest scale AI services in the world,” Zuckerberg added.

The Meta AI assistant is free and can be used on Facebook, Instagram, WhatsApp and Messenger, the company said in a Thursday (April 18) press release. It’s also available on a website, meta.ai, for use on computers, according to the release.

As Zuckerberg said on the call, Meta AI is being offered in more countries. Previously available only in the United States, the assistant is being rolled out in English in more than a dozen other countries, the release said.

By the Numbers

By the numbers, the company showed notable growth across various metrics for Q1.

Family daily active people (DAP) averaged 3.24 billion, marking a 7% increase compared to the previous year. Total revenue for the period amounted to $36.46 billion, with revenue on a constant currency basis slightly lower at $36.35 billion, yet both figures reflecting robust growth of 27% year-over-year.

Ad impressions within Meta’s Family of Apps experienced a significant uptick, rising by 20% year-over-year. Concurrently, the average price per ad also saw a healthy 6% increase from the prior year.

Despite this growth, the company managed to control costs and expenses, which totaled $22.64 billion, representing a modest 6% increase year-over-year. Capital expenditures, including principal payments on finance leases, were reported at $6.72 billion.

CFO Susan Li said during the earnings call that Meta anticipates strong financial performance in the second quarter of 2024, with total revenue projected to fall between $36.5 billion and $39 billion.

Looking at total expenses for the full year of 2024, Meta expects them to range between $96 billion and $99 billion, slightly higher than previously forecasted due to increased infrastructure and legal costs.

The company also foresees significant operating losses for Reality Labs throughout the year, primarily due to ongoing product development efforts and investments aimed at expanding its ecosystem.

While Meta isn’t offering guidance beyond 2024, Li echoed Zuckerberg’s comments that she anticipates continued growth in capital expenditures in the following year to support its aggressive AI research and product development endeavors.