Meta Platforms, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• App Highlights: WhatsApp has 2 billion daily calls globally; Facebook sees positive trends with young adults; Instagram has strong global growth and launched teen accounts with protections; Threads has almost 275 million monthly actives with over a million signups per day.
• AI Efforts: Meta AI has over 500 million monthly active users; Llama token usage has grown exponentially, with Llama 3.2 released including leading small models and open source multimodal models; Llama 4 in development with a large training cluster.
• Reality Labs Highlights: Ray-Ban Meta AI glasses with Meta AI integration, strong demand; Quest 3S released at $300 with great reviews.

Segment Performance

• Family of Apps: Q3 Total Family of Apps revenue was $40.3 billion, up 19% year-over-year. Q3 Family of Apps ad revenue was $39.9 billion, up 19% or 20% on a constant currency basis. Family of Apps Other revenue was $434 million, up 48%, driven primarily by business messaging revenue growth from our WhatsApp business platform. Family of Apps expenses were $18.5 billion, representing approximately 80% of overall expenses, up 13%, and operating income was $21.8 billion, with a 54% operating margin.
• Reality Labs: Q3 revenue was $270 million, up 29% driven by hardware sales. Reality Labs expenses were $4.7 billion, up 19% year-over-year, resulting in an operating loss of $4.4 billion.

Guidance

• Revenue: Expect fourth quarter 2024 total revenue to be in the range of $45 billion to $48 billion.
• Expenses: Full year 2024 total expenses expected to be in the range of $96 billion to $98 billion, updated from prior range. Reality Labs operating losses expected to increase year-over-year.
• CapEx: Full year 2024 capital expenditures anticipated to be in the range of $38 billion to $40 billion, updated from prior range, with Q4 step up due to server timing dynamics.

Risks

• Active regulatory landscape, including increasing legal and regulatory headwinds in the EU and the U.S. that could significantly impact the business and financial results.

Question and Answer

Q: Brian Nowak from Morgan Stanley asked about Meta AI recurring interactions and commercial intent, and headcount investment.

A: Susan Li responded that Meta AI has frequent use cases like information gathering and image generation, and headcount for 2025 is being evaluated based on strategic priorities.

Q: Eric Sheridan from Goldman Sachs asked about key AI opportunity sets.

A: Mark Zuckerberg stated AI is broadly applicable across products, with opportunities in core business engagement, monetization, and new services like AI Studio and business agents.

Q: Douglas Anmuth from JPMorgan asked about Meta AI use cases and Q4 CapEx.

A: Mark Zuckerberg mentioned Meta AI's growth trajectory and Susan Li explained Q4 CapEx step up due to server timing dynamics.

Q: Justin Post from Bank of America asked about AI use in employee productivity and headcount flexibility.

A: Susan Li said AI is being used for productivity with ongoing evaluation of headcount based on ROI and strategic opportunities.

Q: Ross Sandler from Barclays asked about Llama's impact on Meta business and compute CapEx.

A: Mark Zuckerberg discussed Llama's benefits for Meta products and Susan Li mentioned compute CapEx execution progress.

Q: Ronald Josey from Citi asked about Threads monetization and ad pricing.

A: Susan Li said Threads monetization isn't a 2025 driver yet and ad pricing growth is due to advertiser demand and better ad performance.

Q: Ken Gawrelski from Wells Fargo asked about consumer AI applications and Meta's role.

A: Mark Zuckerberg talked about AI's role in content and future feed experiences.

Q: Youssef Squali from Truist Securities asked about Meta AI ads on commercial queries and Reality Labs losses.

A: Susan Li said Meta AI focuses on consumer experience first and Reality Labs is a long-term priority with ongoing investment.

Q: Mark Mahaney from Evercore ISI asked about ad event impacts and WhatsApp monetization.

A: Susan Li said major events had minimal revenue impact and WhatsApp monetization focuses on click-to-WhatsApp ads and paid messaging growth.