Meta Platforms reports strong Q4 earnings with focus on AI advancements and Meta AI glasses
From Nasdaq: 2025-01-29 21:15:15
Meta Platforms held its Q4 2024 earnings call, reporting over 3.3 billion daily app users. CEO Mark Zuckerberg highlighted plans for Meta AI, aiming to reach over 1 billion users. The company is focused on personalized AI, with Llama 4 models and AI engineering agents in development. Ray-Ban Meta AI glasses are gaining popularity, shaping the future of AI glasses.
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Meta Platforms aims to make 2025 a transformative year for AI, with a focus on personalized AI assistants and advancements in AI models like Llama 4. The company plans to lead in open-source AI and develop an AI engineering agent with coding and problem-solving abilities comparable to a mid-level engineer. Ray-Ban Meta AI glasses are expected to shape the trajectory of AI glasses as a category, with a strong market potential. In a pivotal year for AI glasses, Meta plans to invest hundreds of billions in AI infrastructure. The company expects to bring online a gigawatt of capacity and build a two-gigawatt AI data center. They aim to accelerate revenue growth through AI initiatives and product trends, such as the growth of reels on Instagram and Facebook.
Meta’s CFO, Susan Li, shared the company’s Q4 financial results. Total revenue reached $48.4 billion, up 21% year-over-year. Operating income was $23.4 billion with a 48% margin. The company ended the year with over 74,000 employees and $77.8 billion in cash. The Family of Apps segment revenue was $47.3 billion, driven by ad revenue growth.
With a growing user base, Meta’s Family of Apps segment revenue hit $47.3 billion in Q4. Ad revenue reached $46.8 billion, with the online commerce vertical contributing significantly to growth. Strong ad revenue growth was seen in Rest of World, Asia Pacific, and Europe, with North America growing at 18%. The total number of ad impressions served increased by 6%. Impression growth in Q4 was driven by Asia Pacific, while pricing growth benefitted from increased demand from advertisers. Family of Apps revenue was $519 million, up 55% driven by business messaging revenue growth. Reality Labs segment revenue was $1.1 billion, with operating loss at $5 billion.
Daily actives continue to grow on Facebook, Instagram, and WhatsApp. In Q4, video time spent on Instagram grew double digits year over year globally. Instagram is focusing on supporting smaller creators, introducing new features for experimentation, and launching a stand-alone creative app called Edits.
Meta AI now has over 700 million monthly actives, with updates enabling more personalized and relevant responses. Ads on Threads are being tested for gradual introduction. Ads ranking systems enhancements and machine learning systems, like Andromeda, have increased ad quality by 8%. Advantage+ shopping campaigns revenues surpassed a $20 billion annual run rate.
Efficiency in monetization is being improved by optimizing ad engagement and personalizing ad supply. Ads on unmonetized surfaces like Threads are being tested for gradual introduction. Andromeda system has driven higher ad quality by 8%. Advantage+ shopping campaigns revenues surpassed a $20 billion annual run rate, growing 70% year over year in Q4. Advertisers can now optimize sales, app, and lead campaigns with Advantage+ turned on from the start. The expansion will roll out to more advertisers before the end of the year. With over 4 million using generative AI ad tools, Facebook is focused on capital allocation, infrastructure, and talent to drive growth and efficiency. Quarterly revenue is estimated to be between $39.5 billion to $41.8 billion, with a strong financial position supporting future investments and shareholder returns. Mark Zuckerberg shared insights on Meta AI and Llama 4, highlighting improved quality and integration into services. Custom silicon development aims for greater efficiency and performance in unique workloads. Susan Li discussed ongoing partnerships for third-party silicon and plans to expand in-house MTIA program for AI workloads in 2025. The company’s open-source approach mirrors success with open compute, benefiting the industry with shared innovations and standardized supply chains for cost efficiency. ? And on Susan’s comments on ad pricing, it seems like there are a lot of factors at play. Can you give us a sense of what’s driving the growth in pricing and how sustainable that is? Thank you. Mark Zuckerberg discussed the removal of fact-checking and content policies, emphasizing the effectiveness of the community note system. CFO Susan Li noted no impact on advertiser spend, with strong demand for AI-powered tools. Monetizing Meta AI is not a current focus, with potential opportunities in the future.
Zuckerberg mentioned learning from DeepSeek’s advances and implementing them. There is a debate on the allocation of compute infrastructure towards pretraining versus inference. The ability to apply more compute at inference time may lead to higher quality service. The net effect of these trends on infrastructure and capex remains uncertain as the field of technology evolves rapidly. Facebook is focusing on making the platform more culturally influential. Mark Zuckerberg plans to invest in product development to bring Facebook back to its roots. Meta AI is seeing strong engagement on WhatsApp and Facebook, with users leveraging it for information-seeking and social interaction. The company is learning from user behavior to enhance the user experience. Meta AI is focusing on personalization in 2025, with features like improved memory and content recommendations. CFO Susan Li discusses constraints on capex spend and plans to ramp up GPU deployment. Hiring needs in technical areas will drive expense growth. CEO Mark Zuckerberg sees potential for agents and reasoning in Meta AI, moving towards multistep tasks and commercial intent. The future may bring more advanced and efficient AI products. Meta Platforms, previously known as Facebook, is focusing on scaling its AI products to reach a large audience before ramping up monetization efforts. CEO Mark Zuckerberg expects AI to have a durable advantage once at scale, but doesn’t anticipate it being a major contributor to the business in 2025. The company remains optimistic but acknowledges it will take time to see results.
During an earnings call, key participants included Mark Zuckerberg, Susan Li, Brian Nowak, Eric Sheridan, and more. Meta’s strategy involves building products, scaling them to reach a wide audience, and then monetizing them. The company is optimistic about the future but emphasizes the need for time to see significant business growth from AI initiatives. The earnings call transcript is available for further analysis. 1. The stock market reached record highs today, with the S&P 500 closing at 3,581 and the Dow Jones Industrial Average ending at 29,100. Investors are optimistic about the economy’s recovery despite ongoing concerns about the pandemic’s impact on businesses.
2. A new study found that wearing masks can significantly reduce the spread of COVID-19. Researchers observed a 70% decrease in transmission when both infected and healthy individuals wore masks, highlighting the importance of mask-wearing in preventing the virus’s spread.
3. The unemployment rate has dropped to 8.4%, the lowest since March. However, experts caution that the recovery is uneven, with certain industries still struggling. The job market remains uncertain as businesses navigate the challenges of reopening and adapting to the new normal.
4. Hurricane Laura made landfall in Louisiana as a Category 4 storm, causing widespread damage and power outages. The storm brought wind gusts of up to 150 mph and heavy rainfall, leading to flooding in many areas. Relief efforts are underway as residents assess the extent of the destruction.
Read more at Nasdaq: Meta Platforms (META) Q4 2024 Earnings Call Transcript