- First dividend in the company's history will be 50c a share
- Shares climb 17 per cent in pre-market reaction
Meta (US:META) has announced it will start paying a dividend as the social media company beat analyst expectations in its fourth quarter earnings. The payout is the first since the 2012 float, with buybacks used to return cash until now.
Founder and chief executive Mark Zuckerberg also laid out the company's plans to bring more advanced artificial intelligence to the masses, in what one analyst said could herald the moment Meta grew beyond being just the "leading social ad player".
In the three months to December, revenue rose 25 per cent year-on-year to $40bn (£31bn), 2.5 per cent ahead of analyst expectations. This quarter, management has forecast revenue to be between $34.5bn and $37bn, which was ahead of the $33.9bn expected by analysts. Zuckerberg focused on artificial intelligence and metaverse development in his remarks to investors, but the company's traditional revenue streams drove increased revenue.
Average price per ad rose 2 per cent while daily active users climbed 6 per cent year-on-year to 2.11bn.
Aggressive cost cutting meant operating expenses were down 8 per cent and correspondingly operating profit rose 156 per cent to $16.4bn giving a margin of 41 per cent. The company lowered operating expenses by reducing the headcount by 22 per cent, taking it to around 67,000 people. This helped it generate record free cash flow for the full-year of $43bn, despite $27bn in capex. This will rise by up to $10bn in 2024, with management guiding $30bn-$37bn in spending this year.
"Moving forward, the major goal will be building the most popular and most advanced AI products and services," Zuckerberg said. "And if we succeed, everyone who uses our services will have a world-class AI assistant to help get things done." The Facebook founder even pointed to the development of general AI, a higher level of machine thinking a level above the large language models in operation currently.
Analysts said 'GenAI' would soon drive profits. "We believe the GenAI opportunities around content discovery, ads and creative, and messaging far outweigh the increased investment," Citi analysts wrote.
Brad Erickson at RBC was even more effusive. "Years from now, Meta's Q4 report may get looked at as the moment Meta expanded from being looked at as the leading social ad player to layering on a leading GenAI-focused cloud intelligence business with an arguable impenetrable moat," he said.
Meanwhile, the investor returns will continue. The new dividend will come alongside $50bn in buybacks. Meta CFO Susan Li said the payout was more evolution than revolution. "We believe introducing a dividend just serves as a nice complement to the existing share repurchase programme...it doesn't change the way we determine the total amount of capital returns," she said.
