Meta Reports A Record-High Advertising Revenue in 2023: Reality Labs Losses Exceed $16 Billion

Meta Platforms reported an impressive 15.7% YoY growth in its global operating revenue, reaching an all-time high of $134.9 billion in 2023. A whopping 97.8% of this came from advertising. However, its ambitious Metaverse dream needs a reality check!

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Meta Platforms, Inc. (Nasdaq: META) recently unveiled its financial results for the full year ended December 31, 2023. The tech giant reported an impressive 15.7% YoY growth in its operating revenue, reaching an all-time high of $134.9 billion worldwide. A significant 29.7% of this revenue was generated during the fourth quarter. Meta’s net profit also surged a remarkable 68.5% YoY to $39.1 billion in 2023.

Meta Platforms has two revenue-generating segments: Family of Apps (FoA), which includes Facebook, Instagram, Messenger, WhatsApp, and other services, and Reality Labs (RL).

Let’s dig deep to understand which segment contributes the most to Meta’s success and which is making it lose billions.

Meta Platforms revenue by segments

  • Meta’s revenue from the Family of Apps segment increased 16.2% YoY in 2023 to $133 billion worldwide. This segment accounted for 98.6% of the company’s overall revenue during the same period.
  • Within the Family of Apps (FoA) segment, Advertising remains the predominant contributor to Meta’s global revenue, constituting 97.8% in the fiscal year 2023. During the year, the company generated a record-high revenue of $131.95 billion from its advertising business, with 16.1% YoY growth.
  • Meta’s Other revenue within the Family of Apps comprises revenue from the WhatsApp Business Platform, net fees from developers using Payments infrastructure, and various other streams. In 2023, the tech giant generated a whopping $1.06 billion in revenue from this category, with an impressive 30.9% YoY in 2023.
  • 2023 was the second conservative year of Meta’s declining Reality Labs revenue. However, it is noteworthy that the decline in RL revenue in 2022 was relatively milder at 5.1% YoY compared to the more significant contraction of 12.2% YoY in 2023. Meta’s revenue from the reality labs segment amounted to just $1.9 billion in 2023. A whopping 56.5% of this revenue was generated during the fourth quarter, amounting to $1.07 billion.

Meta has consistently incurred substantial losses from its Reality Labs segment since its inception in 2019. In 2023, these losses further increased 17.5% YoY to $16.12 billion.

Despite the significant revenue generated from the Family of Apps segment, amounting to $62.87 billion, the losses from the Reality Labs segment had a notable impact on the overall income from operations, which stood at $46.75 billion. This highlights the ongoing financial challenges faced by the Reality Labs segment, impacting Meta’s overall financial performance.

Growth in Facebook Users and ARPU

The number of Family Daily Active People (DAP) worldwide reached an average of 3.19 billion by the end of December 31, 2023, with an increase of 8% YoY. DAP is defined as a daily active person who visited at least one of Meta’s family products (Facebook, Instagram, Messenger, and/or WhatsApp) through a mobile app or a web or mobile browser.

In particular, Facebook’s daily active users reached 2.11 billion by the end of December 31, 2023, with an increase of 6% YoY.

Similarly, the number of Meta’s Family Monthly Active People (MAP) increased 6% YoY to 3.98 billion worldwide by the end of December 31, 2023. MAP is defined as a monthly active person who visited one or more Family products through a mobile app or a web or mobile browser. In particular, Facebook’s monthly active users reached 3.07 billion by the end of 2023, with an increase of 3% YoY.

In 2023, Facebook’s global ARPU (Average Revenue Per User) increased 12.5% YoY to $44.60.

Interestingly, the United States and Canada, despite having the least number of users compared to other regions, generated the highest ARPU at $226.93, with 9.9% YoY growth. Following closely, Europe reported an ARPU of $75.57, with a 20.9% YoY increase in 2023.

Facebook ARPU from the Asia-Pacific region increased 11.1% YoY to $20.04, while the Rest of the World reported an ARPU of $15.83, showcasing a robust 19.7% YoY increase in 2023.

Meta Platforms, the parent company of Facebook, has demonstrated robust financial performance in 2023. The company’s advertising business continues to drive the growth of the overall revenue. Interestingly, throughout the year, the ad impressions delivered across Family of Apps increased by an outstanding 28% YoY. However, despite this surge in volume, the average price per ad declined 9% YoY in 2023, indicating a shift in ad spending behaviour of users across Facebook and Instagram on a global scale. As Meta Platforms navigates these changes, the question arises: Will Reality Labs ever turn a profit?

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