Meta Reports Increased Profits While Tax Contributions Remain Steady

Meta Platforms has reported a record-breaking fourth quarter, achieving revenues of $48.4 billion, a 21% increase compared to the same period in 2023. Notably, the company's operating profit margin has improved, allowing it to retain 48 cents from every dollar earned. Despite this growth, Meta's tax obligations have decreased, leading to a significant rise in net profits.

In Europe, Meta's advertising revenue surpassed $10 billion for the first time in a quarter, while in the U.S. and Canada, it exceeded $20 billion. This performance indicates a solid recovery in the advertising sector, which has been crucial for Meta's financial health. The company also announced plans to monetize its Threads platform through advertising, which had garnered 320 million active users by December.

Meta's expenses grew by only 5% to $25 billion, despite incurring $1.55 billion in legal costs in the previous year that were absent this quarter. Excluding those costs, expenses would have increased by 12%, still lagging behind revenue growth. The company's operating profit surged by 43% to reach $23.4 billion, with an operating cash flow nearly hitting $28 billion.

Before taxes, profits rose by 40% to $23.6 billion, while the anticipated tax burden dropped slightly from $2.8 billion to $2.7 billion, resulting in a net income of $20.8 billion--a 49% increase year-over-year.

Interestingly, revenue from the Metaverse segment remained stagnant at $1.1 billion, while traditional platforms like Facebook, Instagram, WhatsApp, and Messenger dominated the earnings, contributing $47.3 billion, with advertising revenue increasing by 21% to $46.8 billion. The remainder came from business clients utilizing WhatsApp services, which saw a 55% increase in revenue.

Meta's Chief Financial Officer noted that advancements in machine learning, particularly through a partnership with Nvidia, have significantly enhanced the effectiveness of their advertising algorithms, improving ad targeting by a factor of ten thousand. As a result, the quality of advertisements displayed has increased by 8% based on internal metrics.

For the fiscal year 2024, Meta reported total revenues of $164.5 billion, marking a 22% growth. Expenses rose by 8% to $95.1 billion, while operating profit jumped by 48% to $69.4 billion. The overall profit before taxes reached $70.7 billion, with tax obligations remaining stable at $8.3 billion. Consequently, net income for the year increased by 59% to $62.4 billion, with the workforce expanding to 74,000 employees, a 10% increase from the previous year.

Looking ahead, Meta anticipates an increase in revenues ranging from 8% to 15% for the current quarter. However, expenditures are projected to rise by 20% to 25% due to infrastructure investments necessary for supporting enhanced user experiences and advanced AI capabilities. With a focus on improving server longevity to approximately 5.5 years, Meta expects reduced depreciation costs for 2025.

Following the release of these financial results, Meta's stock saw an uptick of over 2% in after-hours trading.