Meta Platforms:Quarterly Results/2024 Q2: Difference between revisions

=== Q1 Results and future outlook ===

* Instagram Reels engagement continues to grow as they make enhancements to their recommendations system, CFO Susan Li said.

* '''Li said their investments on AI are informed by returns they have seen or expect to achieve across the platforms. "Our ongoing investment in core AI capacity is informed by the strong returns we've seen and expect to deliver in the future, as we advance the relevance of recommended content and ads on our platform. While we expect the returns from Generative AI to come in over a longer period of time, we’re mapping these investments against the significant monetization opportunities that we expect to be unlocked across customized ad creative, business messaging, a leading AI assistant and organic content generation."'''

* '''Susan Li said ad market continues to be healthy and that they will be lapping strong comps in Q3 (Q&A). "We are continuing to see healthy global advertising demand, and we are also delivering ongoing ad performance improvements just related to all of the investments that we've continued to make over time. And improving the sort of ads, targeting ranking, delivery, all of the fundamental infrastructure there. And we expect that all of that will continue to benefit ad spend in Q3. We do expect year-over-year growth to slow in Q3, as we are lapping strong growth from China-based advertisers, as well as strong Reels impression growth from a year ago. And we also expect modestly larger FX headwinds in Q3 based on current rates."'''

* '''Li said the expect broad-based strength seen in Q2 to develop again in Q3 (Q&A). " And we saw basically in Q2 where revenue grew 22% that there was broad-based strength across regions and verticals including particular strength among smaller advertisers, and we expect that generally to continue into Q3."'''

* '''Li said in the follow-up call that they feel good about the pricing trends. "We feel good about the cost per action trends we're seeing. We think that those are healthy."'''

* '''Li said in the follow-up call that their compute needs currently outstrip the available data centres and they have had to shift capacity around to free up capacity for GenAI training and that leads to foregone revenue but they have factored that in Q3 guidance. "Our compute needs outstrip our available data center capacity right now...We've also had to do a little bit of shifting capacity around to free up capacity for GenAI training. And altogether, we expect that that will result in some foregone revenue growth from ads and organic content ranking improvements that we would have otherwise made, but that has been factored into our Q3 outlook. And we generally expect this to be to be a near term dynamic until we start bringing additional data center capacity online next year, which will meet our capacity needs."'''

* '''Li said in the follow-up call that the incremental revenue from ads business this year and next year is primarily a function of core AI work. "The incremental revenue that you see this year and largely next year, coming from the ads business, that will primarily be a function of the investments that we have been making in the core AI work that goes into the ongoing ads performance improvements as we make our ranking, delivery, targeting, et cetera systems, more performant over time."'''

* '''Li said in the follow-up call that they shared last time that two-thirds of their China ad revenue comes from advertisers outside the top 10 spenders in China in 2023. "We don't have an update on that for this year, but I would say it continues to be a diverse advertiser base. And more broadly, I think we are continuing to see a longer-term trend of growth from China-based advertisers...And again, most of our China-based ad revenue continues to come from a longer tail of advertisers," she added.'''