---
title: "\"Rapid Expansion\" Meta Platforms: China's Overseas Expansion Soars, Mark Zuckerberg Generously \"Gives Gifts\""
description: "Perfect performance + record-high repurchase amount + first dividend, BUFF is fully stacked"
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/11450028.md"
published_at: "2024-02-02T01:54:38.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# "Rapid Expansion" Meta Platforms: China's Overseas Expansion Soars, Mark Zuckerberg Generously "Gives Gifts"

Hello everyone, I'm Dolphin Research!

Meta Platforms Platforms Platforms Platforms released its fourth-quarter earnings report for 2023 this morning (February 2, Beijing time). Despite high expectations, Meta Platforms Platforms Platforms Platforms delivered a decent performance, with revenue and profits exceeding expectations due to strong advertising.

Compared to the already optimistic buyer expectations, the surprise in this report mainly lies in the revenue guidance for the first quarter of 2024 - the company expects a growth of 20% to 27%, while buyer expectations closely align with the lower end of the guidance.

On the expenditure guidance that made Dolphin Research slightly worried, the management only slightly raised the upper limit of the capital expenditure guidance, which is still manageable overall. The capital expenditure for the current quarter was also lower than expected, and the full-year expenditure of 28 billion remained within the company's guidance range, without experiencing the "unexpected" surge like Google.

With strong revenue and controlled expenses, the profit for the next quarter is naturally considerable. The even bigger surprise is that Meta Platforms Platforms Platforms Platforms has also given shareholders a New Year's gift: the first dividend ($0.5 per share), plus an additional record-breaking 50 billion in share repurchases!

A year ago, Meta Platforms Platforms Platforms Platforms was a disobedient "problem student," but now it has completely changed its behavior. Not only is it performing well, but it is also generously rewarding shareholders with its first dividend and an additional 500 billion in share repurchases, instantly becoming the well-behaved student that shareholders most want to see. The market immediately responded positively to the management's efforts, with a 15% surge after hours.

**Key Highlights of the Earnings Report:**

**1\. New Year's Gift: Strong Share Repurchases and First Dividend**

The most surprising aspect of this earnings report, in addition to the strong performance, is the generous New Year's gift that Meta Platforms Platforms Platforms Platforms has given to shareholders. It includes a record-breaking 500 billion share repurchase plan and the first dividend of $0.5 per share!

In 2023, the company spent $20 billion on share repurchases, and there was still $31 billion remaining from the previous repurchase plan. But today, Meta Platforms Platforms Platforms Platforms immediately increased it by a whopping 500 billion! Just think about the darkest moments a year ago, Meta Platforms Platforms Platforms Platforms shareholders truly hit the jackpot, happiness came so suddenly!

**2\. Impressive Advertising Guidance**

This time, the market, especially the buyer funds, had high expectations for advertising stocks, and yesterday's setback for Google also raised concerns about Meta Platforms Platforms Platforms Platforms in the market.However, Meta Platforms has performed well. Although its current performance is slightly below the buyer's expectations, it has beaten the guidance for the first quarter of this year.

The guidance for total revenue in the first quarter is in the range of 34.5 billion to 37 billion, with a year-on-year growth of 20% to 29%. BBG's consensus expectation is 33.6 billion, and the buyer's expectation is also just touching the lower end of the guidance, at 34.5 billion. Based on Meta Platforms' consistent low-key guidance style in previous years, it can be confidently predicted that it will exceed expectations next quarter.

Similar to the third quarter, in addition to the frenzy of shopping season and consumer enthusiasm in the United States, Instagram Reels and Temu are likely to be the main drivers of incremental growth.

**3\. VR stands tall**

As Dolphin Research predicted last quarter, thanks to the release of the new product Quest 3 during the shopping season, the VR/AR business finally saw a significant recovery in the fourth quarter, with a year-on-year revenue growth of 47% and a record high for a single quarter. Because of the failure of Quest Pro, VR, which had been languishing for a year, finally gave a little face to Mark Zuckerberg. Otherwise, the move to change the name, which caused a sensation at the time, might have been repeatedly ridiculed.

Dolphin Research believes that starting this year, with Apple's entry, VR may be a bit different, especially in terms of content applications. There will be more developers eager to try, which is very beneficial to the overall development of the ecosystem. However, in order to achieve significant growth in scale, it may still need to wait until after next year (considering the application development cycle and the launch of Apple Visionpro's low-cost second-generation product).

Reality Labs is still in "huge losses", and the company has taken precautions early on, guiding that the losses for this year will continue to expand. However, since the management has already given a clear guidance range for the overall operating expenses and capital expenditures of the company, compared to the expectations of the previous quarter, there has not been a significant increase. Coupled with the strong revenue guidance and the return of Meta Platforms' advertising business on track, the market will also have a higher tolerance for the losses in the VR sector, which can be temporarily ignored.

**4\. Traffic is still expanding**

From the perspective of the relationship between ad volume and price, the driving force behind the strong performance of advertising in the fourth quarter is still the increase in ad impressions, with a year-on-year growth of 21%. Among them, the overall traffic of the ecosystem naturally increased by 6.4%, and Facebook increased by 3.4%. Although platforms other than Facebook (mainly Instagram) have higher growth rates, the growth rate of Facebook has also slightly accelerated compared to the previous quarter.

The average ad price in the fourth quarter has reversed the downward trend and achieved positive growth of 2%, which is related to the strong macro environment and Meta Platforms' own competitiveness.Although Dolphin Research has previously mentioned that during periods of economic prosperity, advertising prices are strong, and during economic downturns, advertising growth relies more on increasing impressions. However, with Meta Platforms joining Reels, short video ads naturally bring in a large number of impressions. At the same time, the YoY decline in unit prices does not necessarily indicate a weak economy, but rather the ROI of Reels is still being optimized, resulting in relatively lower prices.

**5\. Workforce reduction in the first phase, but advertising profit margin continues to improve**

In the fourth quarter, Meta Platforms saw a significant increase in gross profit margin and operating profit margin YoY, mainly due to workforce reduction (a 22% decrease YoY) and optimization of data center costs. The cost reduction exceeded market expectations, especially in terms of sales and management expenses after workforce reduction and office resource reduction.

The number of employees in the fourth quarter has increased by 1,132, and the company expects to increase its workforce this year, mainly in innovative businesses such as AI.

The fourth-quarter expenses also include restructuring costs related to severance compensation and property and equipment integration, totaling 1.15 billion, which affected the operating profit margin by approximately 3 percentage points. Even without excluding the impact of these restructuring costs, the operating profit margin of App services (advertising) continued to increase by more than 2 percentage points QoQ, reaching 54%, almost reaching a historical peak. However, overall, the profit margin remained stable QoQ due to increased losses in VR.

**6\. Slight increase in expenditure guidance, but overall still manageable**

Regarding the total expenditure guidance for operational costs in 2024, Meta Platforms has maintained the guidance from the previous quarter (94-99 billion), with the upper limit of the guidance lower than the consensus expectation of 106.2 billion. In terms of capital expenditure, Meta Platforms slightly raised the upper limit of the guidance from 30 to 35 billion to a range of 30-37 billion.

The increase in Capex is still due to investments in innovative businesses such as AI, but compared to Google's unexpected surge in Capex yesterday, Meta Platforms' Capex is still manageable overall. It seems that lessons have been learned, and a higher level of discipline has been maintained in expenditure.

![Table description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/doV4h5uQ3ovNGHVs7ngvkWyTguq4sJMY.jpg?x-oss-process=style/lg)**Dolphin Research's Viewpoint**

As Dolphin Research pointed out in the analysis report and summary of last quarter's earnings report, "Meta Platforms and the 'Love-Hate Relationship' with Chinese Companies Going Global: TikTok Competing, Temu Delivering," in the advertising sector, Meta Platforms is expected to continue to reap alpha returns in 2024 due to the slowdown in TikTok competition, the reduced impact of IDFA, the net increase in monetization from Reels, and the dividends from the e-commerce battle. However, the only concern is the impact of the slowdown in Chinese e-commerce advertising.

During the post-market conference call, Mark Zuckerberg mentioned that 10% of this year's revenue comes from Chinese advertisers. Needless to say, Temu is definitely the major contributor, but this year we may need to pay attention to the possibility of Temu shifting its marketing focus from outside to inside the United States, which could result in a decrease in advertising spending on Meta Platforms.

However, even if this possibility exists, Dolphin Research believes that Meta Platforms is still expected to lead the industry in growth this year. On the one hand, as a global leading traffic platform, Meta Platforms can still benefit relatively from Temu's user penetration in non-U.S. regions this year. On the other hand, with the impact of IDFA behind, the push of Reels, and the advantage of being the first to use AI tools on a large scale to improve advertising efficiency, Meta Platforms can have a smoother 2024 than its peers.

The following is a detailed analysis:

1.  Strong Advertising Guidance

In the fourth quarter, Meta Platforms' revenue reached 40.1 billion, a year-on-year increase of 25%, continuing to accelerate its recovery from a low base. The main outperformer is still the advertising business, which accounts for 98% of the revenue. VR also performed well with the launch of Quest 3, achieving a new quarterly high.

For 1Q24 expectations: Total revenue is expected to be in the range of 34.5-37 billion, corresponding to a year-on-year growth of 20%-29%, significantly exceeding the consensus estimate of 33.6 billion and better than the more optimistic buyer expectation of 34.5 billion.In line with Meta Platforms' consistent low-key guidance style, a strong performance in the next quarter is a sure thing.

![Chart, histogram description automatically generated](https://pub.pbkrs.com/cms/2024/0/zeu5mVxbSnDLWxNBFJRfAudjiQjwHqPm.jpg?x-oss-process=style/lg)

1.  Increase in ad volume and price: Traffic growth and macro + competitive advantages lead to a return in unit price growth.

Let's look at the driving factors behind the changes in ad volume and price, as well as their sustainability:

![Graph, description of low credibility automatically generated](https://pub.pbkrs.com/cms/2024/0/4GYtCx5sZNRRK2m5n3M44zkKriPJVGxD.jpg?x-oss-process=style/lg)

(1) Ad impressions continue to grow rapidly by 21%. In addition to the expansion of user base and increased user stickiness (6.4% growth in monthly active users, 7.8% growth in daily active users, DAP/MAP reaching 80.2%, a historical high), the average number of ad impressions per user has also significantly increased by 17%.

By process of elimination, considering that ad monetization on several platforms of Meta Platforms is already quite mature (Threads has shown weaker performance and reduced growth potential), the only source of surplus ad inventory and the ability to significantly increase user stickiness is short videos, specifically Reels. On one hand, short videos increase user stickiness, and on the other hand, Reels has a large inventory, which can bring incremental growth when filled.

![Chart, bar graph description automatically generated](https://pub.pbkrs.com/cms/2024/0/ABkagjcN869t7DGQiGcFvPiZ9JDrpG8Z.jpg?x-oss-process=style/lg)

Based on Facebook's user data (3.4% growth in monthly active users, lower than the 6.4% growth of the entire ecosystem) and third-party download data, the expansion of the ecosystem's user base is mainly driven by Instagram. Therefore, an enhanced version of Reels+IG is the main contributor to the increase in traffic.

![Graphical user interface, text, email description automatically generated](https://pub.pbkrs.com/cms/2024/0/j7uU3p78Jz7NEqgbBbbyNV88rc72NvnG.jpg?x-oss-process=style/lg)![Chart, line graph description automatically generated](https://pub.pbkrs.com/cms/2024/0/oFAkRmWexhRxx6voAg45MC5QKUJJeqRo.jpg?x-oss-process=style/lg)![Chart, bar graph description automatically generated](https://pub.pbkrs.com/cms/2024/0/R3eELzEHecFLYf9RE6rHDeGgKuua4JhC.jpg?x-oss-process=style/lg)Speaking of Reels, we cannot ignore the competition from TikTok. However, according to third-party data, the growth of TikTok's US users has slowed down significantly this year, and it is difficult to surpass the 170 million monthly active users, which is still lower than the 200 million plus of popular apps like Facebook and YouTube.

But this also brings a problem, the user base, especially in terms of age, is not comprehensive enough, which affects the ROI of advertising and makes it difficult for advertisers to shift their main advertising budgets from the original platforms to TikTok. On the other hand, Instagram Reels is showing strong momentum in monetization. When TikTok loses its new traffic, measuring advertising ROI becomes a crucial factor for advertisers in determining budget allocation.

Therefore, Dolphin Research believes that the competition between TikTok and Meta Platforms may continue to slow down marginally in 2024. At least for Meta Platforms, the most intense period of competition has passed.

Secondly, the YoY increase in advertising unit price by 2% has reversed the downward trend, reflecting the combined effect of the macro environment and platform competitiveness.

As we mentioned before, the advertising unit price is related to whether the economy is in an upward cycle and whether the platform's competitive advantage has improved. However, this is based on the stable state of traffic on Meta Platforms.

Starting from the second quarter of this year, Reels has been officially commercialized compared to last year. And the pricing of Reels is much lower than that of Facebook and Instagram. Therefore, when Reels' revenue contribution increases, it naturally lowers the average advertising unit price. Therefore, combining the two driving factors of changes in volume and price, it is evident that the commercialization progress of Reels is smooth and its contribution to total revenue is increasing.

On the other hand, the reversal of the decline in advertising unit price to positive growth also indicates strong US consumer spending in the fourth quarter.

1.  VR stands tall

As the beloved Reality Labs of Mark Zuckerberg, after a year of collapse, it finally regained its face with Quest 3, achieving a record high revenue of over 1 billion in the fourth quarter.

The success of Quest 3 and the failure of Quest Pro also confirm Dolphin Research's previous viewpoint - in the stage where hardware still has flaws and content development is in its early stages, taking the high-end product route can be challenging in stimulating the developer ecosystem. Of course, Apple is an exception. Due to its brand reputation and mature system ecosystem, it is more likely to attract developers.Combining IDC data and reverse calculation of revenue, Dolphin Research estimates that Oculus' overall sales in the fourth quarter will exceed 2.5 million units, far exceeding the 1.8 million units. (These are Dolphin Research's estimated values and are only for trend reference)

![Chart, bar chart description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/cspHKY1f1xyCxxcZH85gRHZS7GxnXEk5.jpg?x-oss-process=style/lg)

**Although Meta Platforms Platforms Platforms Platforms made a strong comeback at the end, this year has been a very bleak year for the industry, which also affected its subsequent growth.**

1.  According to IDC data, the overall VR/AR sales in the industry in 2023 were 8.1 million units, a year-on-year decrease of 5.3%, with VR decreasing by nearly 10%. As of the third quarter of 2023, Meta Platforms Platforms Platforms Platforms' market share is still hovering around 50%, but due to the hot sales of Quest 3, Dolphin Research predicts that Meta Platforms Platforms Platforms Platforms' market share in the fourth quarter will exceed 70%.

![Chart, bar chart description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/7ZQWGdBYfpGAo5HRzud9av3a893RqijP.jpg?x-oss-process=style/lg)

1.  However, in December, IDC lowered its shipment expectations for VR/AR headsets in 2027 from the September forecast of 30.3 million units to 28.6 million units.

![Table description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/H5JFG9MRiL3s2qkjEUDsmfHBWXLb4V2F.jpg?x-oss-process=style/lg)

**II. Increased investment, but overall controllable**

Meta Platforms Platforms Platforms Platforms has reduced costs and increased efficiency for a year, and by the end of 2023, it has completed the first phase. In 2023, Meta Platforms Platforms Platforms Platforms accumulated a reduction of nearly 20,000 employees, but in the fourth quarter, it has returned to a net increase of 1,132 employees.

The restructuring expenses for layoffs and data center adjustments throughout the year reached 3.5 billion, affecting the profit margin by about 2.6%, and there were also 4.6 billion in 2022. Meta Platforms Platforms Platforms Platforms has spent 8 billion to gain lessons, and in the long run, it can help the company improve the strategic capabilities and governance level of its management.It is also worth it.

**1\. Gross margin has basically returned to normal levels, but there is still room for improvement in the medium and long term**

As Dolphin Research expected last quarter, Meta Platforms' gross margin increased significantly by 7 percentage points YoY, reaching 81%, which has basically recovered compared to the previous difficulties. In the short term, with the addition of AI investment, it is expected that further improvement may be a bit challenging.

However, Dolphin Research believes that this is only a temporary recovery and in the medium and long term, after going through the mismatch cycle of AI investment and output, considering that AI can continue to optimize advertising ROI, help reduce costs internally, and reduce losses in the RL segment, there is still room for improvement in gross margin.

![Chart, bar chart, histogram description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/E2oz6nLJkTFBwU1sD8EH2UQswbWBPEMq.jpg?x-oss-process=style/lg)

**2\. Layoffs have ended, and R&D expenses are returning to growth**

In the fourth quarter, Meta Platforms' operating profit margin remained at 40.8% QoQ, without further optimization for the following reasons:

On the one hand, the investment in AI indicates the need for corresponding expansion of the R&D team. R&D expenses in the fourth quarter increased by 7.6% QoQ, and the total number of employees increased by a net of 1,132.

On the other hand, the expenses for business restructuring such as layoffs and data center adjustments in the fourth quarter also increased significantly compared to the previous quarter (11 billion in Q4 vs 4 billion in Q3), thereby slowing down the improvement trend of the profit margin QoQ. Dolphin Research estimates that after excluding this impact, the operating profit margin still has a 1-2 percentage point improvement QoQ.

![Table description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/a3XQtzeQphmU6GTwpZSHWHrAwzpj6buq.jpg?x-oss-process=style/lg)

Looking at the two major businesses of advertising and metaverse, the losses in the metaverse are still in a high-loss state, and the management expects that the operating losses of Reality Labs will continue to increase in the coming years.However, based on Dolphin Research's analysis of Meta Platforms' capital expenditure (300-370 billion) and total expenditure (940-990 billion) guidance for 2024, as well as its main investment direction (AI), it is expected that the losses of Reality Labs will not increase too dramatically and remain manageable. Currently, the advertising business is strong, so the market may turn a blind eye to the losses within the controllable range of the VR business.

![Chart, schedule description has been automatically generated](https://pub.pbkrs.com/cms/2024/0/s9dRkrjMNyD5dePvLAVJjnRdr93XJwc4.jpg?x-oss-process=style/lg)

**Historical articles from Dolphin Research on "Meta Platforms" section:**

**Earnings Season (Past Year)**

October 26, 2023 Conference Call: "[Meta Platforms: Chinese advertisers contribute significantly (3Q23 earnings conference call summary)](https://longportapp.com/zh-CN/topics/10404936?invite-code=)"

October 26, 2023 Earnings Review: "[Meta Platforms: Strong return of advertising, why is the market not buying it?](https://longportapp.com/zh-CN/topics/10398168?invite-code=)"

July 27, 2023 Conference Call: "[Meta Platforms: Focusing on AI empowerment, not just commercialization (2Q23 earnings conference call summary)](https://longportapp.com/zh-CN/topics/8541139?invite-code=)"

July 27, 2023 Earnings Review: "[TikTok's decline, Meta Platforms' complete rebirth](https://longportapp.com/zh-CN/topics/8524232?invite-code=)"

April 27, 2023 Conference Call: "[A year of efficiency with good execution, Reels showing its strength (Meta Platforms 1Q23 conference call summary)](https://longportapp.com/zh-CN/topics/5532844?invite-code=)"2023 年 4 月 27 日财报点评《Meta Platforms：渡劫完毕，满血复活》

On April 27, 2023, the earnings report review "Meta Platforms: Rebirth after the tribulation" was published.

2023 年 2 月 2 日电话会《小扎已学 “乖”，满嘴不离 “效率”（Meta Platforms 2022 年第四季度业绩电话会纪要）》

On February 2, 2023, the conference call "Zuckerberg has learned to be "obedient" and never stops talking about "efficiency" (Meta Platforms 4Q22 earnings conference call summary)" was held.

2023 年 2 月 2 日财报点评《利好叠加，Meta Platforms 华丽转身？》

On February 2, 2023, the earnings report review "Multiple positive factors, Meta Platforms' magnificent turnaround?" was published.

2022 年 10 月 27 日电话会《小扎仍坚持押注元宇宙，面对质疑（Meta Platforms 2022 年第三季度电话会纪要）》

On October 27, 2022, the conference call "Zuckerberg still insists on betting on the metaverse despite doubts (Meta Platforms 3Q22 earnings conference call summary)" was held.

2022 年 10 月 27 日财报点评《头铁的 Meta Platforms，失血惨烈下依旧豪赌 “元宇宙”》

On October 27, 2022, the earnings report review "Resolute Meta Platforms, still gambling on the metaverse despite severe losses" was published.

2022 年 7 月 28 日电话会《宏观、苹果 ATT、竞争多个逆风，管理层的短期展望很保守（Meta Platforms 电话会）》

On July 28, 2022, the conference call "Macroeconomics, Apple ATT, multiple headwinds from competition, management's short-term outlook is conservative (Meta Platforms conference call)" was held.

2022 年 7 月 28 日财报点评《Meta Platforms 颓态难掩，缺乏 “Google 式” 的预期反转》

On July 28, 2022, the earnings report review "Meta Platforms' decline is hard to conceal, lacking the expected turnaround like Google" was published.Telephone meeting on April 28, 2022: "[No rush to commercialize Reels to cope with competition (Meta Platforms Platforms Platforms Platforms telephone meeting summary)](https://longbridgeapp.com/topics/2445846)"

Financial report review on April 28, 2022: "[Is the surge a change of faith? Meta Platforms Platforms Platforms Platforms turning point has not yet arrived](https://longbridgeapp.com/topics/2442693)"

Telephone meeting on February 3, 2022: "[Can we expect Reels to activate Meta Platforms Platforms Platforms Platforms user growth like Stories did three years ago? (Telephone meeting summary)](https://longbridgeapp.com/topics/1891697)"

Financial report review on February 3, 2022: "[More thunderbolts, Facebook becomes the 'god of decline' after renaming to Meta Platforms Platforms Platforms Platforms](https://longbridgeapp.com/news/55050905)"

**In-depth**

December 8, 2023: "[The 'love-hate relationship' between Meta Platforms Platforms Platforms Platforms and Chinese concept stocks going global: TikTok challenges, Temu delivers treasures](https://longportapp.cn/zh-CN/topics/10557238?app_id=longbridge)"

June 27, 2023: "[TikTok stumbles, Meta Platforms Platforms Platforms Platforms feasts](https://longportapp.com/zh-CN/topics/7633919?invite-code=032064)"

February 21, 2023: "[US stock market advertising: After TikTok, will ChatGPT start a new 'revolution'?](https://longportapp.com/en/topics/4284858?invite-code=)"

July 1, 2022: "\[TikTok wants to teach the 'big brothers' how to do things, Google and Meta Platforms Platforms Platforms Platforms are about to change\](https://longbridgeapp.com/topics/3016272?"On February 17, 2022, "Internet Advertising Overview - Meta Platforms: Low Combat Power is the Original Sin" was published. [Link](https://longbridgeapp.com/topics/1924950)

On September 24, 2021, "Apple Draws Its Sword, and the First Giant to "Draw Blood" is Facebook?" was published. [Link](https://longbridgeapp.com/topics/1165524?invite-code=032064)

On August 6, 2021, "Facebook: Digging Deep into the "Business Value" of the World's Number One Internet User Harvester" was published. [Link](https://longbridgeapp.com/topics/1012966?invite-code=032064)

On November 23, 2021, "Facebook: Turning Around with Heavy Investment - "Meta Platforms Platforms Platforms Platforms", the Turning Point is Not Far Away After Double Pressure" was published. [Link](https://longbridgeapp.com/topics/1360670?invite-code=032064)

**Risk Disclosure and Statement of this Article:** [Dolphin Research Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
