Meta Platforms (NASDAQ:META) is gearing up to announce its fourth-quarter 2023 results on February 1, with expectations centered around the positive impact of increased advertising revenues.

In the realm of ad dollars, Meta Platforms faces stiff competition from its closest rival, Alphabet (NASDAQ:GOOGL), which recently reported robust results for the fourth quarter of 2023.

Google advertising, a division of Alphabet, disclosed revenues of $65.52 billion, marking an 11% year-over-year increase in the fourth quarter of 2023. This growth was propelled by a strong performance in the retail vertical.

Meta Platforms is anticipated to have reaped the rewards of heightened demand from advertisers. The Consensus Estimate for its fourth-quarter advertising revenues stands at $37.88 billion, reflecting a substantial 21.2% year-over-year growth.

In the third quarter of 2023, advertising revenues, constituting 99.1% of Family of Apps revenues, witnessed a robust 23.5% year-over-year surge, reaching $33.64 billion and accounting for 98.5% of overall revenues.

The company’s strategic focus on enhancing ad ranking and measurement through AI has served as a pivotal factor in driving advertisers’ return on investment.

The Consensus Estimate for advertising revenues in the Asia-Pacific region is projected at $7.22 billion, indicating a 21% growth in the fourth quarter of 2023.

For Europe, the United States, Canada, and the Rest of the World, the consensus figures for advertising revenues are $8.82 billion, $17.51 billion, and $680 million, signifying growth rates of 27.8%, 16.7%, and 5.8%, respectively.

Reels as a Growth Driver

Meta Platforms is expected to benefit from the rising popularity of Instagram, particularly in international markets like Asia. This surge can be attributed in part to the increasing prominence of short-form videos, specifically Reels on Instagram.

Reels, with its emphasis on short-form videos, has succeeded in attracting the Gen-Z demographic to the platform, despite competition from other platforms like Snapchat, Twitter, and TikTok. AI has played a crucial role in enhancing recommendations, contributing to a more than 40% increase in time spent on Instagram.

The growth of Threads has been notable for Meta Platforms, as it concentrates on retaining users, which is likely to translate into positive user growth.

The company has strategically expanded video monetization, particularly in short-form videos like Reels, leveraging AI and machine learning to boost revenues.

Meta Platforms has also demonstrated its commitment to prioritizing user safety and well-being through initiatives aimed at enhancing parental supervision, messaging privacy, and time management on its platforms. These initiatives are expected to drive user base growth in the fourth quarter of 2023.

Estimates and Outlook

The Consensus Estimate for fourth-quarter earnings is set at $4.83 per share, reflecting a 1.04% increase over the past 30 days and suggesting a substantial 61% year-over-year growth.

For the fourth quarter of 2023, the company anticipates total revenues in the range of $36.5 billion to $40 billion. Favorable forex conditions are expected to contribute to approximately 2% year-over-year growth in top-line figures.

The consensus estimate for fourth-quarter revenues currently stands at $38.99 billion, indicating a robust 21.23% increase from the figure reported in the same quarter of the previous year.

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