Meta put out an ambitious roadmap to Muse monetization after strong quarter
Meta Platforms on Wednesday evening delivered a strong, albeit somewhat noisy, quarter in its first reporting period since the release of its viral Muse AI agent. Investors liked what they saw. Revenue in the third quarter rose 26% year over year to $64.6 billion, more than $1 billion ahead of the analyst consensus estimate of $63.37 billion compiled by LSEG. Earnings per share (EPS) is where things got a bit complicated. Diluted EPS was $3.83. Excluding a $9.89 billion, or $3.57 per share, legal settlement charge to resolve teen addiction litigation with state attorneys general, diluted EPS would have been $7.40. We are not comparing earnings to the consensus estimate. The wide range of EPS estimates from $2.61 to $7.57 would seem to indicate that some analysts included the settlement charge in their calculations while others may have excluded it. META YTD mountain Meta Platforms YTD Judging by how Wall Street reacted, the noisy EPS number did not deter buyers. A strong guide and tame capital expenditure forecast certainly helped. Club stock Meta rose 2% in after-hours trading. Shares, which soared since Muse was launched on Sept. 8, closed at a 52-week high of nearly $780 on Sept. 24. We trimmed some Meta two days before that — just under $750 — because of the swift rally. While currently off those highs, Meta is still way up from pre-Muse levels. Bottom line It should come as no surprise that the focus of the earnings conference call was Muse — and from what we heard, the product is off to a great start and has an exciting runaway towards monetization ahead. CEO Mark Zuckerberg said, “In just a month and a half, more than 10 million people in the U.S. and Canada have set up Muse personal agents.” That’s great, but as we said previously, it’s not about the high-water mark for downloads. It’s about how many people use it. So, we were pleased to hear that Muse didn’t only see strong download trends but is also realizing relatively solid retention rates. Of those who set up Muse, Zuckberg said that about 25% use it on any given day. “For our earliest adopters, the longer that they use Muse, the better that retention seems to get. To put this in perspective, this is more than twice the level that Threads started at, or where we believe that other AI apps started at.” He added that the primary use case thus far has been shopping, with over 25% of Muse users engaging in agent-led shopping endeavors. In fact, the trend has been so strong that Zuckerberg said, “Plaid told us that they hadn’t seen activity like they’re seeing with their connector on any other service before, and in the first week we had to work with Stripe to raise credit limits since the volumes were above what any of us expected.” Plaid and Stripe are fintechs that facilitate online payments. While a strong Muse start is great, Meta now has a lot of work to do if it wants to fully capitalize on the viral nature of the launch, such as scaling up the product to serve billions…
Read More: Meta put out an ambitious roadmap to Muse monetization after strong quarter