Meta India's net profit jumps 43% to Rs 505 crore in FY24; Gross ad revenue up 24%

Meta's revenue from operations grew by 9.3 percent YoY to Rs 3,034.8 crore in FY24, from Rs 2,775.7 crore in FY23

Facebook parent Meta's India unit saw its net profit increase by 43 percent year-on-year (YoY) to Rs 504.93 crore for the financial year ended March 2024 (FY24), as the social networking giant benefited from strong growth in online advertising, fueled by rising digital adoption in the country.

The company's revenue from operations grew by 9.3 percent YoY to Rs 3,034.8 crore in FY24, from Rs 2,775.7 crore in FY23, as per the company's latest filing with the Registrar of Companies, shared by business intelligence platform Tofler.

The gross advertising revenue saw a 24 percent increase YoY to Rs 22,730.7 crore for the year, from Rs 18,308 crore in FY23. The FY23 revenue however includes Rs 6,120 crore from gross advertising reseller revenue until July 2022, when the firm terminated the reseller agreement with the parent company Meta Platforms Inc (Meta USA).

Meta's India unit generates advertising revenues by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. It reports revenue from impression-based ads when ads are displayed to users, and from action-based ads when users take the action the marketers contracted for.

Read: Meta India head Sandhya Devanathan on why India is a key market for WhatsApp Business, AI initiatives

In August 2022, Meta India switched from being a reseller of ad inventory to an operating licence model with Meta USA, granting the company a non-exclusive license to commercialise the intellectual property (IP) related to advertising sales activities in India.

Under the new arrangement, Meta India makes royalty payments to Meta USA for the commercialization of its IP, along with infrastructure charges for maintenance of infrastructure. The company recognises revenue after deducting direct sales cost such as royalty, and infrastructure among others.

Under this model, Meta India's net advertising revenue rose 48.9 percent to Rs 1,817.5 crore in FY24, from Rs 1,220.5 crore in FY23. This is despite a significant increase in royalty payments and infrastructure charges during the year.

Royalty payments increased by 95.1 percent to Rs 17,887 crore in FY24, from Rs 9,167.1 crore in FY23. Infrastructure costs increased by 89 percent to Rs 2,922.2 crore for the year, from Rs 1,543.5 crore in FY23.

Meta's India unit also generates revenues by providing IT enabled business process outsourcing services and design support services to Meta USA.

Income from providing IT-enabled business process outsourcing services was Rs 1,135.4 crore in FY24, compared to Rs 1,251.1 crore in FY23. However, the FY23 revenues included Rs 139.3 crore income from marketing support services. The firm terminated the marketing support services agreement with Meta USA on July 31, 2022.

Revenue from providing design support services was at Rs 81.9 crore in FY24. The company entered into a Design Support Service Agreement with Meta USA in October 2023.

Total expenses rose by 2 percent to Rs 2,349.6 crore for FY24, from Rs 2,294.3 crore in FY23. This includes employee benefit expenses that increased by 7.8 percent to Rs 476.2 crore in FY24 from Rs 441.6 crore in FY23.

India is the largest market for Meta's family of apps, which includes Facebook, Instagram, and WhatsApp, with a combined user base of over a billion monthly users. It is also a crucial region for the company's artificial intelligence efforts.

Business messaging is a big growth driver for Meta in India, with revenues from Click-to-WhatsApp ads doubling in the country in the past year, Meta India head Sandhya Devanathan told Moneycontrol in an interview in September. She mentioned that India is one of the key priority markets for business messaging globally for the social networking giant.

Devanathan also noted that ad spend as a percentage of India's GDP is still low "With GDP and digital growth, penetration will rise, so the size of the pie on the ad side will keep increasing. Therefore, we remain optimistic about both the ad side and the messaging side" she said.