Meta India's FY24 Profit Surges 43% In FY24, Revenue Grows 9%; Digital Ad Revenue Jumps; Check

Meta, the parent company of Facebook, Instagram, and WhatsApp, saw its Indian operations record a notable financial boost for FY24, with a 43% year-on-year (YoY) increase in net profit to Rs 504.93 crore.

Meta India's revenue from operations rose by 9.3% in FY24, reaching Rs 3,034.8 crore, up from Rs 2,775.7 crore in FY23. Gross advertising revenue registered a substantial 24% jump, amounting to Rs 22,730.7 crore, compared to Rs 18,308 crore in FY23. However, FY23 revenue figures include Rs 6,120 crore from a reseller agreement with Meta's parent company, Meta Platforms Inc., which concluded in July 2022.

Under this previous reseller arrangement, Meta India served as an intermediary for ad sales in the country. In August 2022, Meta India transitioned from this model to an operating license model, allowing it to directly commercialize ad sales with a non-exclusive license from Meta USA. This shift was marked by an emphasis on royalty payments and infrastructure charges rather than a simple reseller structure.

Advertising Revenues

Advertising continues to be the backbone of Meta India's revenue, with its net advertising revenue for FY24 rising by 48.9% to Rs 1,817.5 crore, up from Rs 1,220.5 crore in FY23. This growth has been driven by Meta's presence across Facebook, Instagram, Messenger, and affiliated third-party sites and mobile applications, where ads are displayed to users. Advertising revenue is categorized into impression-based ads, which generate revenue when users view an ad, and action-based ads.

This shift to an operating license model brought with it increased royalty obligations and infrastructure costs. Royalty payments surged by 95.1% YoY to Rs 17,887 crore, while infrastructure costs increased by 89% to Rs 2,922.2 crore. Despite these higher costs, the switch to the new model contributed to a significant rise in net advertising revenue.

Expanding Role of IT

Beyond advertising, Meta India's revenue also comes from its IT-enabled business process outsourcing (BPO) services and design support services provided to Meta USA. Income from IT-enabled BPO services, which includes business support functions, totalled Rs 1,135.4 crore in FY24, down slightly from Rs 1,251.1 crore in FY23. This decrease is partly due to the termination of a marketing support services agreement with Meta USA in July 2022, which accounted for Rs 139.3 crore of FY23 income.

A new avenue of revenue came from design support services, with Rs 81.9 crore generated in FY24. This stems from a Design Support Service Agreement established with Meta USA in October 2023.

Operational Expenses

Meta India's total expenses increased modestly by 2% to Rs 2,349.6 crore in FY24, up from Rs 2,294.3 crore in FY23. Employee benefits saw a sharper rise, climbing by 7.8% to Rs 476.2 crore, as the company invests in talent to support its expanding footprint in India.

India, home to over a billion users across Meta's apps, is not only the largest market by user base but also a crucial region for Meta's AI ambitions and advertising strategy. The company's head for India, Sandhya Devanathan, highlighted the potential for growth in both ad spending and business messaging in the country. She noted that India's ad spend as a percentage of GDP remains relatively low, suggesting ample room for growth as the economy expands and digital penetration increases. "With GDP and digital growth, penetration will rise, so the size of the pie on the ad side will keep increasing," Devanathan remarked in a recent interview.

Business Messaging

One of the key areas of expansion for Meta in India is business messaging, particularly through Click-to-WhatsApp ads, which allow businesses to reach customers directly on WhatsApp. According to Devanathan, Click-to-WhatsApp ad revenues in India doubled over the past year. India's small businesses, in particular, are embracing WhatsApp for business communications, transforming the app into a powerful tool for customer acquisition and engagement.

Meta has recognized India as one of its priority markets for business messaging globally, with Click-to-WhatsApp ads proving to be a key revenue stream in the region. This aligns with the growing preference among Indian users for mobile-first communication solutions.