For the past 8 quarters (2023 & 2024), incremental gross profit margin is well above 80%, more like 90%.
This is easy to understand, e.g. one more successful ads sale (click etc.) on Instagram won’t cost Meta more.
What’s even more amazing is the incremental operating profit conversion, which on average is like 100% for the past 6 quarters!
What does 100% mean? It means one dollar of additional gross profit earned by Meta was converted into one dollar of operating profit – how amazing is that!
The operating profit margin increased from 20% in 2022 Q4 to 48% in 2024 Q4, growing at 91% CAGR.
Although there were some one-off opex optimization efforts, thus incremental operating margin should definitely fall, it’s still a very very powerful business franchise, demonstrated by this amazing incremental earnings power.