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Meta India, the local unit of global social media giant Meta Platforms, has posted a 24% growth in gross advertising revenue for the fiscal year ended March, as per the company’s filings with the Registrar of Companies (RoC).
In India, the company still operates under the name Facebook India Online Services. In FY24, it saw its gross advertising revenue touch Rs 22,730 crore compared with Rs 18,308 crore in the previous year.
Meta India had recorded 13% growth in gross advertising revenue for the fiscal year ended March 31, 2023. The FY23 gross advertising revenue included Rs 6,120 crore from gross advertising reseller revenue, as the reseller model was in effect for a few months of that year.
Meta, which operates platforms such as Facebook, Instagram and WhatsApp, has seen strong monetisation from both major advertisers and small and medium-sized businesses (SMBs).
Earlier, media agency GroupM had projected that digital advertising revenue would grow by 13% in 2024, reaching Rs 88,502 crore.
Meta India declined to comment.In August 2022, Meta India transitioned from a reseller to an operating licence model, granting the company a non-exclusive licence to commercialise intellectual property (IP) related to advertising sales activities in India.Under this new arrangement, the company compensates Meta Platforms with royalty payments for commercialising its IP, along with infrastructure charges for maintaining infrastructure.
The shift to the operating licence model saw Meta India pay higher royalty to Meta Platforms, which rose by 95% to Rs 17,887 crore in FY24. It also paid Rs 5,666 crore to Meta Platforms for the cost of advertising inventory. Infrastructure costs increased by 89% to Rs 2,922 crore.
Despite increased royalty and infrastructure expenses, Meta India’s net advertising revenue, excluding the royalty paid to Meta Platforms, jumped by 49% year-on-year to Rs 1,817 crore in FY24.
Meta India’s operating revenue grew by 9.3% to Rs 3,034 crore, although other income declined by 26% to Rs 29 crore. Total expenses rose by 2% to Rs 2,349 crore, including an employee benefit expense of Rs 476 crore, marking an 8% year-on-year increase.
The company’s net profit surged by 43% to Rs 505 crore despite tax expenses rising by 25% to Rs 209 crore.
Facebook India did not incur any equalisation levy in FY24 due to the shift in its revenue model from a reseller to an operating licence model. Instead, it paid TDS on the royalty and infrastructure charges.
Prior to August 2022, Facebook India had paid a 6% equalisation levy on advertising inventory costs. The levy, introduced in 2016, applies to digital firms earning revenue from Indian users. It initially targeted online advertising before expanding to e-commerce services in 2020.
Meta India operates in the business of selling advertising inventory to customers in India and providing IT-enabled support and design support services to Meta Platforms.
From 1 October 2023, the company entered into a design support service agreement with Meta USA. The service fee charged is based on the level of expenses incurred by the company in performing the services, plus an agreed profit margin.
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