Facebook parent Meta saw a jump in daily users in the last three months of 2022 and reported revenue that beat Wall Street’s expectations.
The social media giant’s better-than-expected ad sales could mean that some of Meta’s toughest times could be behind the company as it doubles down on the metaverse and AI.
Meta reported fourth-quarter revenue of $32.2 billion, above estimates of $31.5 billion, data from Refinitiv shows. The company reported fourth-quarter earnings of $1.76 per share but Meta noted the figure included charges related to layoffs and other moves to cut costs. Nearly 3 billion people used one of Meta’s apps daily including Instagram, Facebook and WhatsApp, a 4% increase compared with the same period last year.
Meta’s stock jumped nearly 18%, to $180.60 per share, in after-hours trading.
Like other businesses, Meta has been trying to slash costs because it hasn’t been making as much money as expected from ad sales. The social network cut 11,000 workers, representing about 13% of its workforce, in November and has frozen hiring through the first three months of 2023. Meta also downsized office space and reduced perks. The company saw its first-ever revenue drop in July 2022.
Meta CEO Mark Zuckerberg said 2022 was a “challenging year” but that the company made progress on its priorities and laid the groundwork to deliver better results this year.
“As part of this, we’re going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial,” Zuckerberg said in a call with analysts. “But my main focus is on increasing the efficiency of how we execute our top priorities.”
Zuckerberg said in a November blog post that the company started to hire more during the pandemic as people spent more time shopping online and using social media. But this bump in online activity didn’t last, and the company also faced other challenges, such as an economic downturn and increased competition from short-form video app TikTok. In addition, Apple made privacy changes that made it tougher for advertisers to track data about potential customers. All these challenges led to Meta’s decision to lay off workers, Zuckerberg said.
Meanwhile, Meta has been trying to invest more in the metaverse, virtual spaces where people can work, play and socialize. The company introduced a new $1,500 VR headset in October.
It’s also been doubling down on the use of AI to recommend videos or posts that users could be interested in on Facebook and its photo service Instagram. Zuckerberg said Facebook uses AI to recommend content for users and in its ad businesses. With the rise in popularity of AI programs such as ChatGPT that generate texts, he said one of the company’s goals is to be a “leader in generative AI.” AI could help enable more tools, including for creators, he said.
“I do expect that the space will move quickly,” Zuckerberg said. “I think we’ll learn a lot about what works and what doesn’t.”
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