It’s no secret that the tech industry is struggling, facing a string of layoffs while companies try to shed some financial weight amid challenging macroeconomic conditions. However, Meta reported better-than-expected numbers on Wednesday, which could signal that things may start turning around for the company.
Despite weaker revenue compared to last year, Meta’s $32.17 billion was more than analysts expected for the quarter. Weaker ad spending has been one of the major factors affecting companies like Mate, Snap, and even Alphabet over the past year, but it seems things are beginning to level off. The company’s outlook for Q1 earnings is also squarely within analyst expectations, which is a fairly good sign for the company after some troubling quarters in 2022.
“Tech investors are relieved to see that the slowdown across Meta’s key ad business was not as bad as feared,” notes Jesse Cohen, senior analyst at Investing.com. “Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending.”
“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta CEO Mark Zuckerberg said in a statement. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
Meta announced in November 2022 that it was laying off roughly 11,000 employees in an attempt to make the company operate more efficiently. During Wednesday’s earnings call, Zuckerberg doubled down on the decision, saying that a more efficient Meta should make it a better place to work.
“I do think things like reducing layers of management should make it so information flows better through the company, and so you can make faster decisions. And I think, ultimately, that’ll help us not only make better, better products, but I think it’ll help us attract and retain the best people who want to work in a faster-moving environment.”
Reality Labs also came under question, as its a division that has continued to lose money for Meta despite its increased investment in AR/VR and the Metaverse. During Q4, Reality Labs widened its losses to nearly $5 billion, with its total losses for the year reaching over $13 billion. Last year, Zuckerberg was adamant in his decision to continue investing in the business.
“On Reality Labs, we still expect our full-year Reality Labs losses to increase in 2023,” said Susan Li, Meta’s CFO. “And we’re going to continue to invest meaningfully in this area given the significant long-term opportunities that we see.”
Regarding VR, Meta recently came out on top after seemingly winning approval from a court to purchase Within, the company behind Supernatural.