Meta, the parent company of Facebook, reported stronger-than-expected quarterly earnings on Wednesday, fueled by a recovering digital advertising sector.
The company announced a profit of $7.8 billion, equivalent to approximately Rs. 63,949 crore, on revenues totaling $32 billion, roughly Rs. 2,62,358 crore, for the most recent quarter. Facebook’s monthly active users increased to 3.03 billion during this period.
“We had a good quarter,” said CEO Mark Zuckerberg during an earnings call. “We continue to see strong engagement across our apps, and we have the most exciting roadmap I’ve seen in a while…”
Last year, Meta faced significant challenges due to a deteriorating economic environment that led advertisers to reduce spending, alongside Apple’s data privacy changes that allowed users to opt out of targeted advertising, which is central to Meta’s revenue model.
This year, however, Meta has joined other major U.S. tech firms in experiencing notable stock price increases, which Zuckerberg described in January as the start of a “year of efficiency.”
“With two consecutive quarters of positive revenue growth and the first instance of double-digit revenue growth since late 2021, Meta’s year of efficiency is off to a promising start,” commented Debra Aho Williamson, an analyst at Insider Intelligence. “There’s a lot to feel good about when it comes to Meta right now.”
Following the earnings release, Meta’s shares climbed more than seven percent, reaching $320.32 (around Rs. 26,262) in after-hours trading.
The company highlighted a 34 percent increase in the number of ads across its platforms year-over-year during the second quarter, indicating a resurgence in advertiser interest, particularly in Reels—the short video format that resembles TikTok.
“We are seeing good progress in monetizing Reels,” Zuckerberg stated, noting the video clips are viewed over 200 billion times each day across Facebook and Instagram.
Cost-Cutting Measures
Meta has been implementing rigorous cost-cutting measures, leading to significant layoffs totaling thousands since last November. The company reported having 71,469 employees at the end of June, reflecting a 14 percent decrease compared to the same period last year.
Zuckerberg acknowledged the slow adoption of metaverse technologies as a “somewhat sobering signal,” yet he remains optimistic about its potential as a future computing platform.
According to the earnings report, Meta expects operating losses from its VR division to “increase meaningfully” in the forthcoming year. The company has also capitalized on the disarray at Twitter, recently rebranded as X.
Earlier this month, Meta launched Threads, a text-based app that quickly garnered over 100 million downloads, although its long-term user retention is still uncertain.
“We saw unprecedented growth out of the gate, and importantly, we’re observing more returning users than I expected,” Zuckerberg remarked regarding Threads. “Our focus now is on retention and honing the fundamentals; I’m very satisfied with our trajectory.”
On the topic of artificial intelligence, Zuckerberg is adopting a different approach than Microsoft, which has partnered with OpenAI. Meta is advocating for a more “open source” model by making its Llama generative AI technology accessible to researchers and companies for customization.
Investors are eager to understand how Meta plans to integrate generative AI into its products, as indicated by questions during the earnings call. Zuckerberg mentioned that the company is developing an AI platform designed to enhance collaboration between creators and advertisers.
