(San Francisco) Meta’s (Facebook, Instagram, WhatsApp) efforts to downsize and refocus on its core business – selling social media advertising – paid off in the first quarter with better-than-expected results, which reassured the market.
The Californian group generated $5.7 billion in net profit from January to March (-24% year on year), for a turnover of $28.65 billion, up 3% after three consecutive quarters down, according to its earnings release released on Wednesday.
Its title took about 11% during electronic trading after the closing of the New York Stock Exchange.
“Meta had a better than expected start to the year. In this economic context, and after the disaster of 2022, 3% revenue growth over one year is an achievement,” reacted Debra Aho Williamson, analyst at Insider Intelligence. “And their strong guidance for the current quarter shows that the company may be truly on the mend.”
In 2022, the social media giant experienced two firsts since its IPO in 2012: its advertising revenue declined and Facebook lost users (before regaining them).
Meta’s revenues are suffering from shrinking advertiser budgets due to inflation, competition from TikTok and regulatory changes from Apple, which are limiting its ability to harvest user data to sell highly targeted ads.
AI, AI, AI
“Meta can’t afford to rest. The group must finish rebuilding advertising targeting after the debacle caused by Apple, convince advertisers to abandon TikTok and retain influencers, ”commented Debra Aho Williamson.
The analyst also referred to increased competition from Amazon and other online retail sites that attract advertisers by allowing them to “communicate with consumers where they shop”.
According to its research firm, Meta will hold 20% of the global digital advertising market in 2023, its smallest slice of the pie since 2018.
Spurred on by the immense popularity of TikTok, the American group has changed the way its platforms work to copy the application, from its short and entertaining videos with “Reels” to its powerful content recommendation algorithms.
“Now, 20% of what artificial intelligence (AI) recommends to you on Facebook and Instagram comes from accounts you don’t follow,” said boss Mark Zuckerberg during a conference call with analysts.
“Since we launched Reels, AI recommendations have led to a 24% increase in time spent on Instagram,” he added, assuring that these videos are also bringing in more revenue than before.
The manager also expressed his enthusiasm for generative AI (capable of creating content on request in everyday language), the current darling of tech.
These new systems will enable “tens of millions of small businesses to have AI agents responding to customers on their behalf. […] All of our products and services will be affected,” he said.
Dismissals and recruitments
Like its neighbors in Silicon Vallet, Meta is therefore investing consistently in AI, despite massive layoffs.
In February, Mark Zuckerberg placed 2023 under the sign of “efficiency”. The company which had so far never launched a social plan in 20 years of existence dismissed 11,000 people in November (13% of the workforce) and 10,000 in March.
A third wave is due to take place in May, but “then we will resume recruitment”, indicated Susan Li, the group’s financial director, in particular for the teams in charge of “generative AI, advertising, infrastructure and of the Reality Labs branch,” which designs products and services for the metaverse.
Mark Zuckerberg confirmed that this parallel universe remains a priority for his company, as enthusiasm died down in 2022. He spoke of a new virtual and augmented reality device for this year, “at a price that many people can afford”. .
Reality Labs lost nearly $4 billion in the first quarter, following net losses of $13.7 billion in 2022.
The Facebook and Instagram networks are seeking to diversify their sources of income with “Meta Verified”, a subscription starting at $12 per month, launched in March to authenticate your account on these platforms and benefit from other privileges.