Meta, the parent company of Facebook and Instagram, has reported a profit of $5.7bn (£4.6bn) for the first quarter of this year, surpassing expectations for a period in which many jobs were cut at the big tech company.
Recall that the company laid off 11,000 employees last year, citing the need for the company to become efficient again. Meta’s chief, Mark Zuckerberg, dazzled Wall Street with an earnings report that showed progress towards the “year of efficiency” and a return to growth, thanks to AI-powered content recommendations.
It said artificial intelligence (AI) was “driving good results” across its business.
“Our community continues to grow,” said chief executive Mark Zuckerberg. “We’re also becoming more efficient so we can build better products faster, and put ourselves in a stronger position to deliver our long-term vision,” he added.
In its latest figures, the company’s revenue stood at $28.6bn, while the number of people on Facebook every month rose to just under three billion. Meta’s shares rose 11% on Thursday.
If premarket gains hold, the company’s valuation will increase by over $60 billion. In the first quarter, Meta outperformed forecasts for profit and revenue, which increased for the first time in almost a year. This is the latest indication that American IT giants are emerging from a downturn that has resulted in tens of thousands of job losses.
Did Meta’s layoffs pay off?
In November last year, Meta made a historic layoff of about 13% of its workforce, the largest layoff in the company’s history. The aim was to turn 2023 into “a year of efficiency,” said Mr Zuckerberg.
We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.Meta CEO, Mark Zuckerberg
Since then, the corporation has been one of the most aggressive US big tech companies in downsizing, eliminating more than 20,000 employees, or over a quarter of its overall workforce, in months.
Analysts and industry experts have begun expressing confidence and high praise for the CEO, who has brought the company out of the slump it was headed with his bold and daring cost-cutting strategy.
Ben Barringer, from investment management firm Quilter Cheviot, said: “You have to take your hat off to Mark Zuckerberg and Meta given the business transformation over the last six months.
“The ‘year of efficiency’ Zuckerberg likes to talk about is bearing fruit. These results are a strong beat on the expectations and, given the improving macro backdrop, Meta should continue to recover well.”
“The year of efficiency is off to a stronger-than-expected start for Meta,” said Insider Intelligence principal analyst Debra Aho Williamson.
“In this economic environment – and after the disaster that was 2022 – 3% year-over-year revenue growth is an accomplishment,” she added.
Meta’s AI drive
One of the key factors driving the company’s impressive earnings is its use of AI in various aspects of its business. Meta’s AI-powered algorithms are used to personalize users’ newsfeeds, show them targeted ads and even moderate content on the platform.
While offering a few details, he said it was “exploring chat experiences in WhatsApp and Messenger, visual creation tools for posts in Facebook and Instagram and ads, and over time video and multimodal experiences as well.”
The company’s investment in AI has also led to new features like automatic translations and voice recognition, further improving the user experience. The company also intends to commercialise its privately-run generative AI, joining Google in finding practical applications for the tech – because the industry is awash with the hype around its capabilities.
Meta established Facebook’s AI Research laboratory in 2013 but has not made big inroads in this area yet, as some other big tech firms – such as Microsoft – have done.
But Mr Zuckerberg insisted Meta was “no longer behind in building our AI infrastructure” and said generative AI Meta products, which can instantly create sentences and graphics, would be released in the coming months.
The outcomes also highlighted the growing significance of AI, according to CEO Mark Zuckerberg, who claimed the technology was assisting in increasing traffic to Facebook and Instagram and ad revenue.
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