After the market closed on Wednesday, Meta Platforms (META) released first quarter earnings that far above expectations. The business also increased its prediction for the current quarter while lowering its expense forecast.
In after-hours trading, shares of the parent company of Facebook and Instagram rose as much as 11%, reaching their highest level since January 2022. In a press release, Meta—which has dubbed 2023 as its “Year of Efficiency”—stated that it has “substantially completed” its 2022 layoffs, though it will still make cuts this year.
Adding to the company’s prior layoff announcement from November, Meta said this month that it will fire 10,000 employees.The following figures from Meta’s profits are crucial when compared to Bloomberg’s compilation of analysts’ estimates:
Actual revenue was $28.65 billion compared to the projection of $27.67 billion.
Actual EPS of $2.20 compared to $2.01 estimate
Actual advertising revenue was $28.1 billion compared to the projected $26.76 billion.
Revenue from the Family of Apps: $28.3 billion actual vs. $26.88 billion anticipated
Actual operating losses at Reality Labs were $3.99 billion compared to an expectation of $3.8 billion.
Q2 revenue: $29.5-$32 billion in actual versus $29.48 billion in forecast
CEO of Meta Mark Zuckerberg said in a statement, “We had a good quarter and our community continues to grow.
“Our AI effort is producing positive benefits for our business and apps. In order to produce better products faster and strengthen our ability to realize our long-term vision, we are also becoming more efficient.
In addition, the downturn in digital advertising that alarmed Meta in previous reporting cycles appears to be coming to an end.
The increase in ad impressions in Meta’s “Family of Apps,” which includes Facebook, Instagram, and WhatsApp, helped the business outperform expectations for ad revenue.
Cost reduction
If cost-cutting in Big Tech is the theme of this earnings cycle, Meta may be the business that has been the most brutal.
The company provided guidance in October for 2023 expenses to range from $96 billion to $101 billion. According to the company’s statement in the release on Wednesday, expenses for this year would total between $86 billion and $90 billion, including costs associated with restructuring.
This also explains Reality Labs, the company’s metaverse business, which is likely to continue seeing year over year growth in losses. 2022 saw Reality Labs post a $13.7 billion loss.
The company’s stated workforce at the end of the first quarter was 77,114, down 1% from the previous year.”Almost all employees impacted by the layoffs announced in November 2022 are no longer reflected in our reported headcount as of March 31, 2023,” Meta stated in its release. The workers who will be affected by the layoffs in 2023 are also counted in our stated headcount as of March 31, 2023.
Like Alphabet (GOOG, GOOGL) and Microsoft (MSFT), Meta is doing buybacks despite layoffs. As of March 31, Meta has the right to repurchase $41.73 billion of its own stock. The business bought back $9.22 billion of its shares in the first quarter of 2023.
