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Meta’s Q1 2023 performance underscores its commitment to cutting costs and maximizing earnings in its “year of efficiency.”
Meta Platforms (META: NASDAQ) recently reported its Q1 2023 earnings, showing an unexpected revenue increase for the first time in four quarters. The tech giant’s shares jumped 12% following the report, which turned out better than expected.
For the first quarter of the year, Meta raked in revenue of $28.65 billion versus the $27.65 expected by analysts. The California-based social media company also realized earnings per share (EPS) of $2.20 for the same period compared to the consensus estimate of $2.03.
For Q1 2023, Meta experienced a 3% rise year-over-year (YoY) in sales after sustaining three consecutive quarters of revenue decline. The company saw its daily active users (DAUs) swell to 2.04 billion compared to 2.01 billion expected. Meanwhile, monthly active user (MAU) numbers came in on par with estimates at 2.99 billion, while Q1 average revenue per user (ARPU) was $9.62. Wall Street analysts had expected an ARPU of $9.30 for the same period.
Before the earnings report, Meta’s shares were up 74% this year after declining by two-thirds in 2022. The company’s stock passed $234 on Wednesday, following its earnings report, with shares up 164% from November 2022 lows of $89.
As of press time, META was changing hands at $209.40.
Meta Execs Comment on Q1 2023 Outing
Meta co-founder and chief executive officer Mark Zuckerberg commented on the company’s latest quarterly outing, saying:
“We had a good quarter, and our community continues to grow. Our AI work is driving good results across our apps and business. 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.”
In light of its commendable Q1 performance, Meta’s Q2 forecast also exceeded expectations. The social media company’s chief financial officer Susan Li said it expects revenue of between $29.5 billion and $32 billion. Meanwhile, analysts had expected no more than $29.5 billion for Q2 2023.
Li added that Meta’s Q2 guidance assumes foreign currency headwinds will be lower than 1% to YoY total revenue growth based on current exchange rates. The CFO also said:
“We anticipate our full-year 2023 total expenses will range between $86 and 90 billion, updated from our prior outlook provided in March. This outlook includes $3-5 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs.”
However, she pointed out that Reality Labs’ operating losses would increase YoY this year. The unit, which is developing virtual reality (VR) and augmented reality (AR) metaverse tech, realized $339 million in sales for Q1. However, it also sustained an operating loss of $3.99 billion for the same period. This is largely because Zuckerberg continues to pump more cash into the metaverse.
However, besides the Reality Labs’ indulgence, Meta is in cost-cutting mode as it grapples with the online ad market slowdown. The multinational technology conglomerate has also embarked on mass layoffs to remain competitive in what it previously described as its “year of efficiency”.
Mass Layoffs
Meta, which is currently in its latest downsizing round, has garnered investors’ support as a prudent way to save costs. Although it let thousands of employees go from late last year into 2023, the company targets an additional 21,000 technical job cuts.