Even as its Reality Labs unit continues to bleed, social media company Meta just had its best quarter since 2021. The parent company of Facebook, Instagram, WhatsApp and also ‘Threads’, exceeded analysts estimates when it came to its earnings for the second quarter of the year, and issues a better-than-expected forecast for the ongoing quarter.
The second quarter of 2023 saw Meta clock an annual increase in its revenue – which jumped to $32 billion and exceeded analyst estimates of $31.12 billion. Its costs and expenses for the same period jumped as well, rising by 10% annually to amount to $22.6 billion. For the six months ended June 30, Meta’s revenue jumped to $60.6 billion.
The company’s profits clocked a healthy increase of 16% to reach $7.8 billion for the quarter, while its diluted earnings per share (EPS) rose by 21% to reach $2.98 (beating analyst estimates of $2.91 per share. The company’s strong performance enabled a 7% rise in its stocks in extended trading – Meta’s shares are currently priced at $298.57 per share. The second quarter of the year marks the first time Meta has achieved growth in double digits since the fourth quarter of 2021.
“We had a good quarter,” Meta CEO Mark Zuckerberg said in the official statement. “We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall.” Going forward, the company expects its capital expenditures for the year to drop to $27-30 billion, owing to cost savings on non-AI servers, as well as shifts in capital expenditures into the next year, he added.
All of this comes amidst Meta’s “Year of Efficiency,” wherein Zuckerberg had laid off thousands – tens of thousands, to be precise – as part of the company’s cost-cutting efforts. Other such measures include the slashing of the expenditure in some divisions, as well as the restructuring of the hierarchy of the company. Overall, Meta’s headcount dropped by 14% annually. The numbers are impressive, especially when one considers the company’s less-than-impressive earnings over the past 18 months and a drop in ad sales. Meta’s ad revenue contributes to the majority of its overall revenue, bringing in $31.5 billion for the quarter and $59.9 billion for the six months ended June 30.
The company’s ever-growing Family of Apps clocked a decent performance during the quarter as well, and saw a rise in its users as a result of the same. At the very least, the second quarter of the year witnessed impressive growth in user engagement in its apps – the number of daily active users (DAUs) of Facebook rose by 5% to reach 2.06 billion, while monthly active users (MAUs) rose by 3% to reach 3.03 billion. Overall, the DAUs and MAUs across Facebook, Instagram, and WhatsApp rose to 3.07 billion and 3.88 billion respectively. “We continue to see strong engagement across our apps, and we have the most exciting road map I’ve seen in a while,” Zuckerberg commented on the matter.
Nonetheless, these measures failed to stop its Reality Labs division from bleeding – Meta’s metaverse ambitions has already cost it billions of dollars. In the second quarter of the year, Reality Labs reported an operating loss of $3.7 billion – up from the estimated $3.5 billion – and brought in $276 million in revenue for the same period. The unit’s operating loss widened to $7.7 billion for the six months ended June 30, while the revenue for the same period amounted to $0.6 billion. And if things are not dire enough, the social media company expects to lose even more money on its metaverse ambitions in the coming quarters. Meta CFO Susan Li said that the company is expecting Reality Labs’ losses to “increase meaningfully” as compared with last year, when it had lost more than $13 billion.
Zuckerberg, of course, downplayed the deplorable numbers presented by its Reality Labs division, saying that the social media company remains “fully committed to the metaverse vision.” He also spoke of Threads – the company’s answer to an embattled Twitter – saying that they had witnessed “unprecedented growth” so far, but that the company will wait to monetize the app. “I’m quite optimistic about our trajectory here. We saw unprecedented growth out of the gate and more importantly, we’re seeing more people coming back daily than I’d expected,” Zuckerberg said.