Meta reported total revenue of $32 billion, an increase of 11 percent year-over-year and at the top-end of the company’s previous guidance for the three months ended June 30.
Net income reached $7.8 billion, up 16 percent from $6.7 billion a year ago. Monthly active users on Facebook reached 3.03 billion as of June 30, 2023, an increase of 3 percent year-over-year, and up from 2.9 billion in the first quarter of the year.
Total monthly active users across all of Meta’s apps, which include Facebook, Instagram, WhatsApp and Messenger, reached 3.88 billion, up six percent from a year ago, and up from 3.81 billion recorded last quarter. Average revenue per person on these apps is back on the upswing, hitting $8.32 after falling to $7.59 in the prior quarter.
In March, Meta announced that it would lay off an additional 10,000 employees, after previously cutting 11,000 jobs in November. The March layoffs led to a $523 million hit in Q1, with total costs expected to reach $1 billion by the end of the year. On Wednesday, Meta said it had “substantially completed” planned layoffs but continued to assess “facilities consolidation and data center restructuring initiatives.” The company recorded restructuring charges of $705 million for the three months ended June 30.
As of June 30, total headcount was 71,469, a decrease of 14 percent year-over-year, but about half of employees impacted by the 2023 layoffs are included in the headcount.
In April, Meta also shut down original programming on Facebook Watch, which included shows such as Red Table Talk, a talk show co-hosted by Jada Pinkett Smith, Willow Smith and Adrienne Banfield-Norris.
These cuts came as part of CEO Mark Zuckerberg’s proclaimed “year of efficiency,” which the executive first outlined in February 2023 and then reiterated as part of the layoffs in March.
“We should prepare ourselves for the possibility that this new economic reality will continue for many years. Higher interest rates lead to the economy running leaner, more geopolitical instability leads to more volatility, and increased regulation leads to slower growth and increased costs of innovation,” Zuckerberg said in March.
However, the company has continued to release new offerings, including Threads, its Twitter competitor, in early July. The app is connected to users’ Instagram accounts and allows the user to make text-based posts of up to 500 characters, in addition to photos and video. Threads has not yet launched in countries in the European Union amid strict data protection laws.
On the earnings call, Mark Zuckerberg, Meta founder and CEO, said Threads had so far seen “unprecedented growth,” 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.
“And now we’re focused on retention and improving the basics and then after that, we’ll focus on growing the community to the scale that we think is going to be possible. Only after that are we going to focus on monetization,” he continued.
He also noted that the app was built by “a relatively small team,” as part of his efficiency directive for the company. Going forward, Meta will continue to hire for key roles, but the number of roles will still remain relatively low, he said.
“Now that we’ve gotten through the major layoffs, the rest of 2023 will be about creating stability for employees, removing barriers that slow us down, introducing new AI power tools to speed us up and so on,” he said.
Meta also continues to see success with Reels, its TikTok competitor which is hosted on Instagram. The video offering is now recording more than 200 billion daily views and has hit a $10 billion annual run rate, up from $3 billion last fall, Zuckerberg said.
“We had a good quarter. 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,” Zuckerberg said in the earnings release.
Still, Meta warned that Reality Labs, its business segment that focuses on augmented and virtual reality, will see its operating losses increase in 2023 and those will continue to increase “meaningfully” in 2024 due to “ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem.”
The company expects total revenue in Q3 between $32 and $34.5 billion. Expenses for the full 2023 year are also now expected to increase, hitting a range of $88 to $91 billion, due to legal expenses and restructuring charges. In 2024, expenses are also expected to grow due to higher payroll expenses, which reflect higher-cost technical roles, as well as a higher infrastructure costs.