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Facebook parent Meta returned to double-digit revenue growth for the first time since the end of 2021 and forecast better than expected growth in the current quarter, sending its shares higher in a sign that the digital advertising slump is easing.
Meta said it expected revenue in the current quarter to be in the range of $32bn-$34.5bn — well above analysts’ expectations of a rise to $31.1bn.
Revenues in the second quarter rose 11 per cent to $32bn, above analysts’ expectations of an increase to $31.03bn.
Chief executive Mark Zuckerberg has sought to revive the company from a period of sluggish growth, wider macroeconomic woes and investor concern over his costly bet on the metaverse.
As part of this, over the past six months Meta has undergone a big restructuring, including a flattening of the management structure and redundancies affecting about 20,000 staff, in what Zuckerberg has dubbed the “year of efficiency”.
He has also set his sights on increasing the company’s investment and capabilities in artificial intelligence.
Meta shares rose as much as 8 per cent in after-hours trading on Wednesday.
Net income increased 16 per cent to $7.8bn, compared with consensus expectations of a rise to $7.4bn.
However, costs rose 10 per cent to $22.6bn, partly because of legal expenses of $1.9bn and restructuring charges of $780mn. In May, Meta was hit with a €1.2bn fine by the EU for privacy violations.
“We continue to see strong engagement across our apps and we have the most exciting road map I’ve seen in a while,” Zuckerberg said, citing the launch of AI products and technology.
Zuckerberg has been doubling down on generative AI, technology that can create text, images and code, as a way to make his apps’ feeds more engaging, boost the effectiveness of advertising and improve productivity internally.
This month, Meta also released a commercial version of a large language model Llama 2, in a bid to compete with rivals OpenAI, Google and Microsoft. Meta has also indicated it is working on chatbots or “AI agents”, which will be powered by the LLM.
In his statement, Zuckerberg also noted his enthusiasm around Reels, Meta’s TikTok-like short video feed, and Threads, a “text-based conversation app” and rival to Twitter that he has pitched as a “friendly” alternative to the struggling social media platform owned by Elon Musk. The latter, which was launched earlier this month, exploded in popularity, reaching 100mn users within a record five days. Usage since then has dwindled, however.
Monthly active users across all of Meta’s apps, including Instagram, WhatsApp and Quest, increased 6 per cent to 3.88bn as of the end of June.
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