On Wednesday, Meta Platforms (formerly Facebook) reported impressive Q1 results that exceeded analysts' estimates and raised its forecast for the current quarter, leading to a surge in share prices. The company's revenue reached $28.65 billion, surpassing the estimated $27.67 billion, while its EPS was $2.20, higher than the predicted $2.01. Meta's advertising revenue was $28.1 billion, beating the estimated $26.76 billion, and its Family of Apps revenue was $28.3 billion, exceeding the expected $26.88 billion.
Despite incurring losses of $3.99 billion in its Reality Labs division, Meta's overall performance was strong, and the company's CEO Mark Zuckerberg attributed its success to its AI initiatives, which are delivering positive results for its apps and business. Moreover, Meta's efficiency drive, which included laying off 10,000 workers in 2022, has been largely completed, with further layoffs expected this year.
Meta's ad revenue was boosted by the 26% YoY growth in ad impressions across its Family of Apps, which includes Facebook, Instagram, and WhatsApp. This is a promising sign for Meta, which has been impacted by the digital advertising slowdown in previous earnings cycles.
Looking ahead, Meta has forecast Q2 revenue of $29.5 billion-$32 billion, which exceeds the estimated $29.48 billion. Overall, Meta's impressive Q1 results indicate that the company is on track to achieve its long-term vision and strengthen its position as a leading tech player in the industry.
Cost cutting:
As Big Tech companies focus on cost-cutting in this earnings cycle, Meta Platforms, formerly known as Facebook, has been particularly aggressive. The company had previously projected 2023 expenses to fall between $96 billion to $101 billion. However, in its latest earnings release, the company stated that it anticipates expenses for this year to be between $86 billion to $90 billion, including restructuring costs.
This cost-cutting measure comes amid increasing losses in Meta's Reality Labs division, which lost $13.7 billion in 2022 and is expected to incur more losses this year. The company reported a headcount of 77,114 at the end of Q1, representing a 1% decrease from the previous year. However, despite the layoffs, Meta is still doing buybacks, repurchasing $9.22 billion of its shares in Q1 2023. As of March 31, Meta was authorized to repurchase $41.73 billion of its own stock.
While Meta's layoffs have contributed to the decrease in its headcount, the company stated that "substantially all employees impacted by the layoffs announced in November 2022 are no longer reflected in our reported headcount as of March 31, 2023." Additionally, the employees expected to be affected by the 2023 layoffs are included in the company's reported headcount as of March 31, 2023.
Overall, Meta's cost-cutting measures are expected to increase efficiency and help the company deliver on its long-term vision, positioning it as a strong player in the tech industry. Despite the challenges faced by its Reality Labs division, Meta's aggressive cost-cutting measures and share buybacks demonstrate the company's confidence in its ability to weather the storm and emerge stronger.
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