Facebook parent Meta Platforms Inc. added more users than expected but posted its slowest revenue growth since going public a decade ago, as the company navigates growing competition and privacy headwinds for its advertising business.
The Wall Street Journal reports the user numbers were a surprise for the tech giant. In the wake of poor earnings results from other digital-ad rivals earlier this week, investors had feared the worst; and on Wednesday they pushed Meta shares up more than 18% after the results were announced.
The company cited the war in Ukraine as a contributor to the revenue slowdown, among other factors.
Meta’s stock price was battered in February when the company posted quarterly results that showed a sharper-than-expected decline in profit, a gloomy revenue outlook and a dip in its daily active users. Before Wednesday, Meta shares had fallen nearly 44% and the company had lost nearly $400 billion in market value.
Meta executives including Chief Executive Officer Mark Zuckerberg on Wednesday cited several efforts to reverse those trends. To combat rival TikTok, which Zuckerberg has cited as a rising threat, the company said it would more actively use artificial intelligence to recommend content to users from around the social network, as opposed to populating their feeds mostly with posts from friends and family. That in effect means Facebook will function more like TikTok’s For You feed, which serves users content based on their interests as determined by the company’s algorithm, not the accounts they follow.
Meta had previously expanded the availability of its own short-form video format, known as Reels.
Zuckerberg said the company’s artificial intelligence would serve as a “discovery engine that can show you all of the most interesting content that people have shared across our system.“
One highlight for Meta was its Reality Labs unit, which is central to its long-term plans. Reality Labs develops VR headsets, AR glasses and virtual worlds, known as the metaverse, in which users can live and work.
The unit’s revenue came in at $695 million, ahead of the $683 million analysts were expecting. The unit lost nearly $3 billion, up from $1.8 billion a year prior as the company ramps up its investments in those areas. Analysts had been expecting a loss of $3.6 billion.
Meta’s advertising revenue for the first quarter was $27.9 billion, up 6.6% compared with a year prior. Analysts had predicted Meta’s advertising revenue would rise to $28.3 billion in the first quarter of 2022.
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