Meta Platforms See First Sales Increase in Nearly a Year

Facebook parent Meta Platforms Inc. on Wednesday reported its first increase in sales in nearly a year due to continued improvements in its advertising business, as the company continues to pare back spending during what Chief Executive Mark Zuckerberg has called a “year of efficiency.”

The Wall Street Journal reports Zuckerberg attributed some of these gains to Reels, the company’s short-form video product. Zuckerberg said that Reels is increasing overall app engagement and that the company believes it is gaining share in the short-form video market.

“When we started this work last year, our business wasn’t performing as well as I wanted. But now we’re increasingly doing this work from a position of strength,” Mr. Zuckerberg said on Wednesday in a call with analysts.

The company reported revenue of $28.6 billion, up 3% from a year prior and ahead of expectations of nearly $27.7 billion, according to analysts surveyed by FactSet. That snapped a streak of three quarters in which Meta’s revenue had retreated from the year prior, the only time that has occurred since the company went public in 2012. Shares surged by more than 12% in after-hours trading, as the company also forecast that second-quarter revenue could reach as high as $32 billion.

The tough economic climate, an increasing number of regulations limiting personalized ads and the fallout from Apple Inc.’s ad-tracking changes in 2021 have weighed on the digital-ad market. Meta has faced growing competition from TikTok, which in February reached 150 million monthly users in the U.S.

The 3% increase is an improvement from the 4.5% drop in revenue that the company posted in the final quarter of 2022, indicating that Meta’s heavy investment in artificial-intelligence tools to improve its ad-targeting systems is working.

Those efforts in AI, along with shifting to forms of advertising less dependent on harvesting user data from its platforms, are essential to the company’s plans to bounce back. Meta has made progress in overcoming an Apple privacy change that restricted Meta’s capacity to gather information about what its users do outside its platforms’ walls, The Wall Street Journal reported in January.

Zuckerberg said he expects so-called generative AI to have an impact every one of Meta’s apps and services. He theorized that the technology could help marketers more easily create advertisements for Meta’s services, power chatbots for businesses on Messenger and WhatsApp, and help metaverse users more easily create avatars and virtual worlds.

He also said that he expects Meta to take a more open-source approach to generative AI than companies like Alphabet Inc., Microsoft Corp. and Amazon.com Inc. due to their different business models.