Meta Platforms Inc. posted quarterly sales that topped estimates, gave a rosy revenue forecast and indicated Facebook and Instagram still have room to grow, signaling it’s on course for a turnaround after its most difficult year.
The company’s shares jumped more than 18% in extended trading after a fourth-quarter sales beat that was fueled by stronger advertising demand and more users for its major social networks. To build a more resilient company, Meta is working to become more efficient, more profitable and nimbler at developing new products, according to Chief Executive Officer Mark Zuckerberg.
“We’re working on flattening our org structure and removing some layers of middle management to make decisions faster, as well as deploying AI tools to help our engineers be more productive,” he said on an earnings call with investors. “There’s going to be some more that we can do to improve our productivity, speed and cost structure.”
The company is recovering from the worst year for its stock in history. Meta faced a decline in advertiser demand due to weakness in the broader economy as well as a change in iPhone privacy rules that made it harder for Meta to offer targeted ads. Meta cut 11,000 jobs, or 13% of the workforce, in November in its first-ever major layoff.
Those cuts came during a quarter that was otherwise an improvement for the company. Revenue was $32.2 billion, compared with the average Wall Street estimates of $31.6 billion, according to a Bloomberg survey. Meta is making progress with its investments in artificial intelligence, particularly for improving the videos it shows users on Facebook and Instagram.
Facebook, Meta’s flagship social network, now has more than 2 billion daily users, up more than 70 million from a year ago.
Meta also projected revenue of $26 billion to $28.5 billion for the first quarter, in line with estimates of $27.25 billion. The company also boosted its stock-buyback authorization by $40 billion, adding to the $10.9 billion remaining from previous repurchase programs.
The Menlo Park, California-based company said 2023 expenses will be less than previously forecast. Expenses for the year will be $89 billion to $95 billion, the company said Wednesday. That could help lessen investor concerns that the company is over-spending on its virtual reality ambitions.
Zuckerberg has spent tens of billions of dollars on an effort to build the metaverse — a digital world where people can work and play. Those efforts are still in their early stages, which means much of the investment is not leading to immediate returns.
Capital expenditures in the recent quarter soared to $32 billion. In the fourth quarter of 2021, by contrast, capital spending was $5.54 billion.
