On Wednesday, Meta reported its revenue for the first quarter of the year. Sources reveal that the social media empire tries to find its footing amid a weaker economy as the profits fell 23% during Meta’s first quarter compared to last year.
According to the report, during its first quarter, the social media giant took in a profit of $5.7 billion, a 23% drop compared to $7.4 billion from a year ago. However, in total, the revenue for the first quarter totaled $28.6 billion, slightly higher than $27.9 billion from last year.
In a shareholder letter, Mark Zuckerberg, CEO of Meta, said the business “had a good quarter and [its] community continues to grow.” He also added that its focus on artificial intelligence (AI) across its apps is driving promising results.
Notably, at the time of writing Meta’s share price marked a 1.85% increase over the past day. However, it is speculated that immediately following the release of its earnings report, the share price jumped, up 12% during after-hours trading to $233.
Meta’s image has predominantly been associated with metaverse considering its push since a rebrand in 2021. However, Meta makes money mostly from advertising revenue, which totaled $28 billion for the quarter compared to just $205 million in revenue from other sources. Notably, its latest advertising revenue numbers represent a massive surge compared to $27 billion a year ago.
For a long time, Meta had difficulty letting go of its metaverse endeavors as the company suffered through massive losses. Following a $14 billion loss on its metaverse-focused Reality Labs last year, Zuckerberg declared this year will be Metaverse’s “year of efficiency.” The company is also trying to weather a challenging business environment and fend off competition from social media platforms like TikTok.
Nonetheless, Reality Labs continues to lose huge amounts of money. Reportedly, it saw a loss of $3.9 billion during Meta’s first quarter, an acceleration compared to $2.9 billion in losses during the same period last year.
To cope with such losses, the company has retorted to measures like layoffs, etc. It had fired 11,000 employees by last November and announced 10,000 additional workers would be let go last month, closing out 5,000 job openings on top of that as the company looks to revamp its structure and scrap low-priority projects.
However, in the announcement, Zuckerberg hinted at his likeness to AI. He said that the metaverse was still “central to defining the future of social connection,” but the firm would also lean heavily into AI as its “single largest investment,” following the success of OpenAI’s ChatGPT.
Among Meta’s notable achievements last year were the pioneering legs that appeared realistic in its Horizon Worlds game with AI. Following that, the company has launched multiple tools, including ones aimed at advertisers, that leverage the buzzy technology in 2023.
However, Zuckerberg explicitly stated that just because the company is talking up its plans to leverage artificial intelligence, that doesn’t mean the firm is dimming the lights on its metaverse vision. Quoting him:
A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate. We’ve been focusing on both AI and the metaverse for years now and we will continue to focus on both.
However, interestingly sources reveal that during Zuckerberg’s opening remarks, he mentioned the metaverse only eight times compared to 20 references to AI. While that could be a mere coincidence the company’s trajectory has marked an increasing interest in AI.