Meta has released its Q1 2023 earnings and while they generally made for good reading, with ad revenue up four per cent year-on-year and overall revenue up three per cent, the company’s metaverse division has continued to take a battering.
In fact, Reality Labs, the group tasked by CEO and founder Mark Zuckerberg with creating the metaverse, managed to lose almost US$4 billion (just over AU$6 billion). This was up more than a third year-on-year but down 6.7 per cent from Q4 2022.
“We’ve been focusing on both AI and the metaverse for years now, and we will continue to focus on both,” said Zuckerberg during an earnings call with investors.
“We’ve reached a few milestones worth calling out: More than a billion Meta avatars have now been created. Since last year, the number of titles in the Quest store with at least $25 million in revenue has doubled. More than half of Quest daily actives now spend more than an hour using their device.”
Fortunately, ad impressions across Meta’s stable of apps increased by 26 per cent year-on-year while the average price per ad decreased by 17 per cent year-on-year. In total, it managed to generate US$28.1 billion (AU$42.5 billion) from advertising in the first quarter of this year. However, this was down 10 per cent from the previous three months — understandable given the busy Christmas shopping period.
Meta had recently laid off more than 10,000 workers around the world as part of Zuckerberg’s “year of efficiency” where he sought to reign back in the rapid hiring during the pandemic, tighten the company’s belt and start generating more value for shareholders.
“So far we’ve gone through two of the three waves of restructuring and layoffs we had planned this year — in our recruiting and technical groups. In May we’ll execute our third wave across our business groups,” said Zuckerberg.
“This has been a difficult process. But after this is done, I think we’ll have a much more stable environment for employees. For the rest of the year, we expect to focus on improving our distributed work model, delivering AI tools to improve productivity, and removing unnecessary processes across the company.”
Zuckerberg and his shareholders will be pleased, however, given that the company’s share price jumped by more than 12 per cent on the release of the results that showed its first sales jump in a year.
Closer to home, Will Easton, Meta Australia and New Zealand’s managing director said:
“Like Meta’s broader business, user engagement in Australia is at an all time high, driven by our investments in AI recommendations and ranking systems.
“As we invest in new ad tech, we’re also hearing feedback from Australian advertisers that ad performance and return on advertising spend continues to grow, delivering meaningful returns for their businesses.”
That new ad tech includes the company’s investment in AI to improve monetisation and recommendations.
“More than 20 per cent of content on your Facebook and Instagram feeds are recommended by AI from people, groups or accounts you don’t follow. Across all of Instagram, that’s about 40 per cent of the content that you see,” explained Zuckerberg.
“Since we’ve launched Reels, AI personalization has driven a more than 24 per cent increase in total time spent on Instagram. Our AI work is also improving monetization. Reels monetization efficiency is up over 30 per cent on Instagram and over 40 per cent on Facebook quarter over quarter.”
He also added that daily revenue from Advantage+ Shopping Campaigns was up by seven times in the last six months.
