Meta CEO Mark Zuckerberg said the social-media giant will make 2023 the “year of efficiency” — and signaled that more layoffs could be in the offing as Wall Street reacted positively to news that the company would initiate $40 billion worth of share buybacks.
Share of Meta surged by nearly 20% in pre-market trading on Thursday as Facebook’s parent company’s fourth quarter earnings beat analysts’ estimates on Wednesday.
Zuckerberg said that the company “may incur additional restructuring charges as we progress further in our efficiency efforts,” with the company saying they could total $1 billion this year.
“We closed last year with some difficult layoffs and when we did this, I said clearly that this was the beginning of our focus on efficiency and not the end,” Zuckerberg said. adding that further layers of middle management could still be trimmed.
Meta said it spent around $3.7 billion last year in paying out severance as well as terminating office leases.
In November, Meta laid off more than 11,000 employees — or 13% of the company’s overall workforce. Zuckerberg blamed aggressive hiring during the pandemic, when Meta’s business boomed because people were stuck at home, scrolling on their phones and computers, glued to social media.
But as the lockdowns ended and people started going outside again, revenue growth began to falter.
Meta’s stock price slid by some 70% last year as the company has struggled to smoothly pivot from its traditional, bread-and-butter business model of ad-driven social media to advancing the metaverse.
“Our management theme for 2023 is the ‘year of efficiency’, and we’re focused on becoming a stronger and more nimble organization,” he said.
Quarterly revenue fell 4% year-over-year to $32.17 billion — besting forecasts for $31.55 billion. The company also reported earnings per share of $1.76 — missing estimate targets of $2.26 a share. Meta projected that its first quarter revenue estimates would range somewhere between $26 billion and $28.5 billion — surpassing analyst estimates.
Meta ended 2022 with a 1% revenue decline from 2021 — its first year-over-year drop.
Reality Labs, the virtual reality division of Meta responsible for developing Zuckerberg’s metaverse vision, reported an operating loss of $4.28 billion — beating analyst estimates of $4.36 billion.
The division generated revenue of $727 million in the fourth quarter — surpassing forecasts of $715.1 million. Nonetheless, Reality Labs continues to be a money-loser for the company. In 2022, the division’s operating loss totaled $13.72 billion.
Though revenue declined, Meta continued to add users on its social media apps. Facebook’s daily active users hit 2 billion for the first time — up 4% from a year earlier.
Facebook had 2.96 billion monthly active users at the end of the year. Meta’s monthly active users on what it calls its “family” of apps — Instagram, Facebook, WhatsApp and Messenger — were 3.74 billion as of Dec. 31.
With Post Wires