Facebook parent Meta reported profits fell 23% during its first quarter compared to last year on Wednesday, as Mark Zuckerberg’s social media empire tries to find its footing amid a weaker economy.
During its first quarter, the social media giant took in a profit of $5.7 billion, a 23% drop compared to $7.4 billion a year ago. Revenue for the first quarter totaled $28.6 billion, up slightly compared to $27.9 billion last year and beating expectations across Wall Street of $27.7 billion for the quarter.
In a shareholder letter, Zuckerberg said the business “had a good quarter and [its] community continues to grow,” adding that its focus on AI across its apps is driving promising results.
While the company’s image has largely centered on its metaverse push since a rebrand in 2021, Meta makes money mostly from advertising revenue, which totaled $28 billion for the quarter compared to just $205 million in revenue from other sources. But its latest advertising revenue numbers represent an increase compared to $27 billion a year ago.
Following a $14 billion loss on its metaverse-focused Reality Labs last year, Zuckerberg declared 2023 will be Metaverse’s “year of efficiency,” as the social media giant tries to weather a challenging business environment and fend off competition from social media platforms like TikTok.
Yet Reality Labs continues to lose significant amounts of money. The segment 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.
The company had already canned 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.
In the announcement, Zuckerberg said that the metaverse was still “central to defining the future of social connection,” yet it would also lean heavily into AI as its “single largest investment,” following the success of OpenAI’s ChatGBT.
While pioneering legs that appeared realistic in its Horizon Worlds game with AI was among Meta’s notable achievements last year, the company has rolled out multiple tools, including ones aimed at advertisers, that leverage the buzzy technology in 2023.
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, Zuckerberg said on an earnings call Wednesday.
“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,” Zuckerberg said. “We’ve been focusing on both AI and the metaverse for years now and we will continue to focus on both.”
It worth noting, however, that during Zuckerberg’s opening remarks, he mentioned the metaverse only eight times compared to 20 references to AI.
Meta, which trades on the Nasdaq under the META ticker, has seen its stock price fall drastically since adopting its new name. When the company announced its rebrand in late October 2021, its stock traded at around $316 per share compared to just over $209 today when markets closed. However, shares of Meta had surged around 74% so far this year, far outpacing a 13% bump in the Nasdaq Composite.
Immediately following the release of its earnings report, Meta’s share price jumped, up 12% during after-hours trading to $233.