Charles Platiau/Reuters
- Mark Zuckerberg's mission to turnaround Meta's fortunes is working.
- Meta posted revenues of $32 billion for its second quarter – 11% higher than last year.
- It's a sign that Zuck's "Year of Efficiency" is paying off.
Mark Zuckerberg's been a man on a mission.
Putting personal ambitions to rehabilitate public image aside – ambitions that have involved capitalizing on a rival tech billionaire's shortcomings – the Meta chief has been out to reverse his social media empire's fortunes after a pretty disastrous period.
After Meta's value fell by a record $230 billion in a single day last year, coupled with rising public sentiment that the metaverse was destined for the dumpster, some felt the company was stuck in a downward spiral.
Yet Zuck's mission to reverse this fate looks increasingly likely to succeed.
The 'Year of Efficiency' is succeeding
His "Year of Efficiency" ushered in following two rounds of layoffs and a tilt towards AI seems to have paid off: Meta said on Wednesday that revenue rose 11% to $32 billion in its second quarter compared with the same period last year.
It's the first time that Meta has posted a double-digit rise in quarterly revenue since the heady days of tech growth during the pandemic, signaling that the strategy to get lean and place bets on AI is working.
"It's really good to see the decisions and investments we made start to play out," Zuckerberg said on an earnings call.
On efficiency, he pointed to the success in launching Twitter rival Threads. "The product was built by a relatively small team on a tight timeline," rather than a bloated one filled with layers of middle managers who may have slowed the launch process down.
"We've already seen a number of examples of how our leaner organization and some of the cultural changes that we've made can build higher quality products faster, and this is probably the biggest example so far," Zuckerberg said.
Embracing AI already seems to be paying dividends too.
Not only has Meta launched a serious rival to OpenAI's GPT-4 – Llama 2 – but AI-recommended content from accounts that users don't follow "is now the fastest growing category of content on Facebook's feed," Zuckerberg said.
The result has been a 7% increase in time spent on the platform. "This improves the experience because you can now discover things that you might not have otherwise followed or come across," he added.
The strategy's given Zuck some wiggle room to continue directing resources towards his metaverse ambitions too.
Although losses at Reality Labs – the business unit at Meta tasked with turning the vision of a virtual world into a reality – have now topped $40 billion, as my colleague Kali Hays notes, Wall Street has been able to breathe a sigh of relief after revenue growth picked up again.
The combination of cost savings and AI-led boosts to ad revenue have shored up Meta's financial position, to the point that Zuckerberg's revenue guidance for the current quarter is estimated at $32 billion to $34.5 billion.
An 9% rise in Meta's stock in pre-market trading Thursday suggests that's plenty to keep investors happy for now. The stock is already up 139% this year and a jump of that level will take its value above $800 billion.
Of course, Zuckerberg offers no promises on the metaverse being a success. As he noted during the earnings call, "I can't guarantee you that I'm gonna be right about this bet," even if his early metaverse punt has now been backed up by Apple's launch into "spatial computing."
What is certain right now: Zuck's "Year of Efficiency" is working.