Facebook parent Meta reveals 55% profit drop after mass layoffs | business news
Facebook’s parent company saw profits fall 55% in the last quarter of 2022 — the result of a $4.2 billion restructuring charge that included the cost of thousands of job cuts.
Meta Platforms, which include WhatsApp and Instagram, said net income plummeted to $4.65 billion between October and December.
That was down from a figure of over $10 billion for the same period in 2021.
However, Facebook’s quarterly revenue, ad revenue, and daily active user count all beat market expectations.
Users of its platforms combined increased by 4%, with Facebook alone hitting two billion.
Shares, which were down about 60% from their September 2021 peak at the close, rose more than 12% in after-hours trading.
That was explained by Meta’s guidance for first-quarter revenue, according to analysts.
They came in above Wall Street estimates and signaled a rebound in demand for digital ads after months of weak sales.
Technology-related companies suffered a drop in market value over the past year as high inflation and the general economic slowdown weighed on consumer and corporate spending.
Meta, along with rivals, moved to bolster profitability through aggressive cost-cutting.
It was found 11,000 job cuts in November after coming under pressure from investors after two straight quarters of declining earnings.
These costs were booked in the final quarter of 2022 and culminated in the collapse in profits.
Meta said Wednesday it expects another $1 billion in charges over the course of 2023 related to its “efficiency” program.
Bigger competition from the likes of TikTok has also eaten into its space.
Five big tech stories to watch in 2023 after a turbulent year
Race to the Metaverse: The Battle for the Future of the Internet
But Mark Zuckerberg, Meta’s founder and CEO, was sticking to a big bet — he vowed to keep investing in his virtual and augmented reality division, Reality Labs, despite shareholder unease about Meta’s prospects Metaverse Applications.
The earnings statement revealed an operating loss of more than $4 billion for Reality Labs in the three months ended December alone. For the full year 2022, the number was over $13.7 billion.
Zuckerberg said of the achievement, “Our community continues to grow and I’m pleased with the strong engagement in our apps.
“Facebook just passed the milestone of two billion daily activities.
“The advances we are making with our AI discovery engine and Reels are important drivers of this.
“In addition, our management theme for 2023 is the ‘Year of Efficiency’ and we are focused on becoming a stronger and more flexible organization.”