Meta sees profits rising in the first quarter

Facebook owner Meta said Wednesday that quarterly profit soared last quarter as the company continues to see stellar advertising growth across its family of leading social media apps.

The Mark Zuckerberg-founded company said net profit rose to $12.4 billion in the January to March period, with total revenue, mainly from advertising sales, up an impressive 27 percent to $36.5 billion .

According to analyst Debra Williamson of Sonata Insights, Meta’s growth is largely due to its advanced advertising tools and the success of “Reels,” the algorithmically-driven, short, scrollable videos copied from TikTok.

In another potential boost to its business, Meta could also start selling ads on Threads, the text messaging platform similar to X (formerly Twitter), by the end of the year.

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With ads on Threads, “advertisers looking to reach audiences during real-time moments will finally have a viable alternative to X,” said Mike Proulx, vice president at Forrester.

The increase in sales and profits continued Meta’s recovery in 2023, which was driven by drastic cost cuts, including massive layoffs in what Zuckerberg called the “year of efficiency,” which saw tens of thousands of employees leave after a miserable 2022.

Meta said its global workforce now stands at 69,329, up slightly from last quarter but down from a peak of more than 87,000 employees in 2022.

Business ‘humming’

The company ended last year with record sales and since then its share price has soared on Wall Street, thanks largely to enthusiasm for AI, with the stock almost tripling last year and rising another 40 percent in 2024.

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But shares of Meta fell sharply in after-hours trading on Wall Street on Wednesday, with investors worried about spending rising again.

“Despite all the recent research into its effectiveness, Meta’s advertising business is booming,” said Max Willens, senior analyst at EMARKETER.

“It will need to continue that upward momentum in the face of rising costs,” he added.

As for the metaverse (mixing real and virtual worlds through high-tech glasses and headsets), which CEO and founder Zuckerberg describes as the future of the Internet, the group’s special division again recorded a significant loss of $ 3.8 billion, even though this was less than expected.

Another topic of interest to the market is Meta’s advances in generative AI, the production of ChatGPT-style text, images and other content based on a simple question in everyday language.

Last week, Zuckerberg unveiled the latest version of Meta AI, which is now deployed as an enhanced smart assistant in his apps including Instagram, WhatsApp, Messenger and Facebook.

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“This means users will simply start using Meta AI without the friction of downloading and learning a new app experience,” says Forrester’s Proulx, referring to rival chatbots like ChatGPT or Claude.

The technology is being rolled out in more than a dozen countries, including Australia, Canada, Singapore and the United States.

The AI ​​is powered by LLaMA 3, the company’s most powerful major language model, which the company makes available as an open source product for developers to create their own tools.

The technology giants are engaged in a race to become the leader in AI, with Microsoft seen as the frontrunner thanks to its partnership with ChatGPT maker OpenAI.

AI is boosting Microsoft’s core cloud computing business, a service Meta does not provide, leaving some doubt about the high cost of deploying the technology.

Meta has fallen behind in AI, but “its platforms give it a huge user base to test AI experiments… and quickly evaluate where users are leaning,” said Williamson.

Source: AFP