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Tag: company revenues

  • Microsoft, Google post strong quarterly sales growth as Big Tech continues its comeback | CNN Business

    Microsoft, Google post strong quarterly sales growth as Big Tech continues its comeback | CNN Business

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    New York
    CNN
     — 

    Big tech companies are continuing a turnaround from last year, as Alphabet, Microsoft and Snap kicked off earnings season with strong sales results for the quarter ended in September.

    Google parent company Alphabet on Tuesday reported quarterly sales of $76.69 billion, up 11% from the same period in the prior year. The company also posted profits of $19.69 billion for the quarter.

    Meanwhile, Microsoft posted 13% year-on-year sales growth to $56.5 billion, also beating expectations. Microsoft’s quarterly profits hit $22.3 billion, up 27% from the year-ago period.

    Snapchat parent Snap on Tuesday reported a return to sales growth in the September quarter, after two consecutive quarters of declining sales. The company reported revenue of nearly $1.2 billion, an increase of 5% from the same period in the prior year and ahead of analysts’ projections. The company reported a net loss of $368 million.

    The strong results come after Microsoft, Alphabet, Snap and other tech companies carried out mass layoffs and other cost cutting moves over the past year following a difficult 2022 when advertisers and other clients cut back on their spending due to concerns over the macroeconomic environment.

    Despite beating Wall Street’s sales expectations, shares of both Alphabet (GOOGL) and Snap (SNAP) each dipped around 5% in after-hours trading following the reports, although Snap’s quickly regained some ground. Microsoft (MSFT) shares gained around 4% in after-hours trading.

    “Q3 tech season has been quite strong thus far,” Tejas Dessai, research analyst at investment fund GlobalX said in a statement. “These numbers clearly defy concerns of near term economic weakness looming.”

    Google’s advertising business generated quarterly revenue of $59.6 billion, up from $54.5 billion in the prior year. YouTube ads, meanwhile, garnered some $7.9 billion in revenue, up roughly 12% year-over-year.

    YouTube Shorts, the company’s TikTok competitor, hit a milestone 70 billion daily views last quarter, Alphabet CEO Sundar Pichai said on a call with analysts Tuesday afternoon.

    Google’s cloud business, however, reported revenue of $8.41 billion — missing analysts’ estimates.

    Jesse Cohen, a senior analyst at Investing.com, attributed Alphabet’s after-hours stock fall to the “relatively weak performance in its Google cloud platform, which is at risk of falling further behind [Microsoft’s] Azure and [Amazon’s] AWS.” Still, despite taking a hit in 2022 amid a broader tech sector downturn, shares for Alphabet have climbed roughly 56% since the start of 2023, beating the tech-heavy Nasdaq index.

    Google’s report comes as the tech giant is in the antitrust hot seat. US prosecutors officially opened a landmark antitrust trial against Google last month with sweeping allegations that the company engaged in anticompetitive behavior to maintain its dominance over search. (As the legal showdown rages on, Google has continued to deny allegations that it operated illegally.)

    Google also confirmed last month plans to lay off hundreds of staffers in its recruiting division, as it continues cost cutting efforts in some areas. These more targeted layoffs came after Alphabet in January cut around 12,000 jobs — about 6% of its workforce.

    Still, Google has signaled that it remains committed to investing heavily in generative artificial intelligence technology. Last month, Google rolled out a major expansion of its Bard AI chatbot tool.

    “As we expand access to our new AI services, we continue to make meaningful investments in support of our AI efforts,” Pichai said on the call. “We remain committed to durably re-engineering our cost base in order to help create capacity for these investments, in support of long-term sustainable financial value.”

    Microsoft’s recent investments in AI technology helped boost its sales in the September quarter, especially in its key cloud division. Sales from Microsoft’s “intelligent cloud” business — its biggest revenue driver — grew 19% from the year-ago quarter to $24.3 billion.

    Revenue from the company’s “productivity and business processes” business, which includes LinkedIn and Office commercial and consumer products, also grew 13% year-over-year to $18.6 billion.

    “Microsoft is firing on all cylinders and AI is clearly driving growth,” Cohen said in a research note following the company’s report. “The results indicated that artificial intelligence products are stimulating sales and already contributing to top and bottom-line growth.”

    But economic jitters among consumers appear to still have some impact on the company’s bottom line. Devices revenue, which includes sales of laptops, tablets and Xbox consoles, decreased 22% year-over-year, despite a 3% sales increase in the overall “more personal computing” segment. Ongoing concerns about a potential economic slowdown could continue to weigh on the company as it heads into the crucial holiday device sales season.

    The report is Microsoft’s first since the company closed its $69 billion acquisition of “Call of Duty” maker Activision Blizzard earlier this month. While the deal didn’t factor into this quarter’s results, it’s expected to supercharge the company’s gaming business.

    “Microsoft now controls 30 game studios and some of the most well-known games across the industry,” Edward Jones analyst Logan Purk said in a research note earlier this month. “With a massive cloud network and now a compelling library of games, Microsoft has a leg up on peers” in gaming, he said.

    Following the Activision takeover, “we’re looking forward to one of our strongest first-party holiday [game] lineups ever, including new titles like Call of Duty Modern Warfare 3,” CEO Satya Nadella said on an analyst call Tuesday. The company said it expects roughly $400 million of operating expenses in the fourth quarter to come as a result of the acquisition.

    Snap said its sales growth was driven in part by its ongoing efforts to revamp its advertising technology, following changes to Apple’s app tracking policies that took a hit to the business models of Snapchat, Facebook and other platforms.

    “We are focused on improving our advertising platform to drive higher return on investment for our advertising partners, and we have evolved our go-to-market efforts to better serve our partners and drive customer success,” CEO Evan Spiegel said in a statement.

    Snap also reported that it now has 406 million daily active users, up 12% compared to the year-ago quarter. And time spent watching Spotlight — Snapchat’s TikTok clone — grew 200% year-over-year, according to the company.

    The company also recently announced that it had reached more than 5 million subscribers to its Snapchat+ subscription program, a key effort to diversify its revenue.

    Snap said Tuesday that its chief operating officer, Jerry Hunter, plans to retire. Hunter, who spent seven years at the company, will step down from his role as of the end of the month, but will remain at the company until July 1, 2024, to support the transition.

    The company noted that some advertisers temporarily paused their spending following the outbreak of the Israel-Hamas war. Because of the “unpredictable nature” of the war, Snap declined to provide formal guidance for the fourth quarter, but said its internal forecast assumes year-over-year quarterly revenue growth between 2% and 6%.

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  • Apple posts second consecutive quarterly revenue decline | CNN Business

    Apple posts second consecutive quarterly revenue decline | CNN Business

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    CNN
     — 

    Apple on Thursday reported that its revenue fell 3% to $94.8 billion for the first three months of the year as consumers scale back spending on smartphones and computers amid looming recession fears.

    The company’s revenue was slightly better than what Wall Street had expected, but it nonetheless represented the second consecutive quarterly revenue decline for the iPhone maker.

    Apple attempted to appease investors by announcing up to $90 billion in share buybacks. Shares of Apple were largely flat in after-hours trading Thursday following teh results.

    Despite the continued revenue decline, there were bright spots in the report.

    Apple CEO Tim Cook said Apple hit a “a March quarter record for iPhone despite the challenging macroeconomic environment” and that the installed base of active devices reached an all-time high.

    Apple’s latest quarterly earnings report comes amid a sharp decline in PC and smartphone sales globally after a surge earlier in the pandemic.

    Worldwide PC shipments declined 30% in the first quarter of 2023 compared to the year prior, according to data from Gartner. Global smartphone shipments plunged 14.6% last quarter, according to separate data from market intelligence firm IDC.

    Apple’s report on Thursday caps off a closely-watched earnings season for Silicon Valley amid broader economic jitters. All five Big Tech companies beat Wall Street’s estimates, but the numbers paint a stark picture of the industry at this moment.

    Apple and its peers once enjoyed seemingly limitless growth. Now these business are struggling to grow sales and profits – or posting declines.

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  • Lyft shares fall nearly 25% after forecasting revenue below estimates | CNN Business

    Lyft shares fall nearly 25% after forecasting revenue below estimates | CNN Business

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    Reuters
     — 

    Lyft

    (LYFT)     on Thursday forecast current-quarter revenue below Wall Street estimates, blaming extremely cold weather in some of its major markets and lower prices, especially during peak hours, sending its shares down nearly 25% in extended trading.

    The company’s outlook was in contrast to that of its larger rival Uber

    (UBER)    , whose strong presence globally is helping it ride a boom in demand for ride-hailing services from travelers and office-goers

    Lyft’s bigger presence on the U.S. West Coast, a region that analysts have said was trailing the rest of the United States in return to pre-COVID demand, could be hurting its recovery compared with Uber.

    Company president John Zimmer said in an interview that the West Coast had “not fully” recovered but noted a “material improvement.”

    Lyft forecast first-quarter revenue of about $975 million, which fell below analyst estimates of $1.09 billion, according to Refinitiv data.

    Its forecast for first-quarter adjusted earnings before interest, taxes depreciation and amortization (EBITDA), a key measure of profitability that strips out some costs, was between $5 million and $15 million.

    For the fourth quarter, Lyft reported an adjusted EBITDA of $126.7 million, excluding $375 million it had set aside for increasing insurance reserves. Analysts had forecast $91.01 million.

    “We wanted to ensure we strengthened our insurance reserve … the purpose of doing that is to ensure we don’t have that type of volatility going forward, because we did such a large reserve on the high end of what we could expect given the size of our insurance book,” Zimmer said in an interview.

    Active riders rose 8.7% increase to 20.36 million for the fourth quarter, Lyft said. Analysts were expecting 20.30 million, according to FactSet estimates.

    Rideshare was “really back … we’re happy with the current marketplace conditions,” Zimmer said.

    Revenue rose 21% to $1.18 billion, slightly above the average estimate of $1.16 billion.

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  • Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

    Meta shares surge nearly 20% as Zuckerberg pledges to make 2023 a ‘year of efficiency’ | CNN Business

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    New York
    CNN
     — 

    For years, Facebook and its CEO Mark Zuckerberg invested heavily in growth, including in areas like virtual reality with unproven potential. But after a brutal year in which the company lost more than $600 billion in market value, Zuckerberg has started speaking Wall Street’s language — and they are rewarding him for it.

    Facebook-parent Meta on Wednesday posted its third straight quarterly decline in revenue and a sharp drop in profit for the final three months of 2022, as it confronted broader economic uncertainty, heightened competition in the social media market and incurred significant charges from a recent round of layoffs.

    But the company nonetheless outperformed Wall Street analysts’ expectations for sales. Moreover, it pledged to focus on “efficiency,” lowered its forecast for capital expenditures in the year ahead and announced plans to boost its share repurchase plan by $40 billion. All of that helped send shares of Meta up nearly 20% in after hours trading Wednesday.

    “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said in a statement with the earnings results.

    Meta reported nearly $32.2 billion in revenue for the quarter, down 4% from the year prior but ahead of the $31.5 billion analysts had projected. The social media giant’s quarterly net income was just shy of $4.7 billion, down 55% from the same period in the prior year and below analysts’ expectations.

    Meta announced plans to lay off around 11,000 employees in November. The company also currently has a broad hiring freeze in place and plans to limit hiring throughout the year, Meta CFO Susan Li said on a call with analysts Wednesday.

    In its earnings report, Meta said it has cut its guidance for capital expenditures for 2023 down slightly to between $30 billion and $33 billion, citing plans for lower data center construction spending. It also added that “substantially all of our capital expenditures continue to support the Family of Apps,” a term that refers to Facebook, Instagram and WhatsApp, perhaps in an effort to reassure investors skeptical of its plan to center its business model around the future version of the internet it calls the metaverse.

    For the first quarter of 2023, Meta expects revenue between $26 and $28.5 billion, the upper end of which would represent an increase from the year-ago quarter and would break Meta’s streak of consecutive quarterly revenue declines. The guidance is somewhat better than Snapchat-parent Snap’s from earlier in the week, which said it expects first quarter revenue to fall between 2% and 10% compared to the previous year.

    Zuckerberg explained the focus on efficiency during the analyst call by acknowledging that for the first 18 years of the company’s history, its revenue grew sharply each year. “And then obviously that changed very dramatically in 2022, where our revenue was negative growth for the first time in the company’s history … and we don’t anticipate that’s going to continue but I don’t necessarily think it’s going to go back to the way it was before.”

    He added: “So I think this is a pretty rapid phase change there that I think just forced us to basically take a step back and say, okay, we can’t just treat everything like it’s hyper-growth,” although Zuckerberg said he thinks the shift in mindset “actually makes us better.”

    Meta’s user numbers also marked a bright spot from Wednesday’s report. Facebook now has 2 billion daily active users, and Meta’s family of apps grew its daily active people by 5% year-over-year to 2.96 billion, a welcome sign for the company following concerns about stagnant user growth last year.

    The company’s core advertising business fell just over 4% to nearly $31.3 billion, a “better-than-expected” result that “should refute concerns over the state of the digital advertising industry,” said Jesse Cohen, senior analyst at Investing.com. Li said that ad revenue growth from its top advertising verticals, online commerce and consumer packaged goods, remained negative during the December quarter but fell at a slower rate than in the previous quarter.

    Still, Meta’s average price per ad fell 22% year-over-year during the December quarter, and 16% overall in 2022, as the company grapples with Apple’s app tracking changes and increased competition from the likes of TikTok.

    The company also lost a total of more than $13.7 billion in its “Reality Labs” unit which houses its metaverse efforts. Fourth quarter Reality Labs revenue fell 17% to $727 million, due to lower sales of its Quest 2 headset, the company said.

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  • Forget inflation, it’s all about earnings | CNN Business

    Forget inflation, it’s all about earnings | CNN Business

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    New York
    CNN
     — 

    To everything there is a season and now is the time for earnings.

    Over the past few weeks investors have been squarely focused on inflation and Fed policy, but now market reactions are getting bigger for earnings (especially the misses) and smaller for economic data.

    What’s happening: “We expect earnings to take the center stage going forward,” wrote Bank of America strategists Savita Subramanian and Ohsung Kwon in a note on Friday. They noted that over the last three quarters, S&P 500 reactions to earnings beats and misses have soared higher and have now surpassed the one-day market reaction to both CPI inflation and Fed policy meeting decisions.

    Companies that missed on both sales and earnings-per-share during the last quarter underperformed the S&P 500 by nearly six percentage points on average the next day, the largest reaction to earnings misses on record.

    Shares of Disney sank 13.16% last November — their lowest level in more than two years — when they missed earnings estimates. Meta shares plummeted 24% after showing a drop in third-quarter revenue in October, the company’s second consecutive quarterly revenue decline. And shares of Palantir closed down more than 11% in November after it missed estimates only slightly.

    “We see this as a narrative shift in the market from the Fed and inflation to earnings: reactions to earnings have been increasing, while reactions to inflation data and FOMC meetings have been getting smaller,” wrote Subramanian and Kwon.

    So we can expect some serious volatility over the next few weeks as companies report their fourth quarter corporate earnings.

    Bank of America’s predictive analytics team analyzed earnings transcripts to calculate sentiment scores and found that corporate sentiment remained flat in the third quarter, well off its highs, which points to a potential earnings decline ahead.

    Similarly, companies’ references to of better business conditions (specific usage of the words “better” or “stronger” vs. “worse” or “weaker”) remained well below the historical average, and mentions of optimism dropped to the lowest level since the first quarter of 2020.

    So far, swings have been to the downside. S&P 500 fourth-quarter earnings-per-share estimates have dropped by about 7% since October. Early earnings reports from some of the largest financial institutions point to a bleak quarter.

    Bad news ahead: The estimated earnings decline for the S&P 500 in the fourth quarter of 2022 is -3.9%, according to a FactSet analysis. If that is indeed the actual drop, it will mark the first earnings decline reported by the index since the third quarter of 2020.

    Over the past few weeks, reported FactSet, earnings expectations for the first and second quarters of 2023 switched from year-over-year growth to year-over-year declines.

    The latest: JPMorgan beat estimates for fourth-quarter revenue but also increased the amount of money for expected defaults on loans. The bank added a $2.3 billion provision for credit losses in the quarter, a 49% increase from the third quarter.

    The move was driven by a “modest deterioration in the Firm’s macroeconomic outlook, now reflecting a mild recession in the central case,” said the report. On a subsequent call, JPMorgan CFO Jeremy Barnum told reporters that the bank expects a recession to hit by the fourth-quarter of 2023.

    Bank of America

    (BAC)     also beat earnings expectations but CEO Brian Moynihan said Friday that the bank is preparing for rising unemployment and a recession in 2023. “Our baseline scenario contemplates a mild recession,” he said. The bank added a $1.1 billion provision for credit losses, a sharp change from last year when that number was negative.

    What’s next: Hold on to your hats. During the upcoming week, 26 S&P 500 companies are scheduled to report results for the fourth quarter.

    Apple CEO Tim Cook has responded to angry shareholders by recommending that the company cut his pay this year, reports my colleague Anna Cooban.

    Cook was granted $99.4 million in total compensation last year. The vast majority of his 2022 compensation — about 75% — was tied up in company shares, with half of that dependent on share price performance.

    But shareholders voted against Cook’s pay package after Apple’s stock fell nearly 27% last year. The vote is nonbinding, but the board’s compensation committee said Cook himself requested the reduction.

    “The compensation committee balanced shareholder feedback, Apple’s exceptional performance, and a recommendation from Mr. Cook to adjust his compensation in light of the feedback received,” the company said in its annual proxy statement released Thursday.

    But don’t cry for Tim Cook just yet. This year, the executive’s share award target is $40 million. About $30 million, or three-quarters, of that is linked to share price performance. The tech boss, who has headed up Apple

    (AAPL)     since 2011, is estimated to have a personal wealth of $1.7 billion, according to Forbes.

    The bottom line: Apple’s share price, like other tech companies, plunged last year as coronavirus lockdowns shuttered some of its factories in China. Supply chain bottlenecks and fears that a global economic slowdown would crimp demand also dragged down its stock.

    Angry investors believe that the person at the helm of the company should also see a drop in pay.

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  • Microsoft earnings hit by personal computing slowdown | CNN Business

    Microsoft earnings hit by personal computing slowdown | CNN Business

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    CNN Business
     — 

    Microsoft posted a double-digit profit decline in the three-month period ending in September as the company confronted a slowdown in the personal computing industry and a broader economic downturn.

    The tech giant on Tuesday reported net income of $17.6 billion for the quarter, a decrease of 14% from the year prior. Microsoft

    (MSFT)    ’s revenue, meanwhile, grew a modest 11% to $50.1 billion. Both results were better than analysts had expected.

    Microsoft’s Azure cloud services unit saw revenue increase by 35% from the prior year, but the growth was slower than some analysts had hoped for a division that has been one of the company’s biggest bright spots in recent years.

    Other parts of Microsoft’s business declined. Microsoft said revenue from its Windows OEM operations fell 15% from the year prior, which comes as demand for personal computers has fallen sharply on the heels of a pandemic-fueled boom. Consulting firm Gartner reported earlier this month that worldwide PC shipments declined 19.5% in the third quarter of 2022, compared to the same period last year. This marks the steepest market decline since Gartner began tracking the PC market in the mid-1990s.

    Microsoft also said revenue from Xbox content and services declined by 3%. The company reportedly recently laid off employees in its Xbox division, among other parts of the company, as it — like many other tech companies right now — looks to cut costs.

    Shares of Microsoft fell 2% in after-hours trading Tuesday following the earnings report.

    Microsoft’s stock has fallen more than 25% since the beginning of the year, amid a broader market downturn as rising inflation, geopolitical uncertainty from the war in Ukraine and more macroeconomic headwinds continue to wreak havoc on the tech industry.

    “In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way,” Satya Nadella, CEO of Microsoft, said in a statement Tuesday announcing the quarterly earnings.

    Haris Anwar, senior analyst at Investing.com, called Microsoft’s earnings report a “mixed bag” in a commentary after the results were released on Tuesday.

    “It shows that Microsoft is weathering the economic storm better than other technology players and its diversified business model is playing a big role in doing so,” Anwar said. But he added that the slowing cloud computing growth was cause for concern.

    “If this growth deceleration continues, it could harm an investment case in the company’s stock which is considered a safe-haven amid the market turmoil, with these concerns reflected in the company’s shares being down in extended trading,” Anwar said.

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  • Meta’s stock falls 17% as its quarterly profit is cut in half | CNN Business

    Meta’s stock falls 17% as its quarterly profit is cut in half | CNN Business

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    New York
    CNN Business
     — 

    Meta on Wednesday posted the second quarterly revenue decline in its history since going public and warned that it is making “significant changes” aimed at cutting costs ahead of 2023, as it confronts an economic downturn that is hitting its core online advertising business.

    For the three months ended in September, Meta

    (FB)     posted revenue of $27.7 billion, down 4% year-over-year and slightly above Wall Street analysts’ expectations. The Facebook parent company posted its first-ever quarterly revenue decline during the June quarter.

    The company reported net income of nearly $4.4 billion — less than half the amount it made during the same period in the prior year and below analysts’ projections.

    “We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company,” Mark Zuckerberg, Meta’s founder and CEO, said in a statement.

    Meta’s stock fell almost 17% in after-hours trading Wednesday following the results.

    Demand for online advertising has declined in recent months amid rising inflation and fears of a looming recession. Tech companies like Google and Snap have also seen hits to their ad revenues. Meta CFO David Wehner said on a call with analysts following the report that the average price per ad across Meta’s platforms fell 18% during the quarter.

    At the same time, Meta’s user growth is slowing amid heightened competition from rivals like TikTok. Meta reported having 2.96 billion monthly active users on its core Facebook app at the end of the quarter, up 2% year-over-year. That’s down from the 6% growth rate it posted in the year-ago quarter. Daily active users on Meta’s family of apps grew 4% to 2.93 billion, down from the 11% increase it posted the year prior.

    Zuckerberg noted on the call that Instagram now has more than 2 billion monthly active users and WhatsApp has more than 2 billion daily active users.

    These challenges to its core business come as Meta is funneling billions of dollars into an ambitious new bet to build a future version of the internet called the metaverse that likely remains years away.

    Wehner said operating losses from the company’s metaverse ambitions, which are categorized under its Reality Labs unit, are expected to “grow significantly year-over-year” in 2023. Reality Labs lost nearly $3.7 billion in the September quarter, and has cost the company a total of $9.4 billion so far this year. Revenue from the Reality Labs unit also fell by nearly 50% year-over-year in the September quarter.

    Altimeter Capital, a Meta sharehoder, last week wrote an open letter calling on the company to reduce its headcount expenses by at least 20% and its annual capital expenditure by at least $5 billion, and to limit its investment in the metaverse to no more than $5 billion per year.

    In Wednesday’s report, Wehner said the company is “making significant changes across the board to operate more efficiently.” Executives said the company expects headcount at the end of 2023 will be roughly in line with or slightly smaller than the 87,314 it reported as of the end of September (an increase of 28% from the year prior).

    “We are holding some teams at in terms of headcount, shrinking others and investing headcount growth only in our highest priorities,” Wehner said. He also hinted that the company could shrink its physical office footprint.

    Zuckerberg said on the call that the three key areas of investment for the company in the coming year are its AI discovery engine that’s powering Reels and other recommendations, ads and business messaging, and its future vision for the metaverse. Meta earlier this month unveiled its newest virtual-reality headset, the Meta Quest Pro, and touted its potential for business customers.

    In the final three months of the year, Meta expects quarterly revenue between $30 billion and $32.5 billion. On the high end, the projection would mark a 3.5% year-over-year decline from the same period in the prior year.

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  • Meta stock jumps after company reports first revenue growth in nearly a year | CNN Business

    Meta stock jumps after company reports first revenue growth in nearly a year | CNN Business

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    New York
    CNN
     — 

    Facebook-parent Meta on Wednesday reported that it grew sales by 3% during the first three months of the year, reversing a trend of three consecutive quarters of revenue declines and far exceeding Wall Street analysts’ expectations.

    Meta shares jumped as much as 12% in after-hours trading following the report, continuing the company’s strong trajectory since Zuckerberg announced that 2023 would be a “year of efficiency.”

    Another bright spot: user growth was relatively strong compared to recent quarters. The number of monthly active people on Meta’s family of apps grew 5% from the prior year to more than 3.8 billion and Facebook daily active users increased 4% to more than 2 billion.

    “We had a good quarter and our community continues to grow,” Zuckerberg said in a statement Wednesday. “We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long term vision.”

    But Meta has a long hill to climb.

    The company also reported that profits declined by nearly a quarter compared to the same period in the prior year to $5.7 billion. Price per advertisement — an indicator of the health of the company’s core digital ad business — also decreased by 17% from the year prior.

    Meta has been in the midst of a massive restructuring, as it attempts to recover from a perfect storm of heightened competition, lingering recession fears resulting in fewer ad dollars and a multibillion dollar effort to build a future version of the internet it calls the metaverse. Meta said in November it would eliminate 11,000 jobs, the single largest round of cuts in its history. And in March, Zuckerberg announced Meta would lay off another 10,000 employees. All told, the cuts will shrink Meta’s workforce by a quarter.

    Meta took a hit of more than $1 billion related to the restructuring in the March quarter, and said it will realize additional charges of around $500 million related to 2023 layoffs by the end of the year.

    Zuckerberg said on a call with analysts Wednesday that when Meta started its “efficiency work” late last year, “our business wasn’t performing as well as I wanted, but now we’re increasingly doing this work from a position of strength.”

    The company said it expects revenue to grow again in the current quarter compared to the prior year. And it slightly lowered its expectations for full-year expenses, potentially buoying investor optimism.

    “The year of efficiency is off to a stronger than expected start for Meta,” Insider Intelligence principal analyst Debra Aho Williamson said in a statement. But she added that the company “can’t afford to sit still in this environment.”

    Like other tech companies, Meta has recently read investor cues and taken to playing up its focus on artificial intelligence rather than the metaverse. The shift comes as Meta contends with the popularity of AI tools from tech firms like Microsoft and OpenAI.

    In his statement with the results Wednesday, Zuckerberg said: “Our AI work is driving good results across our apps and business.” He added in the call that the company’s AI work includes efforts to build AI chat experiences in WhatsApp and Messenger, as well as visual creation tools for posts on Facebook and Instagram and advertisements.

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