Facebook and Instagram owner Meta on Wednesday reported its first annual sales drop since the company went public in 2012, but the fall was less brutal than expected, sending its share price soaring.
The social media giant said sales dropped one percent to $116.6 billion in 2022, while it also announced that the number of daily users on Facebook hit two billion for the first time.
CEO and founder Mark Zuckerberg pointed to the success of improved algorithms on Meta's video Reels service, that was delivering short clips more efficiently to users on Facebook and Instagram. Meta competes fiercely with TikTok, the Chinese owned video-sharing platform that has proved a formidable rival in attracting young users away from once-dominant Instagram.
"The number of people daily using Facebook, Instagram and WhatsApp is the highest it's ever been," Zuckerberg said in an earnings call.
Zuckerberg also lauded improved artificial intelligence (AI) to better distribute ads after changes on the iPhone decided by Apple seriously hampered Meta's ability to target users.
The 2022 results ended a bad year for Meta, which in November announced it would lay off 11,000 employees or 13 percent of staff in the largest worker reduction in the company's history. Zuckerberg said his company's "management theme for 2023 is the 'Year of Efficiency' and we're focused on becoming a stronger and more nimble organization."
Zuckerberg said Meta is working on eliminating layers of middle management as well as deploying AI tools to help engineers be more productive.
Meta will also be more aggressive when it comes to cutting projects that are not performing or are not priorities, he added.
Big tech platforms have been suffering from the souring economic climate, which is forcing advertisers to cut back on marketing, and Apple's data privacy changes, which have reduced leeway for ad personalization.
But Meta beat market expectations as the effect of iPhone privacy changes on ad targeting appeared to be waning and cost-cutting started bringing results, Wedbush analyst Dan Ives said in a tweet.