Meta shares jumped on Wednesday after the social media company’s sales for the final quarter of 2022 were better than expected and it authorized another $40 billion in share buybacks.
Meta, which owns Facebook, Instagram and WhatsApp, reported revenue of $32.2 billion, down 4% from a year earlier but at the upper end of its forecast. It was also slightly above analysts’ estimates of a decline to $31.7 billion, according to S&P Capital IQ.
The company also announced an additional $40 billion for share buybacks. Meta shares jumped around 19% in after-hours trading. If that gain continues, it would add about $76 billion to its market value, according to data from Bloomberg.
The results present a rosier picture for Meta, which has been squeezed over the past year by the economic downturn that prompted marketers to cut spending, as well as increased competition from TikTok and the challenges of adapting. and measure ad campaigns following Apple’s privacy changes.
Monthly active users on one or more of its apps grew 4% to 3.74 billion in the fourth quarter, while the number of Facebook app users specifically grew 2% to 2.96 billion. .
However, its profits took a hit in the quarter due to billions of dollars in restructuring costs as it seeks to bring its finances under control from growing investor impatience with its costly bet on the Metaverse.
Net income in the fourth quarter fell 55% to $4.7 billion, from consensus estimates of a drop to $6 billion. Meta charged a restructuring cost of $4.2 billion in the quarter related to the consolidation of facilities, job cuts and the cancellation of several data centers.
On a call with investors, Chief Executive Mark Zuckerberg said his “management theme” for the company in 2023 is “efficiency”.
The company would focus on removing some layers of middle management, reducing underperforming projects and deploying artificial intelligence tools to help its engineers be more productive, he said.
“2022 has been a difficult year. But I think we ended up making good progress on our top priorities and we’re setting ourselves up for better results this year, as long as we continue to pursue efficiency,” Zuckerberg added.
Meta, which has rapidly increased its workforce since the start of the coronavirus pandemic, has sought to cut costs as Wall Street increasingly questions its money-losing efforts to build an avatar-filled digital world known as of metaverse. As with his many other virtual and augmented reality projects, they aren’t expected to generate returns for many years.
In November, Meta announced its largest workforce reductions, laying off 11,000 employees, or about 13% of the total number of employees. It has also introduced other measures such as cutting budgets and employee benefits, and reducing its “real estate footprint”.
On Wednesday, the company forecast revenue for the current quarter between $26 billion and $28.5 billion. It also projects 2023 spending in the range of $89 billion to $95 billion, down from an earlier outlook of $94 billion to $100 billion, due to “slower anticipated growth in payroll costs and cost revenues”.
It expects an additional $1 billion in restructuring charges, down from a previous estimate of $2 billion.
Additional reporting by Nicholas Megaw