Meta, the social media behemoth formerly known as Facebook, has released its quarterly financial report, and the numbers are impressive across most divisions. However, there is one notable exception – the virtual and augmented reality division is experiencing significant challenges.
Let’s start with the positive news. Meta’s user base continues to expand, with Daily Active Users (DAP) reaching an average of 3.07 billion in June 2023, up 7% from the same period last year. The Monthly Active Users (MAP) also saw a 6% increase, totaling 3.88 billion. The Facebook platform, a flagship product of Meta, enjoyed a boost in Daily Users (DAUs) with 2.06 billion users, up 6%. The Monthly Users (MAUs) for Facebook reached 3.03 billion, a 3% increase.
The advertising segment witnessed significant activity, with ad impressions across all Meta divisions rising by an impressive 34%. However, the average ad price experienced a 16% decrease. Despite this, revenues surged to $32.0 billion, up 11% compared to the previous year. On a constant currency basis, revenues climbed by an impressive 12%.
While the financials look promising overall, there are some areas of concern. Costs and expenses increased to $22.61 billion, a 10% rise from last year. Notably, this includes accrued legal expenses of $1.87 billion and restructuring charges of $780 million during the second quarter of 2023. Investment expenses, including principal payments on finance leases, totaled $6.35 billion.
The company engaged in share repurchases, acquiring $793 million of Class A common stock, indicating confidence in its own growth and potential. Meta had an impressive $53.45 billion in Cash, Cash Equivalents, and Marketable Securities as of June 30, 2023, while Free Cash Flow reached $10.96 billion.
However, headcount declined by 14% from last year, with 71,469 employees. Notably, nearly half of the employees laid off in 2023 are still included in this count as of June 30, 2023.
The growth in Facebook’s daily users is noteworthy, with an increase of 30 million users compared not to last year but to the previous quarter. This is significant because Facebook experienced a decline in audience during the last quarter of 2021.
Mark Zuckerberg, the CEO of Meta, attributed part of the growth to Reels, a short video service akin to TikTok and YouTube Shorts. Impressively, Reels garners approximately 200 billion daily plays.
Despite these successes, Meta’s virtual and augmented reality division, known as Reality Labs, is facing considerable challenges. The division recorded an operating loss of $3.7 billion in the reporting quarter, and it seems to be a persisting issue. The division brought in $276 million from April through June, slightly less than the $339 million in the previous quarter. Last year, Reality Labs suffered losses of $13.9 billion, with an additional $3.99 billion in the first quarter of 2023. Cumulatively, the division’s losses since the beginning of 2022 amount to a staggering $21.3 billion.
As Meta continues to navigate the ever-evolving tech landscape, it remains to be seen how the company will address the challenges in its virtual and augmented reality division while capitalizing on its successes in other areas. The company’s strong financial position and massive user base provide a solid foundation, but tackling the reality division’s issues will be crucial for sustaining growth and success in the future.
