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Meta Platforms:Quarterly Results/2023 Q1: Difference between revisions
Meta Platforms:Quarterly Results/2023 Q1 (view source)
Revision as of 14:26, 27 April 2023
, 27 April 2023→Earnings Call Insights
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* Management to continue championing for efficiency in the business. Mark Zuckerberg said, " Even as our financial position improves, I continue to believe that slowing hiring, flattening our management structure, increasing the percent of our company that is technical, and more rigorously prioritizing projects will improve the speed and quality of our work." | * Management to continue championing for efficiency in the business. Mark Zuckerberg said, " Even as our financial position improves, I continue to believe that slowing hiring, flattening our management structure, increasing the percent of our company that is technical, and more rigorously prioritizing projects will improve the speed and quality of our work." | ||
* While clarifing on the 1-2% headcount growth rate that has been going around, CFO Susan Li said that they "would expect headcount growth in excess of 1% to 2% in 2024." But much of the hiring will be to support priority areas such as "generative AI, ads, infrastructure, Reality Labs, some of the areas that we've been talking about." | |||
=== Performance of Reels === | === Performance of Reels === | ||
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* Since launching Reels, AI recommendations have driven a more than 24% increase in time spent on Instagram. | * Since launching Reels, AI recommendations have driven a more than 24% increase in time spent on Instagram. | ||
* Reels monetization efficiency is up more than 30% on Instagram and over 40% on Facebook quarter-over-quarter. | * Reels monetization efficiency is up more than 30% on Instagram and over 40% on Facebook quarter-over-quarter. | ||
* They expect Reels to become neutral to overall ad revenue at the end of these year or early next year. | |||
* However, CFO Susan Li pointed out that it is more challenging to close the monetization efficiency gap in Reels than it was in Stories as "as people view a Reel for a longer time than a piece of Feed or Stories content, which results in fewer opportunities to serve ads in between posts." | |||
=== Performance of Advantage+Shopping === | === Performance of Advantage+Shopping === | ||
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* However, Zuckerberg didn't spend much time talking about Metaverse like in the past. | * However, Zuckerberg didn't spend much time talking about Metaverse like in the past. | ||
=== | === AI === | ||
* Zuckerberg spend more time talking about AI than Metaverse. | * Zuckerberg spend more time talking about AI than Metaverse. Generally, "AI today and the Metaverse longer-term" is the current main operating philosophy of the company. | ||
* He noted that they are no longer behind in AI infrastracture but that they will continue investing on it. Zuckerberg said they will "have a better idea of the trajectory of that investment later in the year" once they gauge the performance of their new products. | * He noted that they are no longer behind in AI infrastracture but that they will continue investing on it. Zuckerberg said they will "have a better idea of the trajectory of that investment later in the year" once they gauge the performance of their new products. | ||
* While answering a question on what he thinks about generative AI, Mark said that generative AI will improve engagement; hence creating more opportunities for their advertisers. AI agents in particular will create a big opportunity for Meta platforms as tens of millions of small businesses will enlist it to answer customer questions for them. | |||
* CFO Li said their current main AI investments is towards supporting the building of the Discovery Engine, ranking unconnected organic content, ranking ads. | |||
=== Advertising Spend === | |||
* Advertising revenue was mainly from online commerce which benefited from " strong spend among advertisers in China reaching customers in other markets." | |||
* Financial services and technology verticals were the largest negative contributors to ad revenue year-over-year. | |||
* Meta platforms ads impressions increased 26% and the average price per ad decreased 17%. | |||
* Regarding where they are post Apple's privacy policy, CFO Li said they feel good about their relative position. She said that their progress in AI as well as ads algorithms have enabled them to mitigate the impact of the ATT policy. | |||
=== Regulatory Environmennt === | |||
* IDPC is expected to issue a decision in May relating to "transatlantic data transfers of Facebook EU/EEA user data, including a suspension order for such transfers and a fine." | |||
* They are hopefull that the "new EU-US privacy framework will be implemented before a deadline for a suspension." | |||
* They are unsure about the impact of the transatlantic data transfer rules on their revenue. | |||
* Susan Li noted that " roughly 10% of worldwide ad revenue comes from ads delivered to Facebook users in EU countries." But there are other variables to consider before they can come up with the possible impact of the suspension. | |||
=== Q2 and rest of the year outlook === | |||
CFO Li feels confident about Q2 and back half of the year relative to Q1. However, she expects the year to remain volatile due to the current macroenvironment. Some of the things that makes her optimistic about the outlook are: | |||
* There are tailwinds in Q2 and back half of the year caused by a weaker base period due to Russia war. | |||
* They expect FX headwind to be less compared to Q1. | |||
* Reels is a revenue headwind today but they expect it to be a revenue tailwind at the end of the year or early next year. | |||
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