Meta shares have jumped, despite it posting its slowest revenue growth since it went public.
The news comes as a surprise to investors, who expected a slowdown in the face of several headwinds including the fallout from Russia’s invasion of Ukraine.
Meta recorded $7.5 billion in profit in the January-March quarter, down 21% from the same period last year but above Wall Street’s expectations of about $7.1 billion, according to data from S&P Capital IQ.
The Big Tech giant’s revenue came in at $27.9 billion, which marks a 7% increase year-on-year.
It announced that it expected a continuation in the negative trends of the current quarter, including “softness” stemming from the impact of the conflict in Ukraine.
Overall, the results were “better than feared” by Wall Street, Jefferies analyst Brent Thill told the Financial Times.
Advertising, the company’s largest revenue stream, hit $26.9 billion in revenue, falling short of analysts’ predictions $27.6 billion, according to data from Refinitiv.
The number of ad impressions across its apps had increased 15% in 2021, while the price it charged per ad fell 8%.
On the results, Zuckerberg announced that the company’s multiyear projects, which included artificial intelligence and the metaverse would be reined in “given our current business growth levels”.
“These investments are going to be important for our success and growth over time, so I continue to believe that we should see them through,” he told investors on Wednesday.
Reality Labs, the company’s metaverse and VR division, recorded a net loss of $3 billion.
Both Instagram and WhatsApp recorded 2.87 billion daily active users in the quarter, a 6% year-over-year increase.
Zuckerberg praised the growth of Reels, the TikTok-inspired video format which was rolled out on Instagram by Meta recently.
The company’s chief operating officer Sheryl Sandberg said the company saw strong potential in implementing an advertising model for Reels, which accounted for 20% of all time spent on the Instagram app.
“We have great consumer engagement on Reels, we have fast growth,” Sandberg told the Financial Times.
“And we have a playbook for taking that kind of consumer engagement and rolling out ads into the experience. This is going to be a multiyear journey . . . but it’s one we’re very optimistic about.”
Zuckerberg did also warn investors that Meta would struggle to meet Wall Street expectations as a result of the rising popularity of TikTok and other social media companies.