Meta, the owner of Facebook, plans to run lean into 2024, capitalising on staff layoffs and keeping headcount low despite a bounce back in advertising revenue.
The social media company, which like other global media platforms over-hired during the heady days of a consumer switch to online during the pandemic, late last year started a wave of layoffs.
Meta is focused on what it calls the Year of Efficiency but is pushing ahead with investment in AI and key products, including the metaverse.
AI-recommended content, from accounts not followed by a user, is now the fastest growing category of content on Facebook's feed. This has driven a 7% increase in overall time spent on the platform.
The release of Threads, the Twitter killer, is showcased as an example of building “higher quality products faster” with a small team,
Meta last week posted better than expected revenue for the June quarter, up 11% to $US31.999 billion.
Profit was up 16% to $7.78 billion and Meta expects September quarter total revenue to be in the range of $32 billion-$34.5 billion.
Staff numbers fell 14% to 71,469 and more cuts are on the way. About half of the employees impacted by layoffs are still included in this headcount. Meta spent $780 million on restructuring.
Founder and CEO Mark Zuckerberg told analysts in a briefing he wants to keep the company lean even though its financial performance has improved.
“Now that we've gotten through the major layoffs, the rest of 2023 will be about creating stability for employees, removing barriers that slow us down, introducing new AI-powered tools to speed us up, and so on,” he says.
“Over the next few months, we're going to start planning for 2024, and I'm going to be focused on continuing to run the company as lean as possible for these cultural reasons even though our financial results have improved.
“I expect that we’re still going to hire in key areas, but newly budgeted headcount growth is going to be relatively low.
“That said, as part of this year's layoffs, many teams chose to let people go in order to hire different people with different skills they need, so much of that hiring is going to spill into 2024.”
More than 3.8 billion people use at least one of Meta’s apps every month. Facebook now has more than 3 billion monthly active users.
On Threads, Zuckerberg is optimistic.
“We saw unprecedented growth out of the gate and more importantly we're seeing more people coming back daily than I'd expected,” he says.
“And now, we're focused on retention and improving the basics. And then after that, we'll focus on growing the community to the scale we think is possible. Only after that will we work on monetisation.
“We've run this playbook many times before -- with Facebook, Instagram, WhatsApp, Stories, Reels, and more -- and this is as good of a start as we could have hoped for, so I'm really happy with the path we're on here.”
“One note that I want to mention about the Threads launch related to our Year of Efficiency is that the product was built by a relatively small team on a tight timeline.
“We've already seen a number of examples of how our leaner organisation and some of the cultural changes that we've made can build higher quality products faster, and this is probably the biggest example so far.
“The Year of Efficiency was always about two different goals: becoming an even stronger technology company, and improving our financial results so we can invest aggressively in our ambitious long term roadmap.
The other area of capital spend is AI.
“Since we don't know how quickly our new AI products will grow, we may not have a clear handle on this until later in the year,” says Zuckerberg.
“The two technological waves that we're riding are AI in the near term and the metaverse over the longer term.
“Investments that we've made over the years in AI, including the billions of dollars we've spent on AI infrastructure, are clearly paying off across our ranking and recommendation systems and improving engagement and monetization.”
Plays of Reels, the short form video clips, has hit more than 200 billion a day across Facebook and Instagram.
The annual revenue run-rate across Meta’s apps for Reels is now more than $US10 billion, up from $3 billion.
“Beyond Reels, AI is driving results across our monetization tools through our automated ads products, which we call Meta Advantage,” says Zuckerberg.
“Almost all our advertisers are using at least one of our AI-driven products.
“We've also deployed Meta Lattice, a new model architecture that learns to predict an ad's performance across a variety of datasets and optimisation goals.”
An AI Sandbox, a testing ground for generative AI-powered tools such as automatic text variation, background generation, and image outcropping, has been introduced.
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