Meta announced an overall revenue growth of 11% for its second quarter financial results yesterday (26 July).
Its Family of Apps and advertising revenue led profits, both increasing 11% in the last quarter and 8% throughout the last six months.
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In addition to Meta’s apps revenue increasing from $28bn to $32bn, the company also stated that daily active usership across all its apps increased 7% year-on-year.
Speaking on these results, Meta founder and CEO Mark Zuckerberg stated that this “strong engagement” across Meta’s apps was the beginning of a brighter future for the company. Zuckerberg cited the release of Meta’s large language model Llama 2, Threads and the upcoming release of Quest 3 as “the most exciting roadmap” Meta has seen “in a while”.
Speaking on the trajectory of Threads during the earnings call announcing Meta’s financial results, Zuckerberg remained “optimistic”.
Despite numbers of users falling, Zuckerberg was quick to remind callers of the “unprecedented growth” Threads experienced “right out of the gate”. Looking forward, Zuckerberg stated that Meta was now focusing its attention on user retention and the basics of the app, stating that monetisation would not be a priority until after the Threads community has grown “to the scale [Meta] think is possible”.
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By GlobalDataSenior analyst at GlobalData, Amelia Connor-Afflick appears to share this buoyant sentiment regarding Meta’s “shift back to social media”, an area Meta knows best.
Whilst Connor-Afflick agrees that the substantial sign-ups within the first few hours of Threads’ launch have positively “boosted confidence following months of uncertainty around the metaverse”, she reflects that Threads’ timing was a little too perfect.
Given the “disarray at Twitter”, Connor-Afflick also believes Threads took the perfect time to take advantage of an already large “existing Instagram userbase” to achieve this massive signup.
The chance to prove Threads’ longevity, in her eyes, is still upcoming.
Is Meta finally turning its back on Zuckerberg’s metaverse?
Meta’s refocusing on social media and advertising may have also helped turn attention away from the 38% loss faced by the company’s metaverse unit, Reality Labs.
Speaking on the Meta’s product roadmap, Zuckerberg stated that whilst AI was a theme Meta would be exploring “near term”, the metaverse would continue to be a “longer term” focus.
Connor-Afflick states that Zuckerberg’s decision to keep the metaverse as a long-term strategy in this call is “likely” an attempt to “keep attention away from Meta’s major losses in Reality Labs.” However, this “scaling back” from the metaverse has “relieved shareholders” and allowed Meta to prioritise AI which has been especially successful for Meta’s advertising revenue.
Overall, Meta’s CFO Susan Li stated in the earnings call that Meta expects its third quarter 2023 total revenue to be “in the range of $32-34.5bn”.
After its shares crash in 2022, Meta appears to finally be clawing back to pre-crash stock price.
