Facebook Parent Meta Expected to Report Sales Growth as Turnaround Continues

Facebook parent Meta Platforms is expected to post its largest year-over-year revenue growth in more than a year as demand for advertising picks up again.

Meta is set to report second-quarter revenue of nearly $31 billion, according to analysts surveyed by FactSet, up 7.6% compared with a year ago. That would represent Meta’s second quarter in a row of growing revenue after the company saw its business shrink for most of 2022. 

The company’s fortunes have begun to turn around during what Chief Executive Mark Zuckerberg has called a “year of efficiency.” Meta has also seen its performance improve because of the economic climate and investor sentiment about its advancements in artificial intelligence. 

The social-media giant has also improved its ad-targeting capabilities through the use of improved AI technology after Apple in 2021 implemented privacy changes that erased $10 billion of revenue for Meta in 2022. 

The 7.6% increase is Meta’s largest year-over-year growth in revenue since the final quarter of 2021.

Wall Street expects Meta to post a net profit of nearly $7.5 billion for the second quarter. That would represent a more than 11.4% increase from the year-ago period, and an increase from $5.7 billion in the January-to-March quarter.

Thus far in 2023, Meta has seen its shares grow by about 145% through Tuesday’s close. That growth has come after heavy cost-cutting and several rounds of layoffs affecting about 21,000 jobs, or nearly a quarter of the company’s workforce. 

For the quarter, advertising is expected to represent 97.7% of Meta’s revenue, according to analysts surveyed by FactSet. Analysts predict Meta’s advertising revenue will grow to $30.4 billion, up nearly 8.1% compared with a year prior. 

Meta’s Reality Labs, the division tasked with building the hardware and software underpinning that effort, is expected to report revenue of $417 million for the quarter, a decline of 7.7% compared with a year ago. The unit, which makes Meta’s Quest virtual-reality headsets, is expected to post an operating loss of $3.4 billion.

Analysts expect the company to disclose that Facebook’s daily active user base has stayed mostly flat since the previous quarter at 2.04 billion users. Daily active users are a key metric that experts and analysts rely on to measure how well a social network is doing, as more users typically result in more revenue. 

The latest earnings report comes weeks after Meta pulled off the most successful product launch in its history with the rollout of Threads, an app built by Instagram to compete in microblogging versus Twitter. Within five days of its launch, Threads reached 100 million signed-up users. Since the launch, the new app has seen its daily active users decline. 

The successful launch has served to shift the morale among Meta employees following a tough year for the company, people familiar with the matter told The Wall Street Journal earlier this month. 

Write to Salvador Rodriguez at [email protected]