By Vikas SN
Facebook parent Meta CEO Mark Zuckerberg said the management theme for 2023 is the “year of efficiency” and they are focused on becoming a more stronger and nimble organisation, as the company looks to recover from slowing revenue growth in recent quarters and rein in costs amid a tough macroeconomic environment.
“We’re working on flattening our org structure and removing some layers of middle management to make decisions faster, as well as deploying AI tools to help our engineers be more productive” Mark Zuckerberg said during the company’s earnings conference call on February 1
“Even if our business outperforms our goals, this will stay our management theme for the year so I think it’s going to make us a better company” he said.
Zuckerberg mentioned that they are also going to be more proactive about shutting down projects that are not performing or may no longer be as crucial. “My main focus is on increasing the efficiency of how we execute our top priorities,” he said.
The areas the social networking giant is currently focused on are artificial intelligence that includes its discovery engine, ads, business messaging, and “increasingly generative AI”, and the future platforms for its ambitious metaverse.
After a rapid growth for the first 18 years, Meta faced slowing revenue growth in the past few quarters and a first-ever revenue decline last year as marketers pulled back advertising spends amid an economic downturn. The company announced plans to sack 11,000 employees in November 2022 besides restructuring some teams.
“We’ve entered somewhat of a phase change for the company, where we just grew so quickly for like the first 18 years of the company’s growth. And it’s very hard to really crank on efficiency while you’re growing that quickly” Zuckerberg said in the call.
In its earnings release, Meta said it is taking a $4.2 billion restructuring charge related to layoffs, abandoning several offices and early termination of building leases, and cancellation of multiple data center projects as they shift to a new data center architecture that is more cost efficient and can support both AI and non-AI workloads.
Meta CFO Susan Li said they now expect to record another $1 billion in restructuring charges in 2023 related to consolidation of its office facilities while mentioning that the firm may incur additional restructuring charges as they “progress further in its efficiency efforts”
“I think there’s going to be some more that we can do to improve our productivity, speed, and cost structure, and by working on this over a sustained period, I think we’ll both build a stronger technology company and become more profitable,” Zuckerberg said during the earnings call.
These restructuring costs dragged down Meta’s profit by 55% year-on-year (YoY) to $4.65 billion for the quarter, from $10.28 billion in the same quarter last year. Total costs surged 22% to $25.77 billion for the quarter.
The reality labs division, which houses the firm’s virtual reality technologies and projects, posted a loss of $428 million for the quarter, widening from $330 million for the year-ago quarter. The unit posted revenue of $727 million for the quarter, down from $877 million in the year-ago quarter.
Revenues from its family of apps, which primarily comprises advertising, stood at $31.44 billion for the quarter, down 4% year-on-year. Net income was down 33% year-on-year to $10.7 billion. Total revenue fell 4% YoY to $32.17 billion for the year while operational income fell 49% YoY to $6.4 billion.