• by Colin Kirkland , July 27, 2023

In addition to a healthy increase in active Facebook users, Meta’s Q2 performance results show $32 billion in revenue -- an increase of 11% compared to the previous year -- along with the successful launch of Threads and the company’s continued investment in artificial intelligence, which has driven an increase in ad revenue.

“We had a good quarter,” Meta CEO Mark Zuckerberg said in a statement. “We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall.”

Facebook -- an app that has not had the same appeal for younger social-media users -- is back on the map after adding 27 million users in the most recent quarter, crossing three billion monthly active users for the first time in its near-20 year history.

Meta’s Reality Labs unit, which is devoted to metaverse-related ventures, continues to negatively impact the tech giant’s results, bringing in $276 million in sales this past quarter –– its lowest revenue to date -- and posting a loss of $3.7 billion.

Meta’s VR headset sales also fell in the period, but the company hopes that its upcoming Quest 3 release will have a positive effect, despite the forecast of “meaningful” operating losses for the future.

Still, by diversifying its focus beyond developing metaverse technologies, Meta is winning back shareholders' trust -- especially after expanding its influence in the social-media sphere with the launch of Twitter competitor Threads.

Threads became the fast-growing app in social media history, reaching 100 million users within days. With its sudden rebrand to “X,” Twitter continues to ostracize long-time users and ad partners. Though it is still too early to tell how Threads will grow, or how and when the company will monetize the platform with ads, Meta has provided an accessible text-based messaging platform that former Twitter users can flock to if they choose.

For ad performance, Meta shows an increase of 34% year-over-year in Q2 in ad impressions delivered across its various apps. In addition, the average price per ad decreased by 16%. The company cited its AI-led products like Advantage+ and heightened focus on TikTok- competitor Reels as key factors in the positive outcome, one that some analysts find impressive.

“Q2 growth of its ad revenue, attributed to AI tools, will bring a sigh of relief given the challenges it faced from Apple's privacy software updates and stricter data regulations,” says Amelia Connor-Afflick, senior thematic intelligence analyst at GlobalData. “Reels and click-to-WhatsApp ad revenues were particularly strong, arguably showing how Meta is challenging TikTok.”

Connor-Afflick points out that shareholders, however, want to see the company adapt to “the privacy-led regulatory environment,” with improved regulatory compliance to ward off further fines and “reputational damage” and a plan to diversify its revenue stream beyond ads.

With the company's mass layoffs and Zuckerberg's self-proclaimed “year of efficiency,” Meta forecasts revenue of $32 billion to $34.5 billion for next quarter.