The news: Meta posted earnings that were mixed, but not entirely disappointing—though its ad sales growth was the lowest it’s been since the company (then called Facebook) went public a decade ago.
Apple changes bite: Investors were looking for signs that Meta has made headway in limiting the impact that Apple's iOS ad-tracking modifications had on its advertising business last year. The answer: inconclusive.
Focus on Gen Z: With TikTok continuing to outperform Meta properties at winning over younger users, the Facebook and Instagram parent has been inspired to diversify its revenue streams—but those attempts, thus far, haven’t been all that inspiring.
Another problem: Reels just isn't monetizing at the same rate as its Feed and Stories formats, but it is eating into time spent on those legacy formats. That’s likely because keeping ads to a minimum helps build an audience; more efficient monetization can and will come over time. Alphabet chief Sundar Pichai made that point on a Tuesday earnings call touting the growth of Shorts, YouTube’s TikTok competitor.
Analyst insight: DAU growth is a positive sign for Facebook “especially coming off of Q4 2021 when it experienced its first-ever decline in DAUs,” said analyst Evelyn Mitchell. “But it’s also clear that Facebook is still struggling to bring in new users, and it’s becoming increasingly difficult for Instagram to pick up the slack.” But Mitchell notes that a significant portion of that DAU growth came outside of North America, and those markets bring in less ad revenue per user than the US and Canada.
Reality check: The company’s Reality Labs unit, which is responsible for virtual reality (VR) and augmented reality (AR) hardware and software, brought in Q1 revenue of $695 million, up over 30% from the year prior. But it had losses of $2.96 billion—nearly 62% higher than its year-earlier quarterly loss.