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Facebookparent Meta posted better-than-expected fourth-quarter revenue and announced a $40 billion increase in its stock repurchase authorisation, resulting in its stocks rising nearly 20% in after-hours trading.

In the fourth quarter, Meta’s revenue fell 4% to $32.2 billion, from $33.6 billion in the prior-year quarter, but better than analysts’ expectations of $31.53 billion, according to Refinitiv. The company’s net income in Q4 decreased to $4.7 billion (or $1.76 per share), from $10.3 billion (or $3.67 per share), in the year-ago period, missing analysts’ expectations of $2.22 per share.

“2022 was a challenging year, but I think we ended it having made good progress on our main priorities and setting ourselves up to deliver better results this year as long as we keep pushing on efficiency,” Meta Founder and Chief Executive Officer (CEO) Mark Zuckerberg, said.

“Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organisation,” he added.

Zuckerberg noted that the company’s priorities have not changed since last year and the “two major technological waves” driving Meta’s roadmap are “AI today and over the longer term the metaverse”.

The Meta chief said that AI is the foundation of the firm’s discovery engine and its ads business and the emerging technology is going to enable many new products and additional transformations within Meta’s apps.

“Generative AI is an extremely exciting new area with so many different applications, and one of my goals for Meta is to build on our research to become a leader in generative AI in addition to our leading work in recommendation AI,” he added.

In addition, this year, the social media firm is going to launch its next-generation consumer headset, featuring Meta Reality.

Facebook, which rebranded itself as Meta in 2021, is focussed on bringing the metaverse, an immersive digital realm to life, and is making significant investments in this area.

The revenue of its Reality Labs, which has researchers, developers, and engineers working on virtual reality (VR), and augmented reality (AR) gadgets, and its metaverse vision, was $727 million, down 17% year over year due to lower Quest 2 sales.

Reality Labs’ expenses were $5 billion, up 20% due primarily to employee-related costs and

restructuring-related expenses, the firm said. The unit’s operating loss widened to $4.3 billion from $3.3 as compared to the corresponding period of the last fiscal year, taking its total operating loss for the year to $13.72 billion.

Meanwhile, as the company focuses on efficiency and improving its business performance, its total costs and expenses were $25.77 billion and $87.66 billion, an increase of 22% and 23% year-over-year for the fourth quarter and full year 2022, respectively. Meta noted this included charges related to its restructuring efforts of $4.20 billion and $4.61 billion in the fourth quarter and full year 2022, respectively.

Meta’s headcount was 86,482 as of December 31, 2022, an increase of 20% year-over-year. This includes a substantial majority of the approximately 11,000 employees impacted by the layoff announced in November 2022, the company said.

Meta’s ‘Family of Apps’

Meta, which also owns Instagram and WhatsApp, said its community across the ‘Family of Apps’ continues to grow. Approximately 2.96 billion people used at least one of its apps on a daily basis in December, and about 3.74 billion people used at least one on a monthly basis, it noted.

“I’m pleased with the strong engagement across our apps,” Zuckerberg said, adding, “The progress we’re making on our AI discovery engine and Reels are major drivers of this.”

Facebook reached two billion daily active users (DAUs) for the first time in December, up 4% or 71 million compared to last year. DAUs represented approximately 67% of the 2.96 billion monthly active users (MAUs) in December. MAUs grew by 51 million or 2% compared to last year.

Reels plays across Facebook and Instagram have more than doubled over the last year, while the social component of people resharing Reels has more than doubled on both apps in just the last 6 months, according to Zuckerberg.

Most of Meta’s revenue comes from advertising and there appears to be some improvement to fourth quarter advertising revenues compared to the last three quarters, although it remained under pressure from weak advertising demand, which according to Meta, continues to be impacted by the uncertain and volatile macroeconomic landscape.

The company expects first-quarter 2023 total revenue to be in the range of $26-28.5 billion. And it anticipates its full-year 2023 total expenses to be in the range of $89-95 billion, lowered from its prior outlook of $94-100 billion.