- Meta reports first-quarter revenue growth, reversing three consecutive quarters of decline.
- Mark Zuckerberg believes part of this growth is contributing to higher engagement on Instagram Reels.
- Time spent on Instagram has increased 24% since the company launched, according to Zuckerberg.
Meta reports 3% year-over-year revenue growth in the first quarter of 2023, reversing three consecutive quarters of revenue decline. Mark Zuckerberg credits higher engagement with Reels for some of this growth.
On Wednesday’s earnings call, Zuckerberg said time spent on Instagram has increased by 24% since launching TikTok challenger short-form video product Reels.
Zuckerberg said on the earnings call:
Zuckerberg also attributed some of the company’s revenue growth to AI, and praised Meta’s investment in AI for helping Reels push videos to users.
“Our investment in recommendation and ranking systems is driving a lot of results across discovery engines, reels and advertising today,” Zuckerberg said in the transcript.
The company does not categorize daily active users of Reels products. But according to Meta, the number of monthly active users in its app family has grown by about 5% year-over-year to over 3.8 billion. Facebook, meanwhile, has surpassed 2 billion daily active users, up 4% year-over-year, the company said in its earnings release.
When asked by analysts if there were any benchmarks for the increase in time spent on Reels, Meta CFO Susan Li said the company doesn’t quantify “expected engagement growth,” but they did see He said he was “satisfied” with the “incremental engagement”. Li added, “It’s clear that people value short-term videos” on the platform.
These comments from Meta’s C suite come after a bumpy road in the company’s foray into Reels. The Wall Street Journal reported in September, citing internal Meta documents, that the Reels deployment had failed to gain market share from his TikTok.
One of the reasons Reel failed was the low level of content creation. At the time, the platform had about 11 million creators, but most Reels users were “not engaged at all,” according to one of his docs that The Wall Street Journal confirmed.
A spokesperson for Meta disputed the Wall Street Journal’s report, but admitted to an insider that Meta “has work to do” to keep Reels alive.
Meta reported first-quarter revenue of $28.6 billion, up 3% year-over-year. Those earnings beat his FactSet analyst’s forecast of $27.7 billion in revenue, according to a Wall Street Journal report Wednesday. Meta also posted a net profit of $5.7 billion for the quarter, down 24% year-over-year. This is partly due to company restructuring.
The stock surged about 11% in Thursday’s premarket, trading just over $232 just after 6am ET.
Meta did not immediately respond to Insider’s request for comment.
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