Update on the year of efficiency
Meta is already showing progress in the year of efficiency. The company beat March revenue by 2% and EPS by 9%. If they did not have Reality Labs, EPS would have been $3.40 vs. the $2.20 reported, or 55% higher. That meant operating margins increased to 25% in the quarter compared to 20% in the back half of 2022. I believe these margins will continue to increase this year and reach 33% by the middle of next year. That number is below the company’s peak of 45.5% in December 2020 and in line with the 33% for the full year 2019.
As for headcount outlook, CFO Susan Li suggested they will grow headcount in the coming years by more than the 1-2% that was reported in the press from leaked internal comments. The company clarified to expect headcount budgets to increase by 1-2%, and overall headcount to rise by more.
Within the next quarter, the Street will likely have priced in the year of efficiency, and shift the focus to the impact of AI across the company’s product lines.