Facebook bounceback: daily user numbers return to growth

Despite slowing revenue growth, Facebook’s daily active users are up after last quarter’s slump and parent Meta continues heavy investment in Reels and AI.

Daily active users on Facebook have once again climbed following the previous quarter’s landmark reporting of the first slump in the platform’s history. 

The number of daily active users on Facebook in Q1 2022 stood at 1.96bn - up from 1.929bn at the end of last year. The bounceback means a 1.6% jump on the quarter and a 4.4% rise on the user numbers reported for Q1 2021.

However, parent Meta’s revenue growth was reportedly at its slowest pace in at least a decade. Revenue stood at $27.9bn in Q1 2022, 7% up on the same period last year and a dip on the $33.6bn in Q4 2021. Year-on-year Meta saw revenue growth in APAC but there was only a slight rise in the US and Canada and a marginal dip in Europe. 

The company is forecasting revenue of between $28bn to $30bn in Q2 this year - which would, if it achieved the very bottom end of that scale, represent its first potential revenue drop year-on-year.

Meta founder and CEO Mark Zuckerberg said: “We made progress this quarter across a number of key company priorities and we remain confident in the long-term opportunities and growth that our product roadmap will unlock.

"More people use our services today than ever before, and I'm proud of how our products are serving people around the world."

 

AI recommendations boost video dwell time 

In an earnings call this week Zuckerberg confirmed that Meta’s three main investment priorities were ads, Reels and the metaverse, but that this investment will drag on revenue in the short-term.

Investment in Reels – to aggressively compete with TikTok – is on the back of the increasing popularity in short-form video and “the advancement of AI recommendations driving more of our feeds and rather than just social content”, he said, adding that Reels is now making up more than 20% of the time people spend on Instagram, and video overall accounting for 50% of the time users spend on Facebook.

Meta pointed to Apple’s IOS changes as a “meaningful headwind”, which last quarter the company estimated to cost it $10bn and has confirmed that it’s still “to be in that order of magnitude on the expected impact”. 

Other challenges raised included a softening in e-commerce after its strong growth during the COVID pandemic, and the ongoing war in Ukraine meaning the company has been blocked in Russia, with Meta also deciding to stop accepting ads from Russian advertisers across the globe.

Meta results summary: Q1 2022

  • Facebook’s daily active users stood at 1.96 billion in Q1 2022, compared to 1.929 billion in Q4 2021.
  • Daily active users for Q1 last year rose 4.4 percent up compared to Q1 2021;
  • The number of daily active users across any of Meta’s apps (including Facebook, WhatsApp and Instagram) was up 1.8% to hit 2.87bn from 2.82bn quarter-on-quarter. 
  • Year-on-year, daily active users across all Meta platforms was 5.5%.
  • Revenue for Q1 2022 hit $27.9bn - 6.6% up year-on-year but 17% down on Q4 last year.
  • Advertising revenue for Q1 2022 was $27bn - 6.1% up on Q1 2021.

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