Meta, the tech giant behind platforms like Facebook, Instagram, and WhatsApp, has surpassed Wall Street’s revenue expectations in Q2 2023, thanks to an 11% increase in revenue, reaching $32 billion.

The growth exceeded analysts’ predictions of 7%. User numbers also saw a significant boost, with daily active users on Facebook rising 5% to 2.06 billion and a broader average of 3.07 billion daily active users across all Meta products, a 7% increase compared to the previous year.

However, the company faced challenges as losses mounted in its Metaverse project and AI spending rose. The signature virtual reality project, Metaverse, incurred further losses due to ongoing product development and investments in scaling up the virtual world. Additionally, increased spending on artificial intelligence was expected to be a driver for the coming year.

To navigate these challenges, Meta implemented a program of job cuts, reducing headcount by 14% from the previous year. About half of the affected staff, totaling 11,000 job losses, had been made redundant by the end of the last month. While the company claimed to have “substantially completed” the planned layoffs, it continued to explore facilities consolidation and data center restructuring initiatives.

Despite the reduction in employee numbers, payroll costs were set to rise as Meta aimed to employ “higher-cost technical roles.” Furthermore, legal costs incurred in the three months leading up to June exceeded expectations, adding to the company’s expenses. Consequently, total expenses for the year were projected to be around $88-91 billion (£68 billion-£70.3 billion), surpassing the previous estimate of $86-90 billion.

In May, Meta faced a record fine of €1.2 billion (£1.04 billion) from the Irish data protection regulator due to breaching general data protection regulations (GDPR). The fine was imposed for transferring EU users’ data to the United States without sufficient protection from US spying agencies, despite a 2020 ruling by the highest EU court.

Despite the challenges and expenses, Meta’s performance remained strong, with revenue and user numbers continuing to grow. The company’s focus on innovation and the development of new products, like the recently launched Threads app, contributed to its ability to exceed revenue expectations. However, the road ahead includes managing losses in key projects, controlling spending, and addressing legal issues to sustain its growth in the highly competitive tech industry.