Facebook parent Meta's reported quarterly profit jumped past Wall Street's expectations, as did its number of daily users.
Shares were up more than 18% in premarket trading, despite the company's slowest revenue growth since going public a decade ago.
Facebook had 1.96 billion daily active users on average for March 2022, an increase of 4% year-over-year.
Meta has been warning investors that its revenue can’t continue to grow at the breakneck pace they are accustomed to, so it’s likely that the quarter’s single-digit revenue growth was already baked into investor expectations.
Among the challenges for Meta was Apple's recent privacy changes to its iPhone software iOS. Those changes have made it harder for companies like Meta to track people for advertising purposes, which also puts pressure on the company’s revenue.
"I talked last quarter about some of the near-term challenges facing our business. Some are specific to our industry, like signal loss resulting from Apple's iOS changes, which is a meaningful headwind but we also expect that with the right technology investments, we'll navigate okay over time," said CEO Mark Zuckerberg in a conference call with analysts.
The company earned $7.47 billion, or $2.72 per share, in the January-March period. That's down 21% from $9.5 billion, or $3.30 per share, in the same period a year earlier.
Revenue rose 7% to $27.91 billion from $26.17 billion — the slowest growth rate in a decade for the online advertising powerhouse that generally reports sales growth in the double digits.
Analysts, on average, were expecting earnings of $2.56 per share on revenue of $28.28 billion, according to a poll from FactSet.
Zuckerberg said that the revenue acceleration Meta saw during the pandemic has now tapered off, and the company will now "slow the pace of some of our investments" so it can continue to grow profits.
This mainly refers to Meta's Reality Labs segment, which encompasses its futuristic "metaverse" project. The company, which changed its name to Meta Platforms last fall, invested more than $10 billion in Reality Labs — which includes its virtual reality headsets and augmented reality technology — in 2021.
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That's in addition to competition from TikTok and changes in how people use social media that threaten Meta's prospects.
In yet another sign that Meta is attempting to be more "TikTok-like," Zuckerberg said during the call that users are starting to see "a lot of other interesting content" beyond posts from friends, family and accounts they follow on Facebook and Instagram as the platforms shift to AI-powered recommendations.
The Associated Press contributed to this report.