Meta has posted its largest quarterly revenue jump in years, but don't expect the Silicon Valley tech giant to return to its days of blockbuster office leases.
After spending the past year terminating deals, backing away from prelease agreements and trimming its workforce, the Menlo Park, California-based social media company will maintain its focus on profitability as it looks to grow as a leaner, more efficient business, CEO Mark Zuckerberg told analysts Thursday.
"Our 'Year of Efficiency' was focused on making Meta a stronger technology company and improving our financial stability to return to strong revenue growth," Zuckerberg said on the company's latest earnings call. "Becoming a leaner company has helped us execute better and faster, and we'll retain those values moving forward."
The company spent nearly $3.5 billion through 2023 on restructuring efforts that included office closings, severance and personnel costs, and other related expenses. That's in addition to the more than $4.6 billion Meta spent through 2022 as it raced to respond to slowing advertising revenue and mounting losses in its Reality Labs division, which produces the company's augmented and virtual reality hardware and software.
The company employed about 67,315 people by year-end 2023, a 22% drop compared to the prior year.
Meta reported fourth-quarter revenue of more than $41.1 billion, a 25% jump compared to the same period a year ago. That marks the company's largest year-over-year quarterly growth in more than two years. In the third quarter of 2023, Meta reported record revenue of $34.15 billion, a 23% jump.
Leaner, With Less Space
Even so, Meta's muted headcount growth expectations and ongoing efforts to consolidate its real estate footprint signal the days of signing blockbuster leases around the world won't be returning anytime soon.
Company executives emphasized its commitment to moving forward as a smaller, more efficient business that is expected to result in slower hiring and a shrunken office portfolio.
"A lot of people looked at what we were doing as a short-term thing, but the part about making the company leaner is the most important part to take forward," Zuckerberg said. "We're in a place right now where the business is performing well and the obvious question is, 'Should we invest more in things?' But the biggest thing holding me back from doing that is I've come around on thinking we operate better as a leaner company."
The social media giant recently listed for sublease 133,000 square feet of space at 12105 W. Waterfront Drive in Playa Vista, California, a sign that the company isn't quite done with its efforts to consolidate its office portfolio. The latest listing adds to millions of square feet the company has or is looking to offload around the world, much of which has been concentrated around its Silicon Valley headquarters.
As part of Zuckerberg's so-called Year of Efficiency, Meta laid off a third of its workforce last year. While it hasn't announced any large-scale job cuts for 2024, other tech companies such as Microsoft, Google, Amazon, Salesforce and eBay collectively eliminated more than 25,000 positions within the first 30 days of this year.
Job cuts among big tech companies have been a worrisome sign for the national commercial real estate market, which has come to rely on massive leases and rising headcounts in such major cities as San Francisco, New York, Seattle and Los Angeles for rent growth.
While Meta has significantly reduced its real estate portfolio, a potential bright spot for its role in the national office market could be its mounting efforts to get people back to working from physical office locations. The company told employees last June it would require those assigned to a physical workspace to come in for a minimum of three days a week. The mandate took effect in September.