Mark Zuckerberg
Chief Executive Officer at Meta Platforms
All right, hey everyone, thanks for joining today. Our family of apps continues to grow, even as we navigate a challenging macro environment. We now reach more than 3.6 billion people monthly across our services. The number of people using Facebook daily continues to grow, including in the US, although we saw an expected decline in monthly actives due to internet blocks related to the war in Ukraine. Engagement trends on Facebook have generally been stronger than we anticipated, and strong Reels growth is continuing to drive engagement across Facebook and Instagram. That said, we seem to have entered an economic downturn that will have a broad impact on the digital advertising business. It's always hard to predict how deep or how long these cycles will be, but I'd say that the situation seems worse than it did a quarter ago.
In this environment, we're focused on making the long term investments that will position us to be stronger coming out of this downturn -- including our work on our discovery engine and Reels, our new ads infrastructure, and the metaverse. We're also focused on being rigorous about measuring returns and sizing these investments correctly. Now on our last call, I discussed that based on the revenue growth we were seeing in 2021, we kicked off a number of multi-year projects to accelerate our business. I still believe that these projects are important, but given the more recent revenue trajectory we're seeing, we're slowing the pace of these investments and pushing some expenses that would have come in the next year or two off to a somewhat longer timeline.
Now given the continued trends, this is even more of a focus now than it was last quarter. Our plan is to steadily reduce headcount growth over the next year. Many teams are going to shrink so we can shift energy to other areas inside the company, and I wanted to give our leaders the ability to decide within their teams where to double down, where to backfill attrition, and where to restructure teams while minimizing thrash to the long term initiatives. The fact that we hired a lot of people earlier this year means that our reported year-over-year headcount growth will still be substantial for the next few quarters, but it should continue to decline over time.
This is a period that demands more intensity, and I expect us to get more done with fewer resources. We're currently going through the process of increasing the goals for many of our efforts. Previously challenging periods have been transformational for our company and helped us develop our next generation of leaders. And I expect this period to be no different. I expect we're going to find a way to keep investing in our top priority areas, and I think we're going to come through this period as a stronger and more disciplined organization.
Next, I want to discuss how we're doing in our high priority areas. To understand where we're going, it's important to keep in mind that there are two major technological waves that we're riding in our business. The first wave driving our business today is AI. And then the second longer term wave is the emergence of the metaverse. One of the main transformations in our business right now is that social feeds are going from being driven primarily by the people and accounts you follow to increasingly also being driven by AI recommending content that you'll find interesting from across Facebook or Instagram, even if you don't follow those creators.
Social content from people you know is going to remain an important part of the experience and some of our most differentiated content, but increasingly we'll also be able to supplement that with other interesting content from across our networks. Reels is one part of this trend that focuses on the growth of short-form video as a content format, but this overall AI trend is much broader and covers all types of content, including text, images, links, group content, and more. Building a recommendation system across all these types of content is something we're uniquely focused on.
Right now, about 15% of content in a person's Facebook feed and a little more than that of their Instagram feed is recommended by our AI from people, groups, or accounts that you don't follow. We expect these numbers to more than double by the end of next year. As our AI finds additional content that people find interesting, that increases engagement and the quality of our feeds. And since we're already efficient at monetizing most of these formats, this should increase our business opportunity over that period as well.
Reels engagement is also growing quickly. I shared last quarter that Reels already made up 20% of the time that people spend on Instagram. This quarter we saw a more than 30% increase in the time that people spent engaging with Reels across Facebook and Instagram. AI advances are driving a lot of these improvements, and one example is that after launching a new large AI model for recommendations, we saw a 15% increase in watch time in the Reels video player on Facebook alone. So I think there are many improvements like this we'll continue to make.
As we're building our discovery engine though, I want to be clear that we're still ultimately a social company focused on helping people connect. One social trend that we're seeing is that instead of people just interacting in comments in feeds, most people find interesting content in their feeds and then message that content to friends and interact there. And this creates this flywheel of discovery, and then social connection, and inspiring those people to create more content themselves.
In Instagram, for example, we see that Reels makes up more than half of content reshared in messages. So our strategy isn't about public versus social content and interaction -- it's about enabling a flywheel that compounds both. Alright, next, onto ads. We face a number of challenges here in the near term, but the investments that we're making should give us a comparative advantage over the longer term. One near term challenge is the growth of short-form video. Reels doesn't yet monetize at the same rate as feed or stories, so in the near term, the faster Reels grows, the more revenue that actually displaces from higher-monetizing surfaces.
Now in theory, we could mitigate this short term headwind by pushing less hard on growing Reels, but that would be worse for our products and business longer term since we're confident Reels will grow engagement overall and quality and will eventually monetize closer to feed. Our work on ads monetization efficiency for Reels is actually making faster progress than we'd expected. We've now crossed $1 billion annual revenue run rate for Reels ads, and Reels also has a higher revenue run rate than stories did at identical times post launch. So the bottom line is I think we're on track here, and we just need to push through this one.
The second challenge is the signal loss from Apple's iOS changes and as I've discussed before, our approach here is to grow first-party understanding of people's interests by making it easier for people to engage with businesses in our own apps -- whether that's through business messaging, shops, or new ads products. For example, Click-to-Messaging is part of our business messaging strategy that is growing quickly -- with 40% of our advertisers already using this format. The AI wave that we're riding is a tailwind for all of these solutions.
Advances in AI enable us to deliver better personalized ads while using less data. So it powers automated messaging and creation tools that let businesses run better performing campaigns -- which is particularly important for small businesses that don't have big marketing departments and that have been hit hard by Apple's policy changes. Overall, there's a lot of work to do here -- and a lot of the investment is in AI compute capex -- but I'm confident that if we invest in building the new infrastructure we need, then we are going to come out of this downturn with even more superior ad products and a meaningful technology advantage over other industry players.
Of course, the third challenge that we're facing here is the macro economy. We can't control the timing of when things will bounce back, but I'll note that periods like this are when marketers re-evaluate their budgets and are even more focused on finding the highest performing advertising. In the last recession, we invested in our ads business through the downturn and came out stronger on the other side. And I'm focused on and making sure that we do the same today.
If AI is the major technological wave that we're riding today, then the last priority that I want to discuss is about the metaverse technological wave that is currently building. And the metaverse is a massive opportunity for a number of reasons. Most importantly, it enables deeper social experiences where you feel a realistic sense of presence with other people, no matter where they are -- and whether you're playing games or working for hours at a time, or if you're just jumping in for just a minute at a time just to say hi to a friend or collaborate on a project quickly.
By helping to develop these platforms, we're going to have the freedom to build these experiences the way we and the overall industry believe will be best rather than being limited by the many constraints that competitors place on us, and our community, and on small businesses. And given some of the product and business constraints we face now, I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time. This is obviously a very expensive undertaking over the next several years, but as the metaverse becomes more important in every part of how we live -- from our social platforms and entertainment, to work and education and commerce, I'm confident we're going to be glad that we played an important role in building this.
The next milestones to look out for are the continued expansion of Horizon, our social metaverse platform, and the continued improvement of our advertisers platform and how you express yourself and interact in the metaverse, as well as the commerce around that, these are some of the areas that we're most focused on. We'll be launching a web version of Horizon that will be accessible on all platforms later this year, which should dramatically increase the number of people who can use Horizon. And we also just launched our avatar store with digital clothes from leading fashion houses, and we're going to continue expanding that selection and the fidelity of our avatar system overall.
On the hardware front, later this year we'll release Project Cambria, and the experience here is getting pretty awesome. It'll be a high-end device focused on professional users and work, with high resolution color mixed reality. I'm really looking forward to getting this one out. This is just one milestone on the long term path, but I think people are going to be pretty blown away by this.
Alright -- so those are the areas, that are most focused on right now, and that I think are going to have the greatest impact on our products and business over the next few years and much longer. Periods like this can be tough, but I really think that the additional focus and discipline are going to make us stronger over time. In addition to our business, this is also a period of transition for our leadership team. And before I hand it over to Sheryl for what will be her last earnings call, I want to thank her for everything that she's done for Meta, for our community, and for so many small businesses around the world. It's really hard to overstate how big of an impact Sheryl has had on so many different parts of what we do, and on me personally.
At the same time, Javi and Marne are talented leaders who I've worked with closely for many years. They're the type of people whom I've kept giving more and more responsibility too and they keep crushing it, so the expanded roles are well deserved. I think they're going to do a great job carrying our business forward and expanding it in some exciting news ways.
And we also shared the news this afternoon that Dave Wehner will be transitioning into a new role as our Chief Strategy Officer, overseeing our strategy and corporate development teams. Dave has done great work as our CFO, and I'm really looking forward to continuing to work with him in this new role. As part of this, we're also promoting Susan Li to be Meta's new Chief Financial Officer starting later this year. Susan is an incredibly talented executive and I think she'll be an excellent CFO. She already runs our financial planning process and plays an important role on our leadership team -- and this transition is something we've been working on for years.
Alright with that, I'm going to hand it over to Sheryl.
