Mark Zuckerberg promised to further streamline Meta’s business in the year ahead as the company reported mixed results for the fourth quarter of 2022.

Revenue fell by 4% to $32.2 billion in Q4 compared to the same period in 2021, marking the third straight quarter of decline. 

Costs and expenses shot up by 22% year-on-year to $25.8 billion, dragging down the company’s profit. Meta’s net income of $4.65 billion in Q4 represents a 55% decline from the prior year.

Meta said restructuring efforts — including costs related to employee severance, the early termination of office leases and data center restructuring — cost it $4.2 billion in Q4. The company laid off approximately 11,000 employees in the quarter.

But the cost-cutting is far from over. Zuckerberg told investors he was focused on “continuing to streamline the company,” during its earnings call on Feb. 1, saying the management theme for 2023 is “the year of efficiency.”

“We closed last year with some difficult layoffs and restructuring some teams, and when we did this, I said clearly that this was the beginning of our focus on efficiency and not the end,” Zuckerberg said.

Meta expects another $1 billion in restructuring costs in 2023.

Part of the efficiency focus will involve cuts. Zuckerberg said the company is flattening its organizational structure by removing some layers of middle management to help it “make decisions faster.” He also promised to be more proactive about cutting underperforming projects.

But he said his “main focus” is on increasing the efficiency of Meta’s operations, such as by deploying artificial intelligence tools that aim to increase the productivity of its engineers. He described it as a “phase change” for Meta after 18 years of fast growth.

“A lot of the time when people talk about efficiency there is a lot of focus on prioritization and which big things can you cut, but I actually think what makes you a better company over time is being able to execute and do more things because you are operating more efficiently and can get things done with fewer resources,” Zuckerberg said. “I’d like to get us to that mode more.”

This was part of his response to a question around how Meta’s focus on efficiency would affect its hefty bets on AR and VR technologies. Zuckerberg has been pushing his company to become “metaverse-first” since 2021, when its corporate name was changed from Facebook to Meta. But investors have become increasingly concerned about how much money Meta is pouring into building “the next computing platform,” while its flagship ad business has slowed.

Meta’s Reality Labs division, responsible for its AR and VR technology, posted a loss of $4.3 billion in Q4. At the same time, the revenue it pulled in fell 17% to $727 million, which Meta said was due to decreased sales of its Quest 2 headset.

Nevertheless, Zuckerberg remains steadfast in his vision.

“None of the signals I have seen so far suggest that we should shift the Reality Labs strategy long-term,” he said, adding “we are constantly adjusting the specifics of how we execute this.” 

In a comment that is sure to irk employees, Zuckerberg said he thinks the new, more efficient Meta will be “a more fun place for people to work because I think they’re gonna get more stuff done.”

Facebook surpasses 2 billion DAUs

While Meta’s financials continued to slow in Q4, it was successful in growing users, following a similar trend seen by other tech firms SnapSpotify and Netflix.

Facebook reached a milestone of 2 billion daily active users in December, an increase of 4% year-on-year, while monthly active users lifted 2% to 2.96 billion.

Daily active users across Meta’s apps, which include Instagram, Messenger and WhatsApp, increased 5% to 2.96 billion, while monthly users grew 4% to 3.74 billion.

Weak advertising demand

Meta said it continued to suffer from “weak advertising demand” in Q4, with growth declining in its largest verticals of ecommerce and CPG, albeit at a slower pace. 

It said the steepest declines in ad spend were from advertisers in the financial services and tech sectors, but these are smaller verticals for Meta.

The largest positive contributors to growth in Q4 were from travel and healthcare advertisers.

Ad impressions across Meta’s app increased by 23% in Q4 but the average price per ad continued to fall by 22%.

The company’s ‘Rest of World’ region witnessed the strongest ad revenue growth of 5% year-on year. Growth in North America was flat, while Asia-Pacific and Europe declined 3% and 16%, respectively.

Improving monetization of Reels

Meta said consumption of its short-form video product Reels has “more than doubled” across Facebook and Instagram over the past year, while resharing of Reels has more than doubled in six months.

But monetization continues to be a challenge, as time spent on Reels cannibalizes revenue Meta can generate from its other products such as its News Feed ads.

Zuckerberg said Meta was more focused on monetizing Reels over scaling it further.

“For now, the right thing to do is to work on monetization efficiency. We know there is demand to see some more Reels, as we naturally evolve the monetization efficiency…we will naturally unlock the ability to show more Reels,” he said.

Chief operating officer Javier Olivan said over 40% of Meta’s advertisers have purchased Reels ads so far.

Chief financial officer Susan Li said Meta was “roughly on track” to abolish the Reels headwind “by the end of this year or early next year.”

Investors appear to be satisfied with Meta’s outlook for the year — its stock jumped more than 20% in after-hours trading.

This article originally appeared on Campaign US.