Shares of Facebook parent Meta (FB) soared in early trading on Thursday following its first-quarter earnings report. Shares of the social media giant rose more than 14% despite missed revenue expectations as investors and analysts digested the company’s plans to cut spending.

On the surface, The Meta Report wasn’t that great. It missed revenue estimates, with analysts expecting the company to bring in $28.24 billion instead of the reported $27.9 billion. But the company posted better adjusted earnings per share than originally expected.

More importantly, however, Meta’s Facebook app is adding users again, rising 4% to 1.96 billion daily active users after the app lost 1 million last quarter.

“Based on our audits, the quarter was lower than expected due to geopolitical concerns, continued iOS privacy issues, and the transition to Reels,” Mizuho analyst James Lee wrote in a statement. note following the report.

Facebook founder and CEO Mark Zuckerberg speaks during the Viva Tech start-up and technology summit in Paris, France, May 24, 2018. REUTERS/Charles Platiau

“In this spirit, [Q2 2022] the tips came under the flat street [year-over-year], as the increasingly uncertain macro outlook amplifies the impact of Facebook’s platform and technology stack transitions. On the positive side, [daily active user] growth turned positive due to increased engagement from Reels,” Lee wrote.

Meta’s stock is coming off an incredible downturn following its previous earnings report. Ahead of Wednesday’s report, the company’s shares have fallen 41% over the past three months.

The most positive news for investors, however, came from CEO Mark Zuckerberg, who said that if the company continues to invest in the metaverse as part of its Reality Labs business – $2.96 billion in the first quarter – Monetizing its family of social apps is still a top priority. .

“On the app family side, I’m confident we can return to better revenue growth rates over time and maintain strong operating margins,” Zuckerberg said on the earnings call. Meta.

“At Reality Labs, we are making significant investments to deliver the next platform that I believe will be extremely important to both our mission and our business, comparable in value to today’s leading mobile platforms. today. I recognize that it’s expensive to build this – it’s something that’s never been built before and it’s a new paradigm for computing and social connection.

Zuckerberg is moving forward with his plans for the Metaverse, a burgeoning series of interconnected online worlds. But whether or not the average consumer will dive into the metaverse remains to be seen.

Reality Labs revenue, which includes sales of Oculus headsets and software, was $695 million for the quarter, a jump from the $534 million the segment reported in the same quarter last year. . Meta also recently opened its first physical store dedicated to its metaverse products.

Yet headsets and the Metaverse in general are still far from mainstream among consumers. And whether or not it will achieve that level of penetration will take years to figure out.

Meta also continues to face headwinds for its advertising business. The company specifically highlighted the war in Ukraine and its impact on European spending, as well as recent privacy changes to Apple’s iOS (AAPL), which allow consumers to opt out of app tracking. Meta says the iOS changes alone will cut revenue by $10 billion in 2022.

Meta isn’t the only company dealing with iOS issues. Alphabet announced during its earnings that YouTube was facing similar issues, but competitors like Snap appear to be less vulnerable to privacy changes.

That said, Meta’s results were clearly ahead of the basement-level expectations investors had at the start of the quarter. If he can continue that kind of performance in the future, he could set himself up for bigger wins in the coming quarters.

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