Meta trims datacenter build bills by $4 billion
Meta announced on Wednesday that it will cancel multiple datacenter projects and build future bit barns with a “phased” approach, saving billions along the way.
In its Q4 2022 earnings announcement, the company formerly known as Facebook said it was making “a pivot towards a next generation datacenter design,” that would include “cancellation of multiple datacenter projects” as part of “several measures to pursue greater efficiency.”
Of the pivot, CFO Susan Li said [PDF] the datacenter design, currently under development, will be “much more flexible in terms of accommodating both AI and non-AI workloads.”
“We have a new phased approach that allows us to build base plans with less initial capacity and less initial capital outlay, but then flex up future capacity quickly if needed,” she added.
“I think what this is getting at really is – there are incremental gains in unit efficiency, and actually the new datacenter design is inherently more efficient because it supports higher density racks.”
Meta campuses can therefore be smaller, which reduces costs. Meta will therefore use its revised datacenter architecture for all future construction.
At the time of its Q3 2022 earnings report, then-CFO Dave Wehner foreshadowed the infrastructure changes as part of “increased scrutiny on all areas of operating expenses.”
“Having more datacenter headroom will allow us to extend the life of servers over time because we won’t have to replace them due to power constraints,” said Wehner in October.
The “phased” plan appears to deliver the headroom he mentioned.
It’s also shaved billions from Meta’s planned capital expenditure, which is now forecast to be $30-33 billion in 2023, down from prior estimates of $34-37 billion.
Other measures outlined for 2023 – which CEO Mark Zuckerberg named Meta’s “Year of Efficiency” – included a facilities consolidation strategy to sublease, early terminate, or abandon several office buildings under operating leases, and of course that November layoff of approximately 11,000 employees across the Family of App (FoA) and Reality Labs (RL) segments.
Meta is willing to wear significant financial pain to make this happen. Abandonment charges for datacenter assets cost the company $1.34 billion.
The company said total restructuring charges in Q4 in Meta’s FOA segment ($3.76 million) and RL segment ($440 million) knocked operating margin down by 13 percentage points.
According to Meta, severance and other personnel costs were “not material” in Q4 after offsetting savings from decreased payroll, bonuses and and other benefits.
Total headcount for the year was up 20 percent year-on-year – from 71,970 [PDF] to 86,482 – without accounting for the layoffs. Do the math: even with the cuts, the company grew headcount significantly over the past year.
What did fall was revenue, which slipped four percent year-on-year to $32.16 billion for the quarter – a number that was in the higher end of company guidance. Full year revenue fell one percent, to $116.6 billion. Full year net income took a 41 percent dive, from $39.4 billion to $23.2 billion. That nasty number was better than the Q4 net profit dip of 55 percent, from Q4 2021’s $10.3 billion to $4.6 billion in 2022. ®