Meta, the parent company of Facebook, saw its first-ever revenue decline in the second quarter of 2022. (Q2 2022). Overall sales decreased by 1% YoY to $28.8 billion in the second quarter of 2022, and the business expects revenue to decline even more in the third quarter (July to September) to around $26 billion. Meta’s overall earnings dropped 36% to $6.7 billion in the most recent quarter. Nearly $2.8 billion was wiped out by Reality Labs, the branch of Meta working on Mark Zuckerberg’s metaverse aspirations.
When the world was afraid of economic uncertainty, Meta (formerly Facebook) sailed over many COVID-19 waves with no problems. The corporation made $18.6 billion in total sales in Q2 2022, compared to $29 billion in total revenue in the second quarter of the previous year. In 2020 and 2021, the company’s sales expanded at an annual rate.
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Even with revenue dropping, Meta stated it was able to increase its daily active user (DAU) margin by 3% on an annual basis despite the downturn. In June, the DAU was an average of 1.97 billion. Still, it’s a good indication for the firm, given experts had predicted that its DAU would continue to decline after it shrank for the first time in 2013.
The corporation claims the following in its most recent quarterly earnings report: “Total revenue for the third quarter of 2022 is expected to be in the $26-28.5 billion range. As a result, we expect advertising demand to remain poor in the third quarter, which we attribute to macroeconomic uncertainty more broadly. Third quarter Reality Labs revenue will likewise be less than second-quarter revenue.”
App Tracking Transparency, Apple’s new feature that allows iPhone users to opt-out of having their behaviour tracked, may also be to blame for a decrease in ad revenue. According to Apple, these actions are tracked by apps like Facebook and Instagram “for the sake of advertising or sharing with data brokers.”
With the hiring of Chief Financial Officer David Wehner as the company’s first Chief Strategy Officer in the last quarter of 2022, Meta may expect for a shift in fortunes. The senior executive will be in charge of formulating and implementing the company’s strategy. VP of Finance Susan Li will be promoted to CFO of Meta, the company she now works for.
As a result of the more tough operating climate, Meta claims it has decreased employment and total spending growth expectations this year, while “continuing to focus resources on our corporate goals.”
TikTok, Meta’s most direct opponent, is now focusing on improvements to compete with Facebook and Instagram. There is little doubt that TikTok-like experiences will become more commonplace on Instagram shortly, according to the platform’s CEO Adam Mosseri.
