Facebook’s parent company Meta Inc. on Wednesday announced its financial results for the second quarter ended June 30. The social media giant has reported its first-ever revenue drop and said that the third quarter revenue could be even lower.
In Q2, Meta’s total revenue dropped 1% from $29 billion to $28.8 billion and its net income dropped 36% from $10.39 billion to $6.68 billion. The company said it expects the total revenue to drop even further, to $26-28.5 billion, in the next quarter.
‘’This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty,’’ said the company in its press release.
Meta’s Reality Labs department, which develops AR and VR hardware & software, lost $2.8 billion in the second quarter of the year. The company expects a further decline in its revenue in the third quarter too.
Earlier this year, the company said that Apple’s App Tracking Transparency policy, which now requires devs to ask for user consent before showing them related ads, would cause its revenue to drop by $10 billion in 2022.
In addition to the ATT framework, the ongoing economic slowdown has also led to a sharp decline in ad sales as advertisers are cutting their ad budgets.
Last week, Twitter and Snapchat posted their earnings reports and both of them missed analysts’ expectations for the second quarter. Meanwhile, Google’s Search ads managed to top projections bringing in $40.69 in Q2
While Meta’s reported its first-ever revenue drop, the number of Facebook’s daily active users rose by 3% to 1.97 billion and monthly active users rose 1% to 2.93 billion in the second quarter.
Also Read: Facebook Revenue and Usage Statistics (2022)
On the earnings call with analysts, CEO Mark Zuckerberg said Meta’s TikTok-rival Reels is now generating $1 billion annually. “Reels doesn’t yet monetise at the same rate as Feed or Stories’’ said Zuckerberg. ‘’So in the near term, the faster that Reels grows, the more revenue that actually displaces from higher monetising surfaces.”
He also said that the company will reduce the number of employees in 2023 in order to cope with the rising costs. Earlier this month, Meta announced that it cut hiring plans and the CEO warned employees about a deep economic downturn.
“If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” said Zuckerberg during a company meeting.