The decrease in revenue is noteworthy because Meta survived several COVID-19 waves while everyone else was worried about the economy.
In the June 2022 quarter, Facebook parent company Meta reported its first-ever revenue decline (Q2 2022). According to its second quarter 2022 results report, total revenue decreased by 1% YoY to $28.8 billion, and the business expects third quarter revenue to decline even more, to about $26 billion. The overall earnings of Meta decreased 36% to $6.7 billion in the previous quarter. Mark Zuckerberg’s metaverse aspirations are being worked on by Reality Labs, a branch of Meta, which lost close to $2.8 billion during the quarter.
The decline in revenue is noteworthy because Meta (formerly Facebook) survived numerous COVID-19 waves when everyone was worried about the state of the economy. The company reported total revenue of $18.6 billion in Q2 2022 compared to total revenue of $29 billion in Q2 2021. The company’s earnings increased yearly in both 2020 and 2021.
Despite declining income, Meta said it was still able to increase daily active users (DAU) margin by 3% on an annual basis. The DAU averaged 1.97 billion in June. Analysts predicted a greater decline for the company after its DAU shrank for the first time last year, so this is still a positive indication.
The business said in its quarterly results report, “Total revenue for the third quarter of 2022 is predicted to be in the $26-28.5 billion range. This forecast is consistent with the negative advertising demand environment we saw throughout the second quarter, which, in our opinion, was caused by broader macroeconomic uncertainty. Additionally, we believe that Reality Labs’ third-quarter sales would be lower than its second-quarter revenue.”
Apple’s introduction of the “App Tracking Transparency” feature, which lets iPhone users decide whether an app can follow their activity, may also be to blame for the decline in ad sales. According to Apple, these activities 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 its first Chief Strategy Officer in the final quarter of 2022, Meta may expect for a shift. The senior executive will be in charge of corporate growth and strategy for the company. Meta’s existing vice president of finance, Susan Li, will be given a promotion and take over as CFO.
In order to accommodate for the more difficult operating climate, Meta said it has scaled back its staffing and total spending growth projections for this year while “continuing to devote resources toward our corporate priorities.”
Facebook and Instagram are both developing updates to compete with TikTok, currently Meta’s most fierce foe. Adam Mosseri, the head of Instagram, recently confirmed that the platform’s inevitable transformation from a photo-sharing app to a video app (i.e., a TikTok-like experience).