Facebook’s parent, Meta, reported a steeper revenue decline than expected, missed revenue, released a surprisingly weak forecast, and showed a year-on-year decline in sales for the second consecutive year. Stocks fell 3.8% in after-hours trading.
Here’s how the company works.
- Revenue: $ 2.46 per share vs. expected $ 2.59 per share, according to Refinitiv
- Revenue: Forecast of $ 28.82 billion vs. $ 28.94 billion, according to Refinitiv
- Daily Active User (DAU): Expected to be 1.97 billion vs. 1.96 billion, according to StreetAccount
- Monthly Active User (MAU): According to StreetAccount, 2.93 billion vs. 2.94 billion is expected
- Average Revenue Per User (ARPU): Expected $ 9.82 vs. $ 9.83, according to StreetAccount
Meta stocks have lost about half of their value since the beginning of the year, highlighting investor concerns about the health of the company’s core online advertising business. The unit was hit by Apple’s iOS privacy update last year, limiting Meta’s user tracking capabilities and weakening the economy, causing some companies to cut their advertising budgets.
Second-quarter revenue was down almost 1% year-on-year. “We believe that the weak advertising demand environment we have experienced throughout the second quarter continues and macroeconomic uncertainty is increasing,” Meta said in a disappointing third quarter forecast. ..
MetaCEO Mark Zuckerberg said in a phone call with analysts that the company’s Instagram Reels product also reached $ 1 billion annually. The company has strongly promoted Reels, which is similar to TikTok’s short video-sharing app, but Reels can’t make as much sales as other products like Instagram Stories. This means that when an advertiser spends money on reels, meta makes less money than spending money on other products like stories.
According to Refinitiv, sales in the quarter ranged from $ 26 billion to $ 28.5 billion, below the average analyst estimate of $ 30.5 billion, the company said. This means a 2% to 11% decrease from a year ago.
Facebook’s nasty results follow the trends rival Snap and Twitter started last week. Both of these companies reported disappointing Q2 numbers, with executives citing economic and mobile platform challenges that are pervading the online advertising market. Alphabet and Microsoft’s share rose on Wednesday as the mood deteriorated so much this week, but both companies missed analysts’ top-line and bottom-line quotes.
According to Meta, the number of employees increased 32% year-on-year to 83,553. However, early on, the company showed that it plans to slow down hiring, reflecting sentiment from many peers.
The company also expects total costs in 2022 to be $ 85 billion to $ 88 billion instead of $ 87 billion to $ 92 billion, indicating that it is tightening its belt.
Meta’s Reality Labs business unit, responsible for the development of Metaverse and related virtual reality and augmented reality technologies, generated $ 452 million in sales but recorded a loss of $ 2.8 billion in the second quarter. The business unit is also expected to generate less revenue in the third quarter compared to the second quarter, Meta added.
Earlier this week, Meta raised the price of the Quest2VR headset by $ 100 due to higher manufacturing costs and shipping costs. Meta is currently the leader in selling VR headsets, but the market is still small compared to mobile advertising.
We also spend a lot of money on marketing and sales as we continue to drive the Metaverse idea as part of our corporate rebranding. Marketing and sales-related costs increased 10% year-over-year to $ 3.6 billion in the second quarter.
As Facebook struggles to meet Wall Street’s demands, Chief Financial Officer David Weiner has taken on the new role of Chief Strategy Officer overseeing the development of the company, the company said. Meta has promoted Susan Li, the company’s current vice president of finance, to CFO.
Executives will discuss the results with analysts on a webcast starting at 5 pm (Eastern Time).
This story is developing.
look: Meta can be dead money until the Metaverse is rewarded
https://www.cnbc.com/2022/07/27/facebook-parent-meta-earnings-q2-2022.html Facebook Parent Meta Revenue Q2 2022