Meta, Facebook’s parent company, announces first revenue drop in its history – National

Meta, the parent company of Facebook and Instagram, posted its first revenue drop in history on Thursday, led by lower ad spending as the economy falters —— and competition from rival TikTok falters. intensifies.

The results largely followed a broader decline in the digital advertising market that is hitting Meta rivals such as Google, Twitter – which also saw a drop in revenue – and Snap. Alphabet, Google’s parent company, reported its slowest quarterly growth in two years on Tuesday.

CEO Mark Zuckerberg said Meta is slowing its pace of investments and plans to « steadily curtail » employee growth after a hiring drive earlier this year.

« It’s a period that requires more intensity, » he said on a conference call with analysts. “Expect us to do more with fewer resources.

Beyond the economic downturn, Meta faces unique challenges, including the impending departure of its chief operating officer Sheryl Sandberg, the chief architect of the company’s massive advertising business.

In addition to TikTok, falling ad spend amid recession and Apple’s privacy changes, ‘meta leadership questions’ – including Sandberg’s exit and negative sentiment towards the company as a whole — also contributed to the decline, said Raj Shah, associate director at digital consultancy Publicis Sapient.

Meta earned $6.69 billion, or $2.46 per share, in the April-June period. That’s down 36% from $10.39 billion, or $3.61 per share, in the same period a year ago.

Revenue was $28.82 billion, down 1% from $29.08 billion a year earlier.

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Analysts on average had expected earnings of $2.54 a share on revenue of $28.91 billion, according to a poll by FactSet.

« The year-over-year decline in quarterly revenue signifies how quickly Meta’s business has deteriorated, » Insider Intelligence analyst Debra Aho Williamson said in an email. “Prior to these results, we had forecast Meta’s global advertising revenue to grow 12.4% this year, to nearly $130 billion. Now it is unlikely to reach that number.

She added that the good news – if you could call it that – is that Meta’s competitors are also experiencing slowdowns.

Meta is in the midst of a business transformation that it says will take years. He wants to evolve from a social platform provider to a dominant power in a nascent virtual reality construct he calls the “metaverse” — much like the internet coming to life, or at least rendered in 3D. CEO Mark Zuckerberg described it as an immersive virtual environment, a place where people can « enter » virtually rather than just staring at a screen. The company is investing billions in its Metaverse plans that will likely take years to bear fruit — and as part of its plan, it rebranded itself as Meta last fall.

« Expect Meta’s decline to continue until Meta can monetize the metaverse and begin another meta-inverse, » Shah said.

Meta forecasts revenue of $26 billion to $28.5 billion for the current quarter, which is below Wall Street expectations.

« This outlook reflects the continued weakness in advertising demand we experienced throughout the second quarter, which we believe is due to broader macroeconomic uncertainty, » Chief Financial Officer David Wehner said in a statement. Meta said Wehner is promoted to chief strategy officer, where he will oversee strategy and business development. Susan Li, currently vice president of finance, will replace him as chief financial officer.

Shares of Meta Platforms Inc. fell $6.88, or 4.1%. at $162.70 in after-hours trading. The stock had closed up $10.43, or 6.6%. at $169.58 on Wednesday during the regular trading session. Meta’s stock has lost more than half its value since the start of this year.