Meta’s bad year isn’t getting any better. After reporting its first-ever decline in user numbers in February, Facebook’s parent company has now reported another first: a year-on-year drop in quarterly revenue.
The division in charge of its metaverse project performed similarly poorly, losing nearly $3 billion for the second quarter in a row.
According to Meta’s earnings report, the company made $28.8 billion in revenue during the April-June quarter.
This is a 1% decrease from the same period last year, marking the first time Meta/Facebook has experienced a revenue drop since going public.
In addition, the figure fell short of analysts’ expectations of $28.92 billion. Meanwhile, net income fell 36% year on year to $6.7 billion.
Meta’s outlook for the rest of the year isn’t much brighter. It predicts third-quarter revenue of $26 billion to $28.5 billion, less than the $30.52 billion predicted by analysts.
As with Twitter and Snap, which both reported disappointing financial results, the faltering economy, competition from TikTok, and a slowdown in the ad industry are cited as factors.
“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” CEO Mark Zuckerberg said on a call with investors. “The situation seems worse than it did a quarter ago.”
Zuckerberg blamed Apple’s anti-ad-tracking feature, which was introduced in iOS 14, for the 14 percent drop in average ad price. In 2020, Facebook ran full-page ads criticizing Apple’s move and claiming that it would destroy small businesses.
Reality Labs had another difficult quarter, with the division focusing on Meta’s hardware and metaverse ambitions.
It was down $2.96 billion in the first quarter of 2022, and despite revenue increasing 48 percent year on year to $452 million, it lost $2.8 billion in Q2, adding to the $10.2 billion it lost in 2021.
We recently learned that Reality Labs is making cuts by cancelling projects such as the dual-camera smartwatch, but this may not be enough to prevent the company from losing even more money in 2022 than it did last year.
To read our blog on “Meta is closing the Couples-focused social network Tuned,” click here
