Meta reports earnings, revenue miss and forecasts a second straight quarter of declining sales, The parent company of Facebook, Meta, revealed a revenue loss that was more severe than anticipated, missed on earnings, and offered a very weak outlook that pointed to a second consecutive decline in sales when compared to the previous year. During the extended trading session, the share price fell by 3.8 percent.
Specifically, here is how the company performed:
- According to Refinitiv, earnings came in at $2.46 per share, which was lower than the $2.59 per share that was anticipated.
- According to Refinitiv, revenue came in at $28.82 billion, which was lower than the $28.94 billion that was anticipated. Daily Active Users (DAUs) came in at 1.97 billion, which was higher than the 1.96 billion that was anticipated.
- According to Street Account, the number of Monthly Active Users (MAUs) was 2.93 billion, which was lower than the 2.94 billion predicted. The Average Revenue per User (ARPU) was $9.82, which was lower than the $9.83 projected.
Since the beginning of the year, the value of Meta shares has decreased by approximately half, highlighting the concerns of investors regarding the vitality of the company’s primary internet advertising business. Both a deteriorating economy, which has caused some businesses to reduce their advertising spending, and Apple’s iOS privacy change from the previous year, which has made it more difficult for Meta to follow its users, have been factors that have contributed to the unit’s losses.
The revenue for the second quarter was down nearly 1 percent compared to the same period a year earlier. A poor outlook for the third quarter was also provided by Meta, which cited the “continuation of the weak advertising demand environment we observed during the second quarter,” which the company believes was caused by “broader macroeconomic uncertainties.”
According to Refinitiv, the average analyst forecast for the upcoming quarter is $30.5 billion. The company has predicted that its sales for the quarter will fall somewhere in the region of $26 billion to $28.5 billion. It is anticipated that this will result in a decrease of between two and eleven percent in comparison to the previous year.
The unsettling findings for Facebook are consistent with what we saw from their competitors Snap and Twitter a week ago. Both of these companies announced poor financial results for the second quarter, and executives highlighted ongoing difficulties in the online advertising market brought on by the economy and mobile platform competition. The climate had become so negative by this week that shares of Alphabet and Microsoft increased on Wednesday despite the fact that both firms fell short of the forecasts made by analysts regarding their top and bottom lines of business.
According to Meta, the number of people working for the company has climbed by 32 percent from the previous year, reaching 83,553. However, earlier in the year, the company signalled that it plans to decrease the pace of recruiting, which is similar to the opinion expressed by many of its competitors in the technology industry.
The fact that the corporation now anticipates that its total expenses will be between $85 billion and $88 billion in 2022 rather than between $87 billion and $92 billion indicates that it is making efforts to reduce its spending.
In the second quarter, the Reality Labs business unit of Meta, which is responsible for developing the metaverse as well as related virtual reality and augmented reality technologies, brought in sales of $452 million but reported a loss of $2.8 billion. Meta further mentioned that it is anticipated that this particular business unit will generate a lower amount of revenue in the third quarter compared to the second.
This past Monday, the virtual reality headset manufacturer Meta increased the price of its Quest 2 model by one hundred dollars, claiming increases in both production and shipping expenses. Despite the fact that Meta is presently in the lead when it comes to sales of virtual reality headsets, the market is still relatively small in comparison to mobile advertising.
And as the firm continues to push the concept of the metaverse as part of its corporate rebranding, it is also spending more money on marketing and sales; the costs related with marketing and sales grew 10 percent year-over-year to $3.6 billion in the company’s second quarter.
Because Facebook is having trouble meeting the expectations of Wall Street, the firm has announced that Chief Financial Officer David Wehner will be transitioning into the job of chief strategy officer, where he will be responsible for supervising corporate development. Susan Li, who has been serving as the company’s vice president of finance up until this point, will now take on the role of chief financial officer at Meta.
A webcast with executives and analysts will get underway at 5:00 p.m. Eastern Time with the discussion of the results.