Updated · Aug 15, 2022
Meta Reports First Ever Decline in Revenue
Updated · Jul 28, 2022
On Wednesday, Facebook’s parent company reported a drop in revenue that was steeper than expected.
Tough Times for Meta
According to its earnings report for the second quarter, Meta Platforms has experienced shrinking profits.
The company’s revenue stood at $28.8 billion for the three months up to June, a 1% drop from the previous year. It is the first time that Meta has posted a year-on-year revenue decline since it became a public company in 2012.
While that drop looks modest, its revenue took a plummet. Year on year, Meta’s net income for Q2 fell by 36% to just under $6.7 billion.
Meta still commands a significant share of the ad market globally but has seen this department affected by ad budget cuts due to the economic downturn.
It was not all bad news for the company. In a welcome reversal, the company saw its daily and monthly active users increase by 4% each.
Metaverse Division Loses $2.8 Billion
Since changing its name from Facebook, Meta has committed to an expensive metaverse drive. While that bet is a long-term one, it is losing the company a lot of money.
The Facebook Reality Labs division reported a revenue of $452 million for Q1, down from $695 million in the previous quarter. The unit, which runs its virtual and augmented reality operations, posted a $2.81 billion loss.
Meta’s outlook for FBL for the third quarter of 2022 is bleak.
Staff Cuts Incoming
Following the poor earnings report, CEO Mark Zuckerberg has warned of impending layoffs.
“Many teams are going to shrink so that we can shift energy to other areas inside the company,’ he said”
Zuckerberg also warned that Meta will cut “headcount growth over the next year.”
Daniel is an Economics grad who fell in love with tech. His love for books and reading pushed him into picking up the pen - and keyboard. Also a data analyst, he's taking that leap into data science and machine learning. When not writing or studying, chances are that you'll catch him watching football or face-deep in an epic fantasy novel.
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