Mumbai: Facebook parent company, Meta, on Thursday announced a decline in the company’s revenues in its second quarter earnings 2022 for the first time since it went public in 2012. The tech major reported a drop in revenues from $29.08 billion to $28.82 billion, down one per cent over last year.
Meta also announced that its chief finance officer (CFO) David Wehner would now take over the role of chief strategy officer (CSO) and oversee the company’s strategy and corporate development.
The company announced that Susan Li, currently vice president of finance, will replace him as CFO. The transitions will be effective from 1 November.
The social media network’s net income saw a decline of 36 per cent in April-June, falling from $10.39 billion ($3.61 per share) to $6.69 billion ($2.46 per share) year-on-year (YoY).
“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” said Meta founder and CEO Mark Zuckerberg in an earnings call on Wednesday. “It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago.”
The social media giant also issued a bleak third-quarter forecast. “This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty," chief finance officer David Wehner said in a statement.
“We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities,” he added.
The company expects its 2022 total expenses to be in the range of $85-88 billion, lowered from its prior outlook of $87-92 billion, Wehner further stated.
Meta’s worrying results follow a pattern reflected in the results of other major tech companies and its rivals, Snap and Twitter – both of whom reported disappointing second-quarter numbers last week, during an unprecedented stressful period across the industry. The results also follow a broader decline in the digital advertising market.
Advertising revenue growth slowed throughout the second quarter as advertiser demand softened, Wehner stated. “The deceleration has been broad-based across verticals, and we believe businesses are lowering their advertising spend in response to the increased economic uncertainty.”
Earlier on Wednesday, another tech major and Google parent company- Alphabet posted a 13 per cent growth in consolidated revenue at $69.7 billion for the second quarter - its slowest quarterly growth in two years.
Meta also faces its own unique challenges of competing with TikTok, while focusing on its next phase of building the immersive metaverse.
In this environment, we're focused on making the long-term investments that will position us to be stronger coming out of this downturn -- including our work on our discovery engine and Reels, our new ads infrastructure, and the metaverse, stated Zuckerberg. The company is also focused on being rigorous about measuring returns and sizing these investments correctly, he added.
