Jul 27, 2022 - Technology

Meta posts its first-ever quarterly revenue decline

Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images

Meta, the parent company to Facebook, Instagram and Whatsapp, reported its first ever year-over-year quarterly revenue decline since going public in 2012.

Why it matters: The results raise the question whether Meta's strongest growth period is behind it. Earlier this year, the Facebook app lost roughly 1 million daily active users — its first ever year-over-year user drop.

Data: Factset and Meta; Chart: Nicki Camberg/Axios

Details: The company brought in $28.822 billion in revenue last quarter compared to $29,077 billion in revenue during the second quarter of 2021, a 1% decline.

  • Meta also offered weak third quarter revenue guidance: For the period between July and September, it expects between $26 billion and $28.5 billion, a few billion less than the roughly $30 billion analysts were expecting.
  • The company also said that it anticipates its third quarter revenue for its money-losing Reality Labs division, which is leading the firm's metaverse project, to be lower than its second quarter revenue.
  • Like other companies this quarter, Meta said it expects foreign currency headwinds in the third quarter, impacting its guidance.

Yes, but: This quarter was a tough one for Meta to beat by comparison with the previous year, since Meta's second quarter earnings in 2021 were its fastest growing in years.

Facebook CEO Mark Zuckerberg in a statement noted that the company saw a "positive trajectory in engagement trends" last quarter coming from products like Reels and investments in artificial intelligence.

  • "We're putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services," he said.
  • Last week, Meta announced sweeping changes to the Facebook app that will provide a more TikTok-like experience.

In addition to financial updates, Meta also announced that its longtime chief financial officer David Wehner will take on a new role as Meta's first-ever chief strategy officer, beginning this fall. Meta's current vice president of finance, Susan Li, will be promoted to chief financial officer.

By the numbers, via CNBC:

  • Earnings: $2.46 per share vs. $2.59 per share expected, according to Refinitiv
  • Revenue: $28.82 billion vs. $28.94 billion expected, according to Refinitiv
  • Daily Active Users (DAUs): 1.97 billion vs 1.96 billion expected, according to StreetAccount
  • Monthly Active Users (MAUs): 2.93 vs 2.94 billion expected, according to StreetAccount
  • Average Revenue per User (ARPU): $9.82 vs. $9.83 expected, according to StreetAccount

Be smart: The headwinds come amid increased regulatory and competitive pressure on Meta.

  • On Wednesday, the FTC sued to block Meta's acquisition of Within, a virtual reality company.
  • On Tuesday, The Verge reported that Meta CEO Mark Zuckerberg told employees that the company was in a very "deep philosophical competition" with Apple to build the metaverse.

The big picture: Meta's stock has lost half of its value this year, as growth in the advertising market continues to slow and amid privacy changes.

  • Meta said early this year that it expected Apple's ad tracking changes to cost it $10 billion in ad revenue in 2022.
  • In a statement, Meta said its weak third quarter 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."

Go deeper: Meta's earnings over the past year:

Go deeper