Meta, parent company of Facebook, reports first sales decline in history – National

Meta, the parent company of Facebook and Instagram, posted its first revenue decline in history on Thursday, swept up by a drop in ad spend as the economy falters — and as competition from rival TikTok intensifies.

The results largely followed a broader decline in the digital advertising market that threatens Meta rivals such as Google, Twitter _ which also saw revenue declines, and Snap. Google’s parent company, Alphabet, reported its slowest quarterly growth in two years on Tuesday.

CEO Mark Zuckerberg said Meta is slowing the pace of investment and plans to “steadily reduce” staff growth after a hiring blitz earlier this year.

“This is a period that requires more intensity,” he said in a conference call with analysts. “Expect us to get more done with fewer resources.”

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In addition to the economic downturn, Meta faces some unique challenges, including the impending departure of its chief operating officer Sheryl Sandberg, the chief architect of the company’s massive advertising business.

In addition to TikTok, the decline in ad spend during the recession and Apple’s privacy changes, “questions about Meta’s leadership” — including Sandberg’s departure and negative sentiments about the company as a whole — contributed to the decline, Raj Shah said. , a partner at digital consultancy Publicis Sapient.

Meta posted earnings of $6.69 billion, or $2.46 per share, for the April-June period. That’s 36% less than $10.39 billion, or $3.61 per share, in the same period a year ago.

Revenue was $28.82 billion, down 1% from $29.08 billion a year earlier.

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Analysts were expecting earnings of $2.54 a share on revenue of $28.91 billion on average, according to a FactSet poll.

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“The year-over-year decline in quarterly revenue shows how quickly Meta’s business has deteriorated,” Insider Intelligence analyst Debra Aho Williamson said in an email. “Prior to these results, we had predicted that Meta’s global ad revenue would grow 12.4% this year to nearly $130 billion. Now it is unlikely that that figure will be reached.”

She added that the good news – if it can be called that – is that Meta’s competitors are also experiencing delays.

Meta is in the midst of a business transformation that it says will take years to complete. It aims to evolve from a social platform provider to a dominant force in a burgeoning virtual reality construct it calls the “metaverse” – a bit like the internet brought to life, or at least rendered in 3D. CEO Mark Zuckerberg has described it as an immersive virtual environment, a place where people can virtually “enter” instead of just staring at a screen. The company is investing billions in its metaverse plans that will likely take years — and as part of its plan, it renamed itself Meta last fall.

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“Expect Meta’s decline to continue until Meta can monetize the metaverse, and start another Meta reverse,” Shah said.

Meta forecasts revenue of $26 billion to $28.5 billion for the current quarter, which is below Wall Street expectations.

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“This outlook reflects a continuation of the weak ad demand environment we experienced during the second quarter, which we believe is driven by broader macroeconomic uncertainty,” chief financial officer David Wehner said in a statement. Meta said Wehner will be promoted to Chief Strategy Officer, where he will oversee the company’s strategy and business development. Susan Li, currently vice president of finance, will replace him as CFO.

Shares of Meta Platforms Inc. were down $6.88, or 4.1%. up to $162.70 in after-hours trading. The stock was up $10.43 or 6.6%. at $169.58 on Wednesday in the regular trading session. Meta’s stock has lost more than half of its value since the beginning of this year.

© 2022 The Canadian Press

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