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Meta posts first quarterly revenue decline
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Meta, the tech company which owns services including Facebook and Instagram, has posted its first year-on-year quarterly revenue decline, with a contraction of 1%, to $28.8 billion, for its latest three-month trading period.
Why it matters
Meta, and Facebook in particular, are significant forces in the advertising market. Despite many years of consistent growth after going public in 2012, its latest results indicate the firm is not immune to broader issues that are buffeting the wider economy, and point towards growing caution in the ad market.
- Meta’s latest quarterly revenues fell behind analyst estimates, which stood at approximately $28.9 billion, based on data from financial intelligence provider Factset.
- “We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Mark Zuckerberg, Meta’s CEO, said on an earnings call.
- Among the headwinds facing the company are inflation, the conflict in Ukraine, supply-chain problems for many marketers, growing competition for consumer attention (especially from TikTok), and tech company Apple’s tightening of its privacy rules.
- David Wehner, Meta’s chief financial officer, suggested an increasingly complex financial environment could lead to further challenges in the next quarter.
“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,” he said.
- Instagram Reels, a digital offering broadly similar to TikTok’s mobile app, has reached $1 billion in annualised revenue, according to Zuckerberg, but is not as effective a monetisation tool as the platform’s News Feed or Stories.
The bigger picture
- Snapchat, the content-sharing app, recently saw its share price fell by around 25% after missing analysts’ revenue expectations. It cited declining ad budgets as an issue.
- Twitter, another social media property, logged a 1% decrease in ad revenues for its last quarter, well behind analyst expectations of 11% growth.
- Alphabet, the parent company of search engine Google and video-sharing site YouTube, is continuing to grow, but at the slowest pace for two years.
- Reuters reported on an internal question-and-answer session at Facebook where Zuckerberg did not strike an optimistic note about the prospects for the economy as a whole going forwards.
- "If I had to bet, I'd say that this might be one of the worst downturns that we've seen in recent history," he said.
Sourced from Financial Times, Reuters
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