Meta reports revenue decline for the first time in Q2 earnings - The Verge

Meta, the parent company of Facebook and Instagram, reported its first-ever yearly decline in revenue as a public company. Its second-quarter earnings suggest more pain is to come.

Facebook’s decade-long streak of nonstop revenue growth has come to end.

The social network reported its first-ever yearly decline in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion, and predicted that growth in the third quarter could fall even more. The overall profit for its parent company, Meta, fell 36 percent to $6.7 billion. The Reality Labs division responsible for building Mark Zuckerberg’s metaverse dreams lost $2.8 billion in the quarter.

While the first-ever drop in revenue growth was expected on Wall Street going into Wednesday’s earnings report, it solidifies how challenged Meta’s business has quickly become on all fronts. Apple’s “Ask app not to track” prompt on iPhones has made its ads much less effective, costing Meta $10 billion in ad revenue last year alone. And now a rapidly slowing economy has caused advertisers to pull back on their spending.

Meanwhile, in its effort to compete with TikTok, Meta is rearchitecting Facebook and Instagram to place an emphasis on short videos and posts that its system recommends to people. On a call with analysts, Zuckerberg said that the percentage of content people see in Facebook and Instagram that comes from accounts they don’t follow will more than double next year. Building the AI needed to make that happen is a costly investment, he said.

Even though Meta’s revenue is declining, it managed to grow Facebook’s daily users by 3 percent to 1.97 billion, reversing a worrisome decline in users it observed a couple of quarters ago. Meta reported that 2.88 billion now use its suite of social apps — Facebook, Messenger, Instagram, and WhatsApp — every day, an increase of 4 percent from a year ago.

https://www.theverge.com/2022/7/27/23281294/facebook-meta-revenue-declines-for-first-time

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