Meta’s revenue shrank for the first time in its history

Facebook parent Meta just reported its earnings for the second quarter of 2022, and it was another quarter of shrinking earnings. Total revenue of $28.8 billion fell just 1 percent from the second quarter a year ago, but net income fell 36 percent to $6.7 billion. Earnings of nearly $7 billion isn’t a bad quarter for anyone, but the magnitude of the year-over-year decline is pretty significant. And loud Wall Street Journal, This is the first-ever revenue drop for Meta/Facebook – so while we’re only talking about 1 percent, it’s still notable.

Revenue from advertising and Meta’s “family of apps” was essentially flat year over year, and Reality Labs (home of hardware like Meta Quest and other Metaverse-related initiatives) grew 48 percent year over year to $452 million. But Reality Labs posted a loss of $2.8 billion this quarter, a 15 percent larger loss than in the second quarter a year ago. At this rate, it seems likely that Reality Labs Meta will lose more than the $10 billion it cost the company in 2021. In fact, the company said it expects Reality Labs’ third-quarter revenue to be lower.

This comes on the same day the FTC announced it wanted to block Meta’s acquisition of Supernatural VR workout app maker Within, a proposed sale announced last year. “Rather than competing on merit, Meta is trying to buy its way to the top,” John Newman, deputy director of the FTC’s competition bureau, said in a statement.

In June, Meta announced it had 2.88 billion daily active users across its family of apps (which includes Facebook, Instagram, WhatsApp and Messenger) and 3.65 billion monthly active users, both up 4 percent corresponds to the previous year. However, Facebook-specific growth was slower — average daily and monthly users grew just 3 percent and 1 percent, respectively.

Also hiding in today’s press release is a somewhat unusual leadership change announcement. On November 1, the company welcomes its first Chief Strategy Officer, David Wehner, who is currently Meta’s Chief Financial Officer. Susan Li, Vice President of Finance, will be promoted to the position of CFO upon the effective date of this change. As CSO, Wehner will be responsible for “the strategy and corporate development of the company”, which is likely to be a broader range of tasks compared to his current role.

Speaking to investors today, CEO Mark Zuckerberg said about 15 percent of the content people see on Facebook and Instagram is AI-driven “recommendation” posts, and he expects that number to double over the next year . So if you’re already frustrated by the drastic changes Meta is making to Facebook and Instagram, things aren’t going to go back anytime soon.

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Russell Falcon

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