By Barbara Ortutay
Meta, the parent company of Facebook and Instagram, posted its first revenue decline in history Thursday, dragged down by a drop in ad spending as the economy falters — and as competition from rival TikTok intensifies.
The results largely followed a broader decline in the digital advertising market that is dinging Meta rivals such as Google, Twitter — which also posted a revenue decline — and Snap. Google's parent company Alphabet reported its slowest quarterly growth in two years on Tuesday.
CEO Mark Zuckerberg said Meta is slowing its pace of investments and plans to "steadily reduce" employee growth after a hiring blitz earlier this year.
"This is a period that demands more intensity," he said in a conference call with analysts. "Expect us to get more done with fewer resources."
Beyond the economic downturn, Meta faces some unique challenges, including the looming 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 spending among the downturn and Apple's privacy changes, "questions about Meta's leadership" — including Sandberg's exit and negative sentiment about the company as a whole — also contributed to the decline, said Raj Shah, a managing partner at digital consultancy Publicis Sapient.
Meta earned profits of $6.69 billion, or $2.46 per share, in the April-June period. That's down 36% from $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.
Analysts, on average, were expecting earnings of $2.54 per share on revenue of $28.91 billion, according to a poll by FactSet.
"The year-over-year drop in quarterly revenue signifies just how quickly Meta's business has deteriorated," said Insider Intelligence analyst Debra Aho Williamson in an email. "Prior to these results, we had forecasted that Meta's worldwide ad revenue would increase 12.4% this year, to nearly $130 billion. Now, it's unlikely to reach that figure."
She added that the good news — if it could be called that — is that Meta's competitors are also experiencing slowdowns.
Meta is in the midst of a corporate transformation that it says will take years to complete. It wants to evolve from a provider of social platforms to a dominant power in a nascent virtual reality construct it calls the "metaverse" — sort of 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 people can virtually "enter" rather than just staring at a screen. The company is investing billions in its metaverse plans that will likely take years to pay off — and as part of its plan renamed itself Meta last fall.
"Expect Meta's decline to continue until Meta can monetize the metaverse, and begin another Meta-reverse," Shah said.
Meta forecasts revenue of $26 billion to $28.5 billion for the current quarter, which is below Wall Street's expectations.
"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," finance chief David Wehner said in a statement. Meta said Wehner is being promoted to chief strategy officer, where he will oversee the company's strategy and corporate development. Susan Li, currently vice president of finance, will replace him as CFO.
Shares of Meta Platforms Inc. fell $6.88, or 4.1%. to $162.70 in after-hours trading. The stock had closed up $10.43, or 6.6%. at $169.58 on Wednesday in the regular trading session. Meta's stock has lost more than half its value since the start of this year.
Barbara Ortutay is an AP technology writer
“Venom: The Last Dance” Tops Box Office For 2nd Straight Weekend
"Venom: The Last Dance" enjoyed another weekend at the top of the box office. The Sony release starring Tom Hardy added $26.1 million in ticket sales, according to studio estimates Sunday. It was a relatively quiet weekend for North American movie theaters leading up to the presidential election. Charts were dominated by big studio holdovers, like "Venom 3," "The Wild Robot" and "Smile 2," while audiences roundly rejected the Tom Hanks, Robin Wright and Robert Zemeckis reunion "Here." Thirty years after "Forrest Gump," "Here" opened to only $5 million from 2,647 locations. "Venom 3" only fell 49% in its second weekend, which is a notably small drop for a superhero film, though it didn't exactly open like one either. In two weeks, the movie has made over $90 million domestically; The first two opened to over $80 million. Globally, the picture is brighter given that it has already crossed the $300 million threshold. Meanwhile, Universal and Illumination's "The Wild Robot" continues to attract moviegoers even six weeks in (and when it's available by video on demand), placing second with $7.6 million. That's up 11% from last weekend. The animated charmer has made over $121 million in North America and $269 million worldwide. "'The Wild Robot' has quietly been this absolute juggernaut for the fall season," said Paul Dergarabedian, the senior media analyst for Comscore. "For that film to see an increase after six weeks is astounding." "Smile 2" landed in third place with $6.8 million, helping to push its worldwide total to $109.7 million. The time-hopping "Here," a graphic novel that was adapted by "Forrest Gump" screenwriter Eric Roth, was financed by Miramax and distributed by Sony's TriStar. With a fixed position camera, it takes audiences through the... Read More