Meta, Facebook’s parent company, reported its first quarterly revenue decline and plummeting profit on Wednesday as the social media powerhouse battles a turbulent economy and the growing TikTok phenomenon.
Meta had long seen seemingly endless upward growth, but after that loss of revenue — and reporting its first drop in global daily user numbers earlier this year — the company has adopted a more modest tone.
“This is a time that demands more intensity, and I expect us to do more with less,” CEO Mark Zuckerberg told analysts after the company reported a 36% decline in its profits at $6.7 billion.
Meta also said revenue in the recently ended quarter fell 1% to $28.8 billion, its first such slip since the company, then simply known as Facebook, went public in 2012.
“The year-over-year decline in quarterly revenue shows how quickly Meta’s business has deteriorated,” analyst Debra Aho Williamson said.
“The good news, if you can call it that, is that its competitors in digital advertising are also experiencing a downturn.”
Meta, however, reported an increase in the number of daily Facebook users to 1.97 billion, defying analysts’ forecasts of a decline, but noted that monthly users fell by around two million to 2.93 billion.
Its shares were down about 3.5% in after-hours trading, continuing a decline in the company’s shares since February that has wiped out about half its value.
Meta has also come under intense scrutiny from lawmakers and regulators not only for its massive strength in the social media market, but also for its impact on the health of its users.
The results came just hours after US regulators announced they would try to block Meta’s acquisition of virtual reality fitness app maker Within, a potential blow to the tech giant’s metaverse ambitions.
– US targets purchase of Meta VR –
“This acquisition presents a reasonable likelihood of eliminating current and future competition,” the FTC’s complaint said. “And Meta would be one step closer to its ultimate goal of owning the entire ‘Metaverse’.”
Meta is focused on building its metaverse vision for the future of the internet, betting heavily on the interactive virtual world that the company believes will secure its powerful position.
The social media giant said the FTC’s decision defies reality and said it believes its purchase of Within would be good for VR users as well as developers building apps in that market.
“The FTC’s case is based on ideology and speculation, not evidence,” Meta said in response to an AFP inquiry.
Meta has also faced turmoil as it tries to adapt its platforms to better combat the short-video app TikTok, which threatens the Silicon Valley giant’s primacy.
Instagram, owned by Meta, is trying to address complaints from users, including celebrities Kylie Jenner and Kim Kardashian, who say the changes have made it look too much like TikTok, including video recommendations.
Instagram chief Adam Mosseri posted a video on Twitter addressing the complaint, saying a number of changes were being experimented with and promising not to drop photo sharing from the service.
“We will continue to support the photos, it is part of our heritage,” Mosseri said.
Earnings season got off to a bad start with disappointing reports from Netflix, the parent company of Snapchat and Microsoft.
Snap last week announced plans to slow recruiting “significantly” after dismal results wiped out some 30% of the tech company’s share price, which is struggling on multiple fronts.
Even juggernaut Google reported that its profits and revenue had fallen as the internet giant’s long runaway growth in ad revenue had slowed, but the market seemed relieved that the news was no worse.
Big tech platforms have suffered from the economic climate, which is forcing advertisers to cut marketing budgets, and from Apple’s data privacy changes, which have reduced their leeway for ad personalization.