Meta, the parent company of Facebook and Instagram, reported revenue of $28.8 billion in the second quarter, in line with its forecast of $28 billion to $30 billion for the quarter, but representing a revenue decline of about of 1% year to year.
The company also saw net income fall 36% to $6.7 billion in the second quarter, while total costs and expenses rose 22% to $20.5 billion. And with the social media giant facing stiff competition from rivals like TikTok, daily active users of the Meta family of apps are in the low digits; Meta’s flagship social platform, Facebook, saw a modest 3% growth in the second quarter.
Executives noted a “weak ad demand environment” that is expected to continue into the third quarter, according to Meta’s earnings release. The company forecasts revenue for the quarter between $26 billion and $28.5 billion.
“It appears that we have entered an economic crisis that will have a broad impact on the digital ad business,” Meta CEO Mark Zuckerberg said during the company’s earnings call. “Given the recent revenue trajectory we are seeing, we are slowing down [our] Investments and deferral of certain expenses that would occur in the next year or two at certain times.
The top executive also said the company will cut its “personnel growth in the next year”. “Many teams will be downsized so we can transfer energy to other areas of the company, and I want to give our leaders the ability to decide within their teams where to bend, where to bend, where to fill friction, and where to restructure teams as they shrink. ” [the impact] Long-term initiatives,” Zuckerberg said.
Meta’s earnings report came after other major tech players such as Snap saw their ad revenue decline, causing their share prices to plummet. Alphabet also reported a revenue loss on Tuesday, with YouTube ad revenue hitting $7.3 billion amid ongoing advertiser spending, according to Alphabet CFO Ruth Porat.
Internally, Zuckerberg reportedly told employees earlier this month to prepare for “the worst recession in recent memory”. The company is also cutting hiring and is expected to cut engineering hires by at least 30 percent, Reuters reported.
To compete with TikTok, which Insider Intelligence predicts will reach $11 billion in digital ad revenue by 2024, Meta is increasingly pushing its short video offering, Reels, on Instagram and Facebook. The move has sparked a recent backlash from creators who say their photos have drawn less interest as a result of the emphasis on video, which has been pushed by Instagram boss Adam Moser. deal with criticism in a video posted Tuesday.
In the video, Mosseri tried to control the damage by arguing that more users are sharing and consuming video, so the company will have to “address this change” to video while “continuing to support photos”.
During Meta’s earnings call, Zuckerberg gave Reels a nod, saying the company has increased the amount of time users spend interacting with Reels on Facebook and Instagram by 30%.
In November, Meta CFO David Wenner will assume a new role as Chief Strategy Officer. Susan Lee, Meta’s current vice president of finance, will be promoted to chief financial officer.
July 27, 2:04 pm: Updated to reflect Target revenue of $28.8 billion.
Source: Hollywood Reporter
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
