Facebook parent company Meta (META-US) on Wednesday (27th) announced its second-quarter earnings report, with a larger-than-market decline in revenue and weaker profits, and an unexpectedly weak financial forecast, indicating that the revenue growth rate will decline once more, stimulating the stock to fall by more than 4% following the market. %.
Meta closed up 6.55% on Wednesday, but fell 4.59% following hours to $161.80 per share, as recently confirmed.
Key data for Q3 forecast vs. analyst expectations
- Revenue: 2% to 11% y/y, between $26.0 billion to $28.5 billion vs. $30.5 billion (analysts polled by Refinitiv expected)
Meta’s second-quarter revenue fell 1% from a year earlier, and it issued a disappointing third-quarter guidance, citing “a weak ad demand environment to persist throughout the second quarter amid broader macroeconomic uncertainty. exist.”
Meta Chief Executive Mark Zuckerberg said on an earnings call that the company will cut jobs over the next year to help save money during a slowing economy. “These are times of greater intensity, and we look forward to getting more done with fewer resources.”
Second quarter (ending June 30) key financial data vs. analyst expectations
- EPS: $2.46 vs. $2.59 (Analysts polled by Refinitiv)
- Revenue: Down 1% YoY to $28.82 billion vs. $28.94 billion (Analysts polled by Refinitiv expected)
- Daily active users (DAU): 1.97 billion vs 1.96 billion (analysts polled by StreetAccount expected)
- Monthly Active Users (MAU): 2.93 billion vs 2.94 billion (analysts polled by StreetAccount expected)
- Average revenue per user (ARPU): $9.82 vs. $9.83 (analysts polled by StreetAccount)
Meta’s share price has halved so far this year, underscoring investor concerns regarding the health of the company’s core online business, as Apple limited Meta’s ability to track users following changing its iOS privacy settings last year, hurting the unit’s business and hurting the unit’s business. The weakness has led some businesses to cut budgets.
Following last week’s peer Snap (SNAP-US) and Twitter (TWTR-US) following its disappointing earnings report, Meta’s earnings were equally troubling. Executives at these companies cited economic and mobile platform challenges that permeate the online market.
Short film product Reels is difficult to make a profit
The short film app Douyin continues to grow, not only attracting users but also dividing the market, posing a threat to Meta, so Meta launched the “Reels” short film product on Instagram to compete with Douyin. Zuckerberg said at the conference that Reels’ annualized revenue has reached $1 billion. However, despite Facebook’s large investment in Reels, the product’s revenue efficiency is still not as good as Instagram’s “timed feeds” and “news feeds.”
“In the short term, the faster Reels grows, the more revenue it actually takes away from more profitable products.”
Reality Labs unit continues to lose money, dim revenue outlook
Meta has invested heavily in the Reality Labs division, which develops Metaverse and related virtual reality (VR) and augmented reality (AR) technologies.
The division posted a $2.8 billion loss on revenue of $452 million in the second quarter, and Meta expects third-quarter revenue to be lower than the second.
Earlier this week, Meta raised the price of the Quest 2 VR headset by $100 to reflect higher production and shipping costs. While Meta is currently the leader in VR headset sales, the market is still much smaller compared to mobile .
Meta worked hard to rebrand the company, continued to move towards the Metaverse, and invested more in sales and marketing. Those expenses rose 10 percent annually to $3.6 billion in the second quarter.
Personnel change
Sheryl Sandberg, the services company’s chief operating officer for 14 years, announced in June that she was leaving, her final return to the company’s earnings call.
Thunberg said: “This is a period of global economic turmoil, and many macroeconomic factors affecting our revenue have emerged and continued in previous quarters, such as the impact of the Russia-Ukraine war, and e-commerce has gradually normalized following the peak of the epidemic. changes, but new challenges have emerged amid the uncertainty of rising inflation and recession.”
Meta said its headcount rose 32% from a year earlier to 83,553, but the company earlier said during the period that it would slow hiring, echoing trends in the tech industry. Meta expects total spending this year to be in the range of $85 billion to $88 billion, down from an earlier estimate of the range of $87 billion to $92 billion.
Chief Financial Officer David Wehner also serves as Chief Strategy Officer and oversees business development. Meta is also promoting Susan Li, the company’s current vice president of finance, to take over as chief financial officer.
