Meta Platforms Inc (NASDAQ:FB) saw its profits fall during the second quarter as the social media giant faced a drop in advertising revenue thanks to rising inflation and a loss in digital ad revenue.
Earnings per share (EPS) came in at US$2.46 versus consensus estimates of $2.54.
Total revenue hit US$28.822 billion, 1% less than last year’s 2Q levels of $29.077 billion, and less than Wall Street’s expectations of $30.32 billion, and the first time year-over-year revenue has declined.
READ: Meta Platforms investors badly in need of reassurance
Meta noted that daily active users of Facebook (NASDAQ:META) were 1.97 billion on average for June 2022, an increase of 3% year-over-year, while monthly active users were 2.93 billion as of June 30, 2022, an increase of 1% year-over-year.
"It was good to see positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in AI," said Mark Zuckerberg, Meta founder and CEO in a statement. "We're putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services."
Third quarter looking gloomy
For the third quarter 2022, the parent company of Facebook, Instagram and WhatsApp is forecasting total revenues to be between $26 to $28.5 billion, falling short of expectations.
Dave Wehner, chief financial officer of Meta, wrote 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. We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue. Our guidance assumes foreign currency will be an approximately 6% headwind to year-over-year total revenue growth in the third quarter, based on current exchange rates.
“We expect 2022 total expenses to be in the range of $85-88 billion, lowered from our prior outlook of $87-92 billion. We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities,” Wehner wrote in a statement.
C-suite changes
Meta announced that Wehner will move from the CFO position to a new role as its chief strategy officer. Susan Li, currently vice-president of finance, will take on the CFO role. The changes are will be effective on November 1.
Despite closing up Wednesday at 6.5% or US$169.8, shares of Meta fell around 1% after the bell to about $167.80 per share, a small rise from the low at close of 4% down, or $163.25.
Meta has been facing competition from TikTok and Snap in terms of advertising dollars. Also, Facebook has been banned in Russia, taking with it some 1.5% of Meta’s advertising revenue. The US Federal Trade Commission announced today that it is suing Meta over its latest acquisition in VR, Within Unlimited, a company that makes the virtual reality fitness app Supernatural.
Contact the author at susie@proactiveinvestors.com