Meta earnings miss expectations, net income plummets 36%

Facebook parent company Meta (META) reported its Q2 2022 earnings after the closing bell on Wednesday, falling shy of analysts’ expectations, and missing by a wide margin on its Q3 revenue forecasts. The quarter also marked the first year-over-year revenue decline for the social media company. Net income also fell 36% year-over-year.

Here are the most important numbers from the report versus what analysts were expecting, as compiled by Bloomberg.

Revenue: $28.8 billion versus $28.9 billion expected
Earnings per share: $2.46 versus $2.54 expected
Facebook daily active users: 1.97 billion versus 1.95 billion expected

Meta’s Q3 revenue forecast fell short of analysts’ expectations, coming in at between $26 billion and $28.5 billion. Wall Street was looking for $30.32 billion. And while daily active Facebook users increased by 8 million users quarter-over-quarter, monthly active users declined by 2 million users quarter-over-quarter. CEO Mark Zuckerberg blamed the drop on internet blocks related to the war in Ukraine.

The company’s family of apps, which include the likes if Instagram and WhatsApp, saw quarter-over-quarter increases in both daily active and monthly active users.

Shares of the company were down more than 4% following the report.

Ahead of Meta’s earnings, the Federal Trade Commission announced it is seeking an injunction to block the social media company’s acquisition of Within, maker of the virtual reality fitness app Supernatural.

“Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app,” FTC Bureau of Competition deputy director John Newman said in a statement.

“But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.”

The FTC is pursuing a separate antitrust suit seeking to break up Meta.

Meta’s earnings come as the broader digital advertising industry is experiencing a slowdown amid inflation, rising interest rates, and the war in Ukraine.

It’s not just inflation, interest rates, or the war and COVID that companies are dealing with, either. Apple’s App Tracking Transparency, a privacy feature that prevents apps like Facebook from tracking user activity across the web and apps, is hindering Meta’s ability to provide advertisers with accurate user behavior.

As proof of Meta’s ad market troubles, the company reported that average price per ad fell 14% year-over-year.

Then there’s TikTok, which Meta, and its ilk, see as an existential threat. The bite-sized video app claimed it had 1 billion monthly active users as of Sept. 2021.

To combat the threat of TikTok, Meta has focused more on its Reels product, a TikTok-style short video feature. What’s more, the company introduced a new layout for its main Facebook app complete with a new Home feed that apes the feel of TikTok’s “For You” recommendation page.

FILE - In this Friday, Oct. 25, 2019, file photo, Facebook CEO Mark Zuckerberg speaks about — Meta announced its Q2 earnings after the bell on Wednesday. (AP Photo/Mark Lennihan, File)

All of this comes at a time when Meta is attempting to transition from a social networking company to a metaverse-first business focused on AR/VR experiences.

Internally, Meta employees are grappling with CEO Mark Zuckerberg’s stricter demands to perform or head for the door, and warnings that the company could be facing a damaging downturn, according to Reuters.

Chief product officer Chris Cox also told workers that the company needs to “prioritize more ruthlessly,” according to Reuters which cited an internal memo.

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