It’s like the end of an era: Since its IPO in 2012, Facebook has been on a rapid upswing, and now parent company Meta has reported its first revenue drop — and doesn’t expect an improvement in the coming months, either. Founder and CEO Mark Zuckerberg said the company wants to focus on the long term.
Meta revenues were down about 1 percent year-over-year to $28.8 billion in the second quarter. In short, profits shrank by 27 percent to just under $6.7 billion. CEO Sheryl Sandberg also pointed to the strong dollar that led to an unfavorable translation of foreign profits on the balance sheet. Without the rise in the dollar rate, sales would have increased by three percent, she emphasized in a conference call with analysts.
The revenue forecast for the current quarter was lower than analysts had expected, ranging from $26 billion to $28.5 billion. CFO Dave Wehner mentioned the weakening of the online advertising market, which was already noticeable in the second quarter, given the economic uncertainty.
cracks in the system
So far, Facebook and Meta have shown that they can withstand any economic downturn. Knowing the interests and social connections of billions of users, the platform gave advertisers the ability to target their ads to their desired audiences.
But the first cracks in the system appeared last year after Apple introduced new rules to protect privacy. Developers like Facebook are now required to explicitly ask iPhone users for permission if they want to track their behavior across apps and services. Many users rejected this – and the torpedoed advertising models on Facebook, among others.
Few new users
The number of users using at least one app from the group every day rose from 2.87 to 2.88 billion within three months. Facebook saw an increase from 1.96 to 1.97 billion daily users. The group also includes Instagram and WhatsApp.
New chief strategy
Meta also announced a change of leadership on Wednesday. The previous CFO Wehner will take over the newly created position of strategy chief in November. The new chief financial officer will therefore be Susan Li. A hole appeared on the executive floor after Sandberg announced her retirement. She was considered Zuckerberg’s right-hand man and the architect of Facebook’s business model.
Focus on the “Metaverse”
One of Zuckerberg’s long-term initiatives is the company’s focus on the “metaverse” — a virtual world in which he envisions business and social life will shift. The Reality Labs division, which combines “Metaverse” development and its previous VR business, posted an operating loss of $2.8 billion last quarter.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
