Washington: In the third quarter, Meta was buffeted by a widespread ad-spending downturn, posting a 4 per cent year-over-year revenue loss, while missing Wall Street estimates on the bottom line as significant metaverse investments continued to eat into earnings, reported Variety.
The firm said its flagship Facebook app had 1.984 billion daily active users on average in Q3, up roughly 16 million from the previous quarter -- and, as Meta's core social media business plateaus, TikTok is gaining ground. Facebook DAUs had previously fallen by roughly 1 million in Q4 2021, as per Variety.
According to Variety, Meta reported total revenue of USD 27.71 billion and net income of USD 4.4 billion for the third quarter, which was down 52 per cent year over year and fell short of Wall Street projections.
The year-over-year revenue decline was only the corporation's second as a public company, following a 1 per cent loss in Q2.
Variety quoted Refinitiv data according to which, analysts expected revenue of USD 27.38 billion. Alphabet (parent of Google and YouTube) and Snap both reported Q3 earnings losses, citing deterioration in ad expenditure during the period.
Meta also predicted a loss in revenue for the fourth quarter, projecting sales of USD 30 billion to USD 32.5 billion, a 3.5 per cent- 11 per cent decrease from the previous year.
Meta shares dropped more than 18 per cent in after-hours trading as a result of the earnings failure and Q4 revenue estimate. Year to date, the stock is down more than 68 per cent.
"Our community continues to grow and I'm pleased with the strong engagement we're seeing driven by progress on our discovery engine and products like Reels," said Meta chief Mark Zuckerberg.
"While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We're approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company," he added.
Meanwhile, Meta has been investing billions in its metaverse projects, most recently releasing the high-end Meta Quest Pro headgear (USD 1,500), a turn suggested by the social network giant's new moniker.
As per Variety, the company also disclosed that a lower-cost, consumer-focused next-generation Quest will be released in 2023. However, Meta's Reality Labs division, which includes its VR, AR, and wearables companies, is still years away from contributing to the bottom line and has hampered overall financial outcomes.