Meta’s revenue decline continues in Q3; dials back on Reality Labs investment
Meta – the parent company of Facebook – has reported its Q3 financial results, showing a continuous declining trend in revenue for the company, which amounted to $27.71 billion (A$42.67 billion) in this quarter, a decrease of 4% year-over-year (YoY).
The revenue was in line with the forecast from Wall Street analysts, which was $27.41 billion (A$43.22 billion).
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The company reported a $4.39 billion (A$6.76 billion) net income, a decrease of 52% YoY and a drop compared to $6.68 billion (A$10.28 billion) in Q2.
Meta’s chief financial officer David Wehner quoted a projection of total revenue in Q4 “in the range of $30-32.5 billion” (A$46.23-50.1 billion). In Q4 2021, Meta reported a $33.67 billion (A$51.87 billion) revenue.
The bulk of revenue can be attributed to its advertising operations, reporting a $27.23 billion (A$41.94 billion) revenue in Q3. However, the pressure persists in this realm for the company as it witnessed a 3.6% drop in ad revenue YoY.
Meta’s Reality Labs, which produces the VR and AR responsible for manifesting the metaverse, continued its downward streak with a $3.67 billion (A$5.65 billion) loss.
Wehner expected the loss in this division to extend into the new year: “We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”
For some more positive figures, Meta’s main product Facebook shows a steady increase in daily active users, reporting 1.98 billion on average for September 2022, an increase of 3% year-over-year.
Earlier this week, one of Meta’s investors spoke out and suggested Meta refocus on Facebook and tune down metaverse-related expenses.
The investor also suggested Meta get lean and cut headcount. While that number was 87,314 as of 30 September, an increase of 28% YoY, Wehner said the company will hold some teams “flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities.”
“As a result, we expect headcount at the end of 2023 will be approximately in line with third quarter 2022 levels,” he said.
As of 27 October, Meta trades at $129.82 (A$200) with $348.90 billion (A$537.75 billion) market capitalisation.
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