Meta revenue drops 1st time Zuckerberg macroeconomic
A man looks on near the stand of US multinational technology conglomerate Meta at the congress centre ahead the World Economic Forum (WEF) annual meeting in Davos on May 22, 2022. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

Meta revenue drops for 1st time, Zuckerberg blames macroeconomic trend

The parent company of Facebook, Meta Platforms Inc, this week released its revenue reports for the quarter which ended on June 30th 2022.

According to the numbers posted by the company, revenue of the social media platform declined by nearly 1% to reach 28.8 billion dollars in the quarter. Earnings per share posted by the business also ended up lower than expected by the stock analysts. The current EPS of Meta Platforms Inc is 2.46 dollars per share. Stock and business analysts had estimated revenue of 28.94 billion dollars and earnings per share of 2.61 dollars.

The net income of the social media company also decreased by nearly 36% to 6.68 billion dollars compared to the net income posted in the second quarter of the previous financial year. Income from operations of the company also dropped by 32% to reach 8.35 billion dollars, operating margin of the company also plunged to 29 per cent.

During a call with certain stakeholders, the chief executive officer of Meta Platforms Inc, Mark Zuckerberg said that the major reason for the fall in revenue and net profit is the macroeconomic crisis that has been going on in the international economic landscape. He added that this economic downturn had a huge impact on the digital advertising business, which in turn affected the revenue prospects of the Meta Platforms Inc.

Mark Zuckerberg in the call also hinted about implementing cost-cutting measures in the company, including slowing down investments and reducing the head count of employees in order to trim down extra expenses.

Even though the company took a hit in revenue and net profit in the second quarter, the daily active users in the flagship social media platform of Meta Platforms Inc, Facebook, increased in the second quarter by nearly 3%. Monthly Active Users (MAU) on Facebook also increased by one percentage by the end of the second quarter to stand at 2.93 billion users.

In an overall analysis of daily active users and monthly active users of apps operated under Meta Platforms Inc, including Instagram and WhatsApp, both DAU and MAU saw an increase in the current quarter. Reels feature in the Instagram app also touched the milestone mark of 1 billion dollars of annualized revenue.

Even though there was an increase in its daily and monthly active users, Meta Platforms Inc has forecasted a  weak third quarter as it is expected to generate even lesser revenue. Meta Platforms Inc has forecasted revenue of 26-28.5 billion dollars in the upcoming quarter. This is less than the 30.5 billion dollars estimated for the 3rd quarter of the current financial year.