Meta's net income during the third quarter of 2022 plunged 52% to US$4.4 billion. According to the Financial Times which quoted S&P Capital IQ, this was below estimates of US$5 billion. Its revenue for the quarter also dipped 4% to US$27.71 billion, compared to 1% last year. FT described this to be "the slowest pace of growth" since Meta went public in 2012. Nonetheless, this was still slightly higher than the 5% revenue dip that analysts had predicted, FT said.
Ad impressions delivered across its Family of Apps increased by 17% year-over-year and the average price per ad decreased by 18% year-over-year. CEO Mark Zuckerberg (pictured) said that while the company faces "near-term challenges" on revenue, the fundamentals are there for a return to stronger revenue growth.
"We're approaching 2023 with a focus on prioritisation and efficiency that will help us navigate the current environment and emerge an even stronger company," he added. Meta expects the fourth quarter 2022 total revenue to be in the range of US$30 to US$32.5 billion. Analysts, however, expect revenue to be US$32.2 billion, FT said, adding that Meta's shares slid 19% in after-hours trading and investors wiped out over US$65 billion in the tech giant's market capitalisation.
Meanwhile, Meta has yet to see gains from its bet on the metaverse as Reality Labs' revenues dipped to US$285 million, with a loss of US$3.7 billion in Q3 2022 compared to US$2.6 billion in the same period last year. Meta said it anticipates 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," Meta added.
Heading into 2023, Meta plans to pause hiring for some teams while cutting headcount for others. It also plans to invest headcount growth "only in [its] highest priorities". "We expect headcount at the end of 2023 will be approximately in line with third quarter 2022 levels," the company said.
Despite the revenue dip, Meta's daily active people for its family of apps was 2.93 billion on average for September 2022, an increase of 4% year-over-year. Meanwhile, its monthly active people for its family of apps was 3.71 billion as of September 30, 2022, an increase of 4% year-over-year.
Meta's disappointing earnings come after Alphabet also reported slower revenue growth at 6%, a dip from 41% a year earlier. YouTube's ad revenue also underperformed, sliding 2% to US$7.0 billion for the third quarter of 2022 ended 30 September compared to US$7.2 billion the previous year. The dismal earnings resulted in Alphabet's shares sliding by about 7% in extended trading on Tuesday.
At the same time, Snap revenue also slowed in Q3 2022. Although revenue increased by 6% year-on-year to US$1.13 billion, it still fell short of analysts' expectations of US$1.14 billion, FT said. This marked the "slowest pace of growth" since Snap went public five years ago.
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