Meta has continued its dismal run of form with its latest quarterly results, with revenue falling 1% to $28.8 billion.
Operating income for the tech giant was down by 32% to $8.4 billion, indicating slower revenue growth as well as 22% increase in costs driven by rising research and development spend.
Revenue in Q3 is expected to be anywhere between $26 billion and $28.5 billion, further evidence towards a weaker advertising demand and the 6% negative impact from exchange rates.
Average users on the company’s family of apps including Facebook, Instagram and WhatsApp increased by 4% year-on-year to 3.65 billion.
Flagship platform Facebook’s monthly active users were 2.93 billion, reflecting a 1% increase.
Revenue for its Family of Apps (FoA) tumbled from $28.8 billion to $28.4 billion. Operating profits fell 24.6% to $11.2 billion.
Reality Labs, the company’s augmented and virtual reality division, watched its revenue climb a healthy 48.2% to $452 million.
Operating losses for the arm widened however from -$2.4 billion to -$2.8 billion.
Ad impressions bucked its trend by climbing 15%, but price per ad fell by 14%.
The news pushed Meta’s shares down 1.6% in after-hours trading.
“The blows just keep coming for Facebook parent Meta,” Hargreaves Lansdown equity analyst Laura Hoy said.
“Wednesday delivered a one-two punch to the social media giant—news that the FTC is stepping in to block its latest virtual reality acquisition and unimpressive results confirming fears that advertising spend is drying up.
“There was little to cheer in second quarter numbers, with declines and disappointments at nearly every turn, including a lacklustre third quarter outlook.
“The number of people using Meta’s family of apps each month continued to climb, albeit slowly, and the group’s still free and clear of any debt. But outside of that the numbers were bleak.
“The good news is most of this disappointment was already priced in after fellow social media firms Snap and Twitter posted similarly alarming numbers. But that doesn’t do much for investor confidence moving forward.
“Add to that the ongoing drama with regulators, and you have an inevitable quicksand of negative sentiment. Many believe big names like Google and Facebook were able to monopolise their territory through unfettered acquisitions of smaller rivals along the way.
“Whether or not that was the case, the FTC’s out to make sure it doesn’t happen on its watch as big tech looks to snap up virtual real estate in the metaverse.
“The commission’s efforts to block Meta’s proposed acquisition of virtual reality firm Within is not only a nuisance for Zuckerberg’s vision for a digital future, but a shot across the bow for the entire industry.
“This adds to a growing list of reasons Meta’s metaverse is off to a sputtering start. Chief among them being a severe spending cut to cope with waning advertising spend.
“But even if Facebook was able to splash out, it may well lose the power to sweep up competitors encroaching on its territory. That means Zuckerberg will be forced to navigate the brave new world alone—a risky and expensive endeavour.”