On Wednesday, Meta, the company formerly known as Facebook, reported a 1 percent decline in quarterly revenue from the previous year. It marked the first time the social media giant’s revenues have fallen since it… went public ten years ago, when it faced increased regulatory oversight and a turbulent economy, while trying to build a new frontier of digital communications.
Meta’s second-quarter revenue was $28.82 billion, down from $29.07 billion a year earlier. Earnings were $6.69 billion, down 36 percent from a year earlier. Wall Street analysts had forecast earnings of $7.04 billion on revenue of $28.9 billion, according to data from FactSet.
The results exacerbated what was a bleak day for Meta, and it was: sued by the Federal Trade Commission on Wednesday about a deal to buy a virtual reality company called Within. The lawsuit directly affects the ambitions of Mark ZuckerbergMeta’s founder and chief executive, who has spent billions of dollars creating an immersive world of social interaction in the “metaverse”, that is a combination of virtual and augmented reality that will be linked to commerce and online relationships.
Mr. Zuckerberg has told investors, technologists and others that it will take years for his vision of the metaverse to materialize and that the pursuit will be costly. Some investors are skeptical that the effort will pay off in the long run.
Still, there were bright spots in Meta’s earnings report. The company said the number of daily active users for its family of apps — including Facebook, Instagram and WhatsApp — has risen to 2.88 billion, up 4 percent from a year ago. That exceeded analysts’ expectations that the company was losing visitors. The Facebook app also saw user growth within the United States, an area some believed was saturated.
Mr. Zuckerberg said he was encouraged by other areas of Meta’s business that drive growth and engagement, such as the Reel’s video product, a feature within Instagram that is similar to TikTok’s video offering. Investments in artificial intelligence recommendation algorithms had also led to more people using the service and for longer periods of time, the company said.
“It was good to see a positive trajectory in our engagement trends this quarter from products like Reels and our investments in AI,” he said in a statement. “We are putting more effort and focus on our top business priorities that unlock both short and long-term opportunities for Meta and the people and businesses that use our services.”