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acebook and Instagram’s parent company, Meta, reported second-quarter sales of $28.9 billion, which was in line with expectations of $28 billion to $30 billion but represented a 1 percent year-over-year revenue decline.
Additionally, the company’s net income decreased by 36% to $6.7 billion for the second quarter, while total costs and expenses increased by 22% to $20.5 billion. Daily active users on all of Meta’s family of applications were in the low single digits, while Meta’s primary social platform, Facebook, experienced a modest 3 percent growth in the second quarter, despite the social media giant facing fierce competition from rivals like TikTok.
According to Meta’s results release, executives cited a “poor advertising demand environment” that is predicted to persist into Q3. For the quarter, the company expects revenue of $26 billion to $28.5 billion.
The release of Meta’s financial report coincides with a drop in ad revenue experienced by other large internet giants like Snap, which has caused stock values to plummet. According to Alphabet CFO Ruth Porat, the company missed its earnings target on Tuesday. YouTube ad revenue reached $7.3 billion during the ongoing “pull back” in advertiser spending.
Internally, Mark Zuckerberg, the CEO of Meta, reportedly instructed staff to get ready for the “biggest downturns that we’ve seen in recent history” weeks ago. According to Reuters, the corporation is also slowing down hiring and will likely reduce the number of engineers it hires by at least 30%.
Insider Intelligence predicts TikTok will generate more than $11 billion in digital ad income by 2024, so Meta has been promoting its short-form video service, Reels, more and more on Facebook and Instagram. Instagram CEO Adam Mosseri responded to the criticism in a video posted on Tuesday after creators complained that their photographs had received less engagement as a result of the emphasis on video.
Insider Intelligence predicts TikTok will generate more than $11 billion in digital ad income by 2024, so Meta has been promoting its short-form video service, Reels, more and more on Facebook and Instagram. Instagram CEO Adam Mosseri responded to the criticism in a video posted on Tuesday after creators complained that their photographs had received less engagement as a result of the emphasis on video.
The company will “had to lean into that transition” toward video while “continuing to promote images,” Mosseri claimed in an attempt to defuse the situation in the video. He claimed that more users are sharing and viewing videos.
Zuckerberg acknowledged Reels in a prepared statement prior to Meta’s earnings call on Wednesday by mentioning the “positive trajectory on our engagement trends this quarter” brought on by the short-form video service and Meta’s ongoing investments in artificial intelligence, though the executive did not mention any specific numbers.
👋🏼 There’s a lot happening on Instagram right now.
I wanted to address a few things we’re working on to make Instagram a better experience.
Please let me know what you think 👇🏼 pic.twitter.com/x1If5qrCyS
— Adam Mosseri (@mosseri) July 26, 2022
