HomeTechnology NewsFacebook reports revenue decline in 2nd quarter earnings report

Facebook reports revenue decline in 2nd quarter earnings report



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For months, Facebook Chief Executive Officer Mark Zuckerberg has said the future of its company would be focused on building out the virtual reality powered digital worlds known as the metaverse.

On Wednesday he took detour from that journey, by reiterating that the company is primarily a social brand, even as the company moves to give its users the same algorithmic-powered stream of entertaining content from people they don’t know on social media apps such as TikTok.

“I want to be clear that we are still ultimately a social company focused on helping people connect,” Zuckerberg said in a call with investors.

“Our strategy isn’t about public versus social content and interaction. It’s really about enabling a flywheel that compounds both.”

One social trend that we’re seeing is that instead of people just interacting and comments in their feeds, most people find interesting content in their feeds, then they message. And then they message that content to friends and interact there. And this creates this flywheel of discovery and then social connection, and then inspiring those people to create more content themselves. And Instagram, for example, we see the reels makes up more than half of content reshard into messages.

Alright, next on to ads. We faced a number of challenges here in the near term. But the investments that we’re making should give us a comparative advantage over the longer term.

offered a rosy vision of the future of social connection on its platforms even as the company moves to replicate the algorithmic-powered discovery of entertaining content on social media apps such as TikTok.

“Social content for people you know, is going to remain an important part of the experience and some of our most differentiated content,” Zuckerberg said during a call with investors. “But increasingly, we’ll also be able to supplement that with other interesting content from across our networks.”

Facebook parent company Meta suffered its first quarterly revenue decline in a decade a publicly-traded company, foreshadowing a rocky economic chapter for the digital advertising behemoth.

The company said it earned $28.8 billion dollars during the second quarter of 2022, representing a 0.88 % drop from what it earned during the same time period last year. That revenue figure was also lower than the $28.9 billion Wall Street analysts were predicting, according to a Bloomberg compilation of their estimates. Facebook’s stock declined in after-market trading.

The results illustrate the intensifying financial challenges facing the social media giant as it grapples with both macro-economic challenges and specific threats to its business model. Facebook warned in a statement that it expects marketers to spend less money on advertising due to broader concerns about the economy.

“This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty,” the company said in a statement.

The company’s stock price has been slashed in half this year following a decision by Apple to impose new privacy rules designed to limit app makers’ ability to collect data on their users to power their targeted advertising business. The company is also facing unprecedented competition for young users, creators and advertiser dollars from newer social media platforms, such as TikTok and Snapchat.

Facebook also said Wednesday that it planned to reduce its expenses for the year to $85-88 billion, down from its previous outlook of $87-92 billion.

In recent weeks, Facebook executives have issued a dizzying number of directives, outlining a new era of higher performance expectations and slowed hiring as the company emerges from the pandemic with a growing list of economic challenges.

“We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities,” the company said in statement.

In a bright spot for the company, Facebook reported daily active users on its core social network rose 3% to 1.97 billion in the second quarter. Monthly users also rose about 1% to 2.93 billion, the company said.

Facebook continues to stake its future on building out the so called metaverse, a term used to describe immersive digital worlds accessed by virtual reality-powered devices. The company envisions that people will want to work, play and shop in these new digital realms.

“We’re putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services,” Mark Chief Executive Officer Mark Zuckerberg said in a statement.

Facebook also announced on Wednesday a shake up among its highest leaders. Facebook Chief Financial Officer David Wehner will assume a newly-created role as chief strategy officer. Susan Li, the company’s current vice president of finance, will become the new chief financial officer. Facebook chief operating officer Sheryl Sandberg announcement last month that she would be stepping down after 14 years.

This is a breaking story and will be updated

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