The company formerly known as Facebook isn't doing so hot. After cutting its overhead, scaling back hiring and weathering a new SEC investigation, it doesn't come as a surprise that Meta's second quarter financial results are a bit messy.
The most worrisome piece of news today? For the first time since going public in 2007, Meta reported a decline in quarterly revenue year over year. The company's revenue was $28.82 billion, a 1% decrease from $29.07 billion in the second quarter of 2021.
On her final quarterly earnings call, outgoing COO Sheryl Sandberg blamed this decline on the decreasing value of the Euro.
"Foreign exchange trends had a significant impact in Q2, in particular the depreciation of the Euro relative to the dollar," Sandberg said on the call. "On a constant currency basis, we would have seen 3% revenue growth year over year."
But these less-than-stellar results aren't an aberration for Meta as of late.
Meta had another foreboding "first" just two quarters ago, when Facebook reported an unprecedented loss in daily active users (DAUs). Over the last two quarters, Facebook's DAUs have begun to slowly increase again, but the platform did lose monthly active users (MAUs) this quarter. This is an anomaly, though. The loss entirely came from the European region, where Facebook was banned in Russia. Across Meta's entire family of apps, daily active people (DAP) increased 4% year over year.
As both Facebook and Instagram try to emphasize short-form video, users have spoken out about their distaste for the platform's endless attempts to imitate TikTok. Kylie Jenner and Kim Kardashian shared a petition this week that said, "Stop trying to be tiktok i just want to see cute photos of my friends." Yesterday, Instagram head Adam Mosseri seemed to directly address these stars' concerns in a video, where he emphasized that these feed changes are all just tests. CEO Mark Zuckerberg also weighed in on today's earnings call, and the news isn't good for those who agree with Kim and Kylie.
"About 15% of content in a person's Facebook feed and a little more than that of their Instagram feed is recommended by our AI from people, groups or accounts that you don't follow," Zuckerberg said. "And we expect these numbers to more than double by the end of next year." He also added that users have spent 30% more time viewing Reels than last quarter, but it's hard to say how organic that growth is when users feel like they're being inundated with these videos. Even though Reels monetization is still developing, the product has apparently crossed the $1 billion mark when it comes to annual revenue run rate.
Basically, Mosseri and Zuckerberg are indicating that, whether we like it or not, we're going to be seeing a lot more content from accounts we don't follow -- there's no going back. In just the last week, Facebook took the step to split the newsfeed into "Home," a TikTok-like feed of recommendations, and "Feeds," which shows you posts from your friends, groups and accounts you follow. Both Facebook and Instagram let users toggle between different feeds, but it feels a bit weird that the founder of Facebook has to specify that our actual friends will remain an important part of social media.
When it comes to VR, Zuckerberg still remains firm in his resolve that building the "metaverse" will be worth the massive investment.
"This is obviously a very expensive undertaking over the next several years," he said. "But as the metaverse becomes more important in every part of how we live from our social platforms, to entertainment, to work, and education and commerce, I'm confident that we're going to be glad that we played an important role in building this."
In last quarter's call with investors, Zuckerberg said that these expenditures were "laying the groundwork" for a big 2030.