Meta's Q2 Revenue Declines 1% to $28.8 Billion From $29 Billion

Facebook, Instagram, and WhatsApp owner Meta's Q2 revenue has declined 1% to $28.8 billion from $29 billion in the same quarter last year. This is the first revenue decline for the social media giant since it went public.

While total costs and expenses jumped 22% to $20.4 billion from $16.7 billion, income from operations declined 32% to $8.3 billion from $12.3 billion. Net income saw a 36% dip at $6.6 billion against $10.3 billion.

Meta's Family of Apps revenue was $28.4 billion, down 1%. The Family of Apps ad revenue was $28.2 billion, down 1% or up 3% on a constant currency basis.

"Advertising revenue growth slowed throughout the second quarter as advertiser demand softened. The deceleration has been broad-based across verticals, and we believe businesses are lowering their advertising spend in response to the increased economic uncertainty. Foreign currency headwinds also increased throughout the second quarter. While it wasn’t a factor contributing to the deceleration in Q2, we’re also continuing to face targeting and measurement headwinds such as Apple’s iOS changes, which we believe are contributing to the growth challenges across the digital advertising industry," Meta CFO Dave Wehner says during the Q2 earnings call.

Wehner states that the year-over-year ad revenue growth was strongest in Asia-Pacific and the Rest of the World at 13% and 11%, respectively, with both regions benefiting meaningfully from strong growth in click-to-messaging ads. North America and Europe declined 4% and 12%, respectively, he added.

"Foreign currency was a headwind in all international regions, with Europe and Asia-Pacific experiencing the largest impacts," Wehner adds.

In Q2, Meta's total number of ad impressions served across services increased by 15% while the average price per ad decreased by 14%. "Impression growth was driven by Asia-Pacific and Rest of World. The year-over-year decline in pricing was driven by a reduction in advertiser demand, the mix shift in ad impressions towards lower-monetizing surfaces and regions, and foreign currency depreciation," Wehner further adds.

The Meta CFO also says that approximately 2.9 billion people used at least one of its Family of Apps on a daily basis in June, and approximately 3.6 billion people used at least one on a monthly basis.

Wehner has noted that Facebook's daily active users (DAU) during the quarter were 1.97 billion, up 3% or 60 million compared to last year. DAUs represented approximately 67% of the 2.93 billion monthly active users in June. Further, Monthly Active Users (MAUs) grew by 39 million or 1% compared to last year. Europe DAUs and MAUs declined sequentially and were negatively impacted by the loss of users in Russia and Ukraine.

The revenue from the Reality Labs segment was $452 million, up 48%, driven primarily by Quest 2 sales. Reality Labs' expenses were $3.3 billion, up 19% due to growth in employee-related costs and R&D operating expenses that were partially offset by the previously mentioned reduction in loss reserves. Reality Labs operating loss was $2.8 billion in the second quarter.

Wehner says Meta's third quarter 2022 total revenue is expected to be in the range of $26-28.5 billion.