Meta, the parent company of Facebook and Instagram, saw its first revenue decline in history Thursday. The loss comes as the economy falters; as competition from rival TikTok heightens and a drop in digital advertising.
Raj Shah, managing partner at digital consulting firm Publicis Sapient, explained that Meta must also contend with decreased trust in its leadership, and the looming departure of its chief operating officer and architect behind its advertising business, Sheryl Sandberg.
Meta earned profits of $6.69 billion, or $2.46 per share, in the April-June period. This is down 36% from $10.39 billion, or $3.61 per share, in the same period a year ago.
Revenue was $28.82 billion, down 1% from $29.08 billion a year earlier. This decrease may continue, according to Raj Shah, until Meta can monetise the metaverse.
The results largely followed a broader decline in the digital advertising market that is affecting Meta rivals such as Twitter and Google. Both have also posted a revenue decline. Google’s parent company Alphabet reported its slowest quarterly growth in two years on Tuesday.
CEO Mark Zuckerberg said Meta is slowing its pace of investments and plans to “steadily reduce” employee growth after a hiring blitz earlier this year.
“This is a period that demands more intensity,” he said in a conference call with analysts. “Expect us to get more done with fewer resources.”