Meta reports its first-ever YoY quarterly revenue decline and issues a lowered Q3 forecast, citing a weak ad demand environment and macroeconomic uncertainty

Facebook parent Meta Platforms Inc. META 6.55%▲ posted its first decline in revenue and issued a muted outlook …

Wall Street Journal 2022-07-28 Salvador Rodriguez

Context & Ripple Effects

Meta entered the quarter after a first sequential drop in Facebook daily users and a Q1 advertising-revenue miss that led it to trim its 2022 expense range. The revenue decline turns those earlier growth and monetization warnings into a broader advertising slowdown.

The subsequent reports extend the pattern: Q3 and Q4 revenue each fell year over year even as Meta's family daily audience grew, separating user growth from near-term ad monetization.

First-order effects

Meta's lowered Q3 outlook resets expectations for its advertising business and places greater pressure on the expense discipline it had already signaled after Q1.
Advertisers face a weaker demand environment across Meta's ad inventory, while Meta's investors must assess the company against declining revenue rather than its prior growth trajectory.

Second-order effects

Meta's later Q3 and Q4 results show the forecast cut was not isolated: revenue and net income continued to decline, making cost growth harder to sustain against ad sales.
Growing family daily usage alongside falling revenue shifts Meta's operating focus toward extracting more value from its existing audience, rather than relying on audience expansion alone.

Third-order effects

If audience growth and ad-revenue growth continue to diverge, Meta's scale will no longer by itself guarantee top-line expansion; monetization efficiency becomes the central competitive measure for large ad platforms.
The sequence points to a more cyclical digital-ad market in which macro demand can outweigh platform audience gains, increasing the premium on flexible spending plans.

The trend: Meta's results mark a shift from audience-led growth to a period in which advertising demand and monetization determine performance despite continued user growth.

Discussion

@mosseri Adam Mosseri on x
👋🏼 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 👇🏼 https://twitter.com/...
@naxuu @naxuu on x
it's fucking hilarious to me that a seemingly innocuous iOS update - allowing users to do a single-click opt in or out of data collection/tracking/analysis by apps - single-handedly torpedoed $10 billion and counting in Facebook's ad revenue https://twitter.com/...
@david_p_priest David Priest on x
Apple cost Meta (Facebook) $10 billion/year with one button (that increases privacy). Turns out phone beats app in the rock/paper/scissors of big tech.
@divestech Dan Ives on x
Meta soft guidance speaks to Everest-like uphill battle ahead. Apple iOS privacy issues continue to be front and center along with macro. Bifurcation of tech space continues during June earnings season.
@maxkellybsm Max on x
FB's first EVER miss on revenue and falls slightly short on Q3 projections. A few questions to ask yourself, how often do companies miss and How long had FB or “Meta” been public? Once you answer those how could you not be bullish? It's getting ridiculous.
@anthony Anthony DeRosa on x
Facebook parent Meta posted its biggest drop in daily users and its first decline in revenue as the company struggles to adjust to macroeconomic forces and growing competition from rival TikTok $META https://www.wsj.com/...
@divestech Dan Ives on x
After the SNAP Nightmare on Elm Street earnings reports a different story from Google, Twitter, and even Facebook. Better than feared digital ad spending despite darker macro
@michaelstjames Michael St James on x
Anyone who has to buy advertising on FB business (and IG) and has been consistently ripped off with no recourse, had pixel issues, befuddling conversion numbers in flux, knew this was coming. https://twitter.com/...
@laurengoode Chaotic Goode on x
The real future of Facebook, erm sorry, Meta apps https://twitter.com/...
@ericboehm87 Eric Boehm on x
By the time Congress gets around to breaking up Facebook, the market will have already killed it and rifled through its pockets for loose change https://twitter.com/...
@infographx @infographx on x
Gen Z is literally ditching all the other social apps ... except TikTok. Meta posted its first decline in revenue and issued a muted outlook, reported quarterly revenue down almost 1% from a year earlier; the first time posting a quarterly drop in revenue from the year earlier.
@devilslayer1802 @devilslayer1802 on x
This is the first time EVER Facebook, $META, has had a quarter year-on-year revenue decline. https://twitter.com/...
@curiousgrey8801 Daniel Grey on x
The Company is paying the price for poor strategy& lack of consumer trust. You can change the name and all... but right now you can't change the trust. Advertisers know that. https://twitter.com/...
@jayshams @jayshams on x
The products all seem pretty bloated so maybe they should focus on being a smaller company https://www.wsj.com/...
@gabrielmalor Gabriel Malor on x
But I was told that we must reform federal law to stop this “monopoly” from stifling innovation. https://twitter.com/...
@jamescz19 James Czerniawski on x
Also worth noting this only bolsters my point when I say using users as a metric for measuring dominance/monopolization is both dumb and offers little insight into much of anything. These companies are doing a mighty fine job of hurting themselves.
@kantrowitz Alex Kantrowitz on x
It happened. Symbolic quarter for Meta. Its revenue missed estimates and its quarterly revenue declined for the first time ever. https://twitter.com/...
@sal19 Sal Rodriguez on x
Facebook parent posted its first decline in revenue but added users—defying analysts' projections https://www.wsj.com/...
@jamescz19 James Czerniawski on x
Man that Meta Monopoly theory is something else: 1) lose over $500bn in stock value? ✅ + 2) lose DAUs? ✅ + 3) try to copycat your competition? ✅ (woah now I thought this was a monopoly!) = 4) Dominating the market? 🤔 ❌ Far from it! https://twitter.com/...
@levynews Ari Levy on x
Either TikTok is eating EVERYONE'S lunch. Or the mobile ad market is in the 🚽. Meta just told us that revenue will decline for a second straight quarter. via @JonathanVanian https://www.cnbc.com/...
@joshg_etoro Josh Gilbert on x
Facebook trying to catch up to TikTok, and it's struggling. It's the first time in its history as a public company that $META has reported negative year-over-year revenue growth.
@jowens510 Jeremy C. Owens on x
Facebook is as bad as expected - first ever decline in revenue, third consecutive earnings decline, third-quarter guidance suggests it will get worse. CFO is moving to a new position. $META not so bad, again showing that the bar has been lowered. https://www.marketwatch.com/ ...
@persiancapital @persiancapital on x
Facebook (the “dead app no one uses anymore") DAUs are up 3% YoY. $META family of apps DAPs are up 4% YoY.
@jessecoheninv Jesse Cohen on x
“Facebook's awful quarter underlines the view that advertisers have been cutting back on spending as the economy battles with inflation, higher interest rates and shifting consumer patterns,” https://investing.com/ senior analyst Jesse Cohen said. https://www.marketwatch.com/ ...…
@laurengoode Chaotic Goode on x
“Meta shares have lost about half their value since beginning of the year, underscoring investor concern about the health of the co's advertising business. That unit has been hurt by Apple's iOS privacy update, and by a weakening economy...” Also, TikTok? https://www.cnbc.com/...
@loudmouthjulia Julia Alexander on x
Meta appointing its finance guy to its first ever chief strategy role the same day that it reports a first ever revenue decline (-1%), feels particularly notable? And on the day the FTC puts out an injunction to prevent Meta from acquiring a VR company. FB experts — thoughts?
@daveleeft Dave Lee on x
It wasn't long ago that Groups was FB's focus. Not a single mention today. Remember when you used to upload photos? Leave messages on walls? Play games with people? It's almost all gone. This isn't nostalgia — it's Facebook fundamentally changing what it is.
@crazyreyn Matthew Reynolds on x
“Apple's ‘ask app not to track’ prompt on iPhones has made its ads much less effective, costing Meta $10 billion in ad revenue last year alone.” 😳 https://twitter.com/...
@daveleeft Dave Lee on x
My main thought on Meta/Facebook today with the push to Reels. What motivation is there for the *regular* user to *post* anything today? Not performers, or influencers, just a regular user. What utility does Facebook have?
@kurtwagner8 Kurt Wagner on x
Meta/FB stock is taking a little dive in after-hours. The company reported its first ever annual revenue decline. A small one but notable. Also — Q3 revenue projections were weaker than Wall Street hoped. Bad combo. https://twitter.com/...
@chrisjbakke Chris Bakke on x
Last week, Snapchat released earnings and their stock dropped 30%. Today, Facebook released earnings and their stock dropped 5%. This is further proof that Facebook copies everything Snapchat does, but never does it quite as well.
@jank0 Janko Roettgers on x
Reality Labs losses for the quarter: $2.8 billion.
@mmasnick Mike Masnick on x
But, people insisted to me that Facebook was forever dominant, and the only way to topple it was through antitrust regulation. https://twitter.com/...
@scobleizer Robert Scoble on x
Meta is posting shitty financials. How long can Zuckerberg keep posting crappy numbers? https://twitter.com/...
@shortl2021 @shortl2021 on x
1/2. As expected, Shopify's Q2 is a complete train wreck. Down 7.5% in pre market, following 14% drop yesterday. And more pain to come in Q3 & Q4. https://news.shopify.com/... https://twitter.com/...
@kurtwagner8 Kurt Wagner on x
Interesting comment from Mark Zuckerberg just now on Meta's earnings call: Roughly 15% of content in FB feed, and a little more than that in the IG feed, are from accounts that people don't follow. He expects those numbers to double...
@naxuu @naxuu on x
strongly implying that the only reason they had any sort of viable revenue model in the first place was because they made it either impossible or extremely difficult and confusing to opt out of something that users should've been able to easily opt out of from the beginning
@wagatwe @wagatwe on x
Zuck got a taste of his own medicine: the pain of building your business model on someone else's platform https://twitter.com/...
@laurengoode Chaotic Goode on x
Sheryl Sandberg (her last FB/Meta earnings call) insists that Meta has shown itself to be resilient and a desirable platform for ad spending despite macro-economic challenges.
@mikeisaac Rat King on x
zuck in short: —ad market is shit —reels monetizes less than other ads on instagram and they are ramping up reels so they need to figure out how to make more money from reels eventually — apple still murdering them with privacy changes — AI is the future
@jason_kint Jason Kint on x
That PR exec who decided to rebrand Apple's privacy improvements on iOS that kneecapped 98% of Facebook's business - surveillance advertising - as simply “signal loss” deserves a raise. /2
@alexeheath Alex Heath on x
Wild: if the dollar hadn't become so strong relative to euro etc., Sheryl Sandberg says on earnings call that Meta would have seen 3% revenue growth in the quarter, not the 1% drop
@jason_kint Jason Kint on x
Facebook earnings call has begun. headlines already reported were first ever yr/yr revenue decline and CFO transition. Zuckerberg now propping up its content discovery AI. Worth considering how increasing data/privacy limitations on the company will impact this “flywheel.” /1
@blackamazon @blackamazon on x
Hit take : Privacy changes like this are part of why @meta and @instagram are aggressively pivoting fo video Even more than Tik Tok If they can recreate a “creator economy” no one can monitor and everyone dismisses . They can re up ad revenue https://twitter.com/...
@jgb00m @jgb00m on x
Or, hear me out, people are realizing that FB marketing has a relatively low return compared to other channels. And FB is a poisoned swamp. https://twitter.com/...
@shannonpareil Shannon Bond on x
Zuckerberg in wartime CEO mode on today's earnings call. “This is a period that demands more intensity. I expect us to get more done with fewer resources.”
@shannonpareil Shannon Bond on x
RIP Sheryl's small biz case studies
@kurtwagner8 Kurt Wagner on x
Interesting data point given there has been a lot of discussion of cost cuts the past few months, including at Meta: The company added more than 5,700 new hires last quarter. Now at 83,553 total employees as of the end of June.
@jason_kint Jason Kint on x
Ha. Mark Zuckerberg saying the “social graph” wasn't part of their moat and sustainable advantage is a sign of a well-coached CEO who knows that lawyers at the FTC are listening in. /7
@saranormous @saranormous on x
$2.8 billion of loss (spend) for Meta's Reality Labs in Q2. That's an entire AR/VR ecosystem's worth of startup funding. I think if that as 300 x Series A financings, or more than 3 per day for every day in the quarter!
@sharpshoot @sharpshoot on x
Zuck is misunderstood - but he's putting his cash pile where his mouth is. It may take years but he's willing to reinvent his whole platform. https://twitter.com/...
@jerrycap @jerrycap on x
@modestproposal1 The biggest difference is Amazon didn't change their name to Alexa.
@munster_gene Gene Munster on x
It alls comes down to the call. Zuckerberg is in wartime general mode, telling employees to carry their weight or move on. It's not just Reality Labs. It's the whole company. This is a good thing.
@modestproposal1 @modestproposal1 on x
Seeing all the hot takes on Reality Labs, which sure it's wild levels of spend, but at least there's a large theoretical prize. My hot take is AMZN spend on Alexa is a more wasteful science project cause it's not even clear what the prize is.
@adamdraper @adamdraper on x
High conviction always looks a little crazy. https://twitter.com/...
@jank0 Janko Roettgers on x
That's up from $2.43 billion in Q2 of 2021. In other words: Meta is still losing lots of money on AR/VR. But worth noting: Revenue is growing faster (48% yoy) than losses (15.4% yoy).
@benedictevans Benedict Evans on x
And yet letting it buy Within would apparently be a catastrophic failure of antitrust enforcement 🤔 https://twitter.com/...
@alexeheath Alex Heath on x
On Meta earnings call, Mark Zuckerberg says AI-driven recommendations from accounts you don't follow is roughly 15% in Facebook and a “little more” in Instagram. He says that percentage will more than double by the end of next year. Huge departure from the social graph era.
@philipmichaels Philip Michaels on x
Bold move of a CEO to tell you that his product is about to get much worse. https://twitter.com/...
@mwhittington13 Marc Whittington on x
What strikes me about all of these Insta/FB quotes from Zuck/Mosseri is that they seem to attribute the growth in video to user desire or some phantom phenomenon when, in fact, *their choices* and algorithms are the sole things driving those numbers higher. https://twitter.com/..…
@chrisapplegate Chris Applegate on x
Funny, it feels a lot more than 15%. I think it's because I find I resent the AI recommended stuff in my feed far more than the ads. At least the advertisers have paid https://twitter.com/...
@alexeheath Alex Heath on x
The future of social media is looking less.. social https://www.theverge.com/...
@pbandjaimie Jaimie Park on x
Interesting comment from Mark Zuckerberg just now on Meta's earnings call: Roughly 15% of content in FB feed, and a little more than that in the IG feed, are from accounts that people don't follow. He expects those numbers to double...
@malwarejake Jake Williams on x
As long as you engage, Zuck doesn't care whether the content is from someone you follow or someone you don't. Heck, it doesn't even have to be from someone at all. This time next year, they'll be hosting their own bots spamming your timeline to claim “bot reporting engagement.” h…
@samidh @samidh on x
One primary rationale that Meta used to give for poor integrity experiences was that the feed was just content from entities you chose to follow. You had the control so it was essentially your problem. That justification doesn't work anymore. https://twitter.com/...
@chrisapplegate Chris Applegate on x
Also the AI is just sometimes starkly wrong. I get a lot of formula one reels right now, even though the sport bores me to tears. Not sure how its come to that conclusion, except maybe as I follow a few football accounts it makes a misguided inference
@jason_kint Jason Kint on x
a couple other news news bites in their earnings release. new CFO coming. that's on top of Sandberg exiting. So 2 of 3 people on earnings calls are set to change.
@ddimolfetta David DiMolfetta on x
🚨Asked about @FTC suing @Meta for acquisition of Within Unlimited, CFO David Wehner says: “We believe the acquisition of Within would be good for competition and expand the VR ecosystem...so we definitely take odds with the FTC's position on that.” https://www.ftc.gov/...
@ingridlunden Ingrid on x
Once again, earnings getting used to slip in some pretty damning news. What does it say when your finance head becomes the person running strategy and corp dev? (A newly created role at the company no less.) Almost more telling even than the numbers. https://twitter.com/...

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