Meta’s revenue, profit decline amid ad slump

NEW YORK

Facebook parent Meta has reported that its revenue declined for a second consecutive quarter, hurt by falling advertising sales as it faces competition from TikTok’s wildly popular video app.

The quarter’s weak results raised fresh questions about whether Meta’s plans to spend $10 billion a year on the metaverse, a concept that doesn’t quite exist yet and possibly never will, is prudent while its main source of revenue is faltering.

Meta’s disappointing results followed weak earnings reports from Google parent Alphabet and Microsoft this week. The company earned $4.4 billion in the three month period that ended Sept. 30, down 52 percent from in the same period a year earlier.

Revenue fell 4 percent to $27.71 billion from $29.01 billion.

Some of the company’s investors are concerned Meta is spending too much money and confusing people with its focus on the metaverse, while it also grapples with a weakening advertising business.

“Meta has drifted into the land of excess...too many people, too many ideas, too little urgency,” wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg.

“This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”

In addition to an accelerating revenue decline, Meta also forecast weaker-than-expected sales for the current quarter, further raising worries that the revenue slump is more of a trend than an aberration.

Meta said it expects staffing levels to stay roughly the same as in the current quarter _ a departure from previous years’ double-digit workforce growth. The company had about 87,000 employees as of Sept. 30, an increase of 28% year-over-year.

Despite the revenue decline, Meta grew its user base. Facebook’s monthly active users were 2.96 billion as of Sept. 30, up 2 percent from a year earlier. And 3.71 billion people logged in to at least one of Meta’s family of apps - Facebook, Instagram, WhatsApp or Messenger- up 4 percent year-over-year.