Meta Platforms clocked its first ever quarterly decline in revenue on Wednesday, Reuters reported. According to the report, the fall in revenue was triggered because of recession fears and competitive pressures, weighing on its digital ads sales.
Meta shares were down about 4.6 per cent in extended trading.
The California-based firm said it anticiaptes revenue in third quarter to fall to $26 billion-$28.5 billion, which would make it a second year-on-year (YoY) drop in a row. However, analysts were expecting a revenue fall of $30.52 billion, according to IBES data from Refinitiv.
Citing Refinitiv, Reuters mentioned total revenue, which consists almost entirely of ad sales, fell 1 per cent to $28.8 billion in the second quarter ended June 30, from $29.1 billion last year. The figure slightly missed Wall Street's projections of $28.9 billion.
Meta, which operates the world's largest social media platform, clocked mixed results for user growth. Monthly active users on Facebook came in slightly under analyst expectations at 293 crore in the second quarter, an increase of 1 per cent YoY, while daily active users handily beat estimates at 197 crore.
Meta, like many global firms, is facing revenue pressure from the strong dollar, as sales in foreign currencies amount to less in dollar terms. It said that it expected a 6 per cent revenue growth headwind in the third quarter, based on current exchange rates.
The Meta results also suggest that fortunes in online ads sales may be diverging between search and social media players, with the latter impacted more severely as ad buyers reel in spending.
Meta's core business is also experiencing unique strain as it competes with short video app TikTok for users' time and adjusts its ads business to privacy controls rolled out by Apple Inc last year.
Meta executives told investors they were making progress in replacing ad dollars lost as a result of the Apple changes but said it was being offset by the economic slowdown.
About 15 per cent of content on Facebook and Instagram is currently recommended by AI from accounts users do not actively follow, and that percentage will double by the end of 2023, Mark Zuckerberg told investors on the call.
In November, Chief Financial Officer David Wehner will become Meta's first chief strategy officer. Susan Li, Meta's current vice-president of finance, will become CFO.
Meanwhile, Alphabet Inc, the world's largest digital ad platform, reported a rise in quarterly revenue on Tuesday, with sales from its biggest moneymaker, Google search, topping investor expectations.
Snap Inc and Twitter both missed sales expectations last week and warned of an ad market slowdown in coming quarters, sparking a broad sell-off across the sector.