Meta, currently under pressure from regulators and investors, missed estimates of its second-quarter earnings, but in a bid to offset some of that, it announced an interesting senior management change: David Wehner, the company’s current chief financial officer of the company, will be taking on a new role as Chief Strategy Officer, a new role at the company where he will oversee strategy and business development. Susan Li, currently Vice President of Finance, will assume the role of CFO. The changes will come into effect on November 1 of this year.
If appointing a financier to be in charge of larger strategic moves at the company is intended to give investors more confidence that Meta is working to fix things, and is doing so with fiscal prudence, investors aren’t buying it yet: The stock is currently selling traded about 1.7% down in the after-market hours.
The positive spin from above is still so far. “It was good to see our engagement trends evolving positively this quarter from products like Reels and our investments in AI,” said Mark Zuckerberg, Meta’s founder and CEO, in a statement. “We are increasing our focus on our key business priorities that open up both short- and long-term opportunities for Meta and the people and businesses that use our services.”
The company reported revenue of $28.82 billion with earnings of $2.46 per share for the quarter. Both missed analyst estimates of $28.94 billion and $2.61 per share, respectively. Importantly, that revenue number is down about 1% year over year, marking the company’s first quarterly year-over-year revenue decline since its IPO (ironically, this was a point where analysts’ expectations were met: They largely expected that this decrease will be the case in this quarter). The EPS number is 32% lower than a year ago when it was $3.61.
It also reported a sharp decline in net income for the quarter: The figure for the second quarter of 2022 was $6.687 billion, down a full 36% from the same period last year when it reported net income of $10.394 billion.
MAUs on Facebook increased 1% to 2.93 billion; The number of people in his “app family” was 3.65 billion, up 4%.
In an earnings season that has seen plenty of failures and a difficult outlook, Meta is also taking a very conservative stance: It said it expects the third quarter to average between $26 billion and $28.5 billion.
“This outlook reflects a continuation of the weak advertising demand environment we experienced in the second quarter, which we believe is being driven by broader macroeconomic uncertainty. We also expect Reality Labs’ third-quarter revenue to be below second-quarter revenue. Our guidance assumes that foreign currencies will provide a headwind of approximately 6% year-over-year to overall revenue growth in the third quarter, based on current exchange rates.
There is also a strong cooling down in Europe due to the GDPR. “As noted in previous calls, we continue to monitor developments regarding the feasibility of transatlantic data transfers and their potential impact on our European operations,” it said.
Meta also lowered spending for the year, suggesting the company is cutting costs, slowing hiring and making other adjustments. These will now range between $85 billion and $88 billion versus previous estimates of $87 billion to $92 billion. “We have reduced our hiring and overall expense growth plans this year to reflect the more challenging operating environment while we continue to direct resources towards our business priorities,” it said.
Alongside all that, the company has nearly lost its stock value this year, and today it was revealed that it is being sued by the FTC over its recent acquisition in VR (which Meta called an anti-competitive “giant” in its lawsuit). , and its Instagram, Facebook, and WhatsApp apps are fighting hard to compete against popular rivals like TikTok and Snapchat.
Other important numbers:
- Family daily active people (DAP) – DAP averaged 2.88 billion in June 2022, up 4% year-on-year.
- Family Monthly Active People (MAP) – MAP was 3.65 billion as of June 30, 2022, up 4% year over year.
- Daily Active Facebook Users (DAUs) – DAUs averaged 1.97 billion in June 2022, a 3% increase from the prior year.
- Monthly Active Facebook Users (MAUs) – MAUs were 2.93 billion as of June 30, 2022, up 1% year over year.
- Ad impressions and price per ad – During the second quarter of 2022, ad impressions served across Meta’s entire family of apps increased 15% year over year and the average price per ad decreased 14% year over year.
- Capital Expenditures – Capital expenditures, including capital lease payments on finance leases, were $7.75 billion in the second quarter of 2022.
- Stock Repurchases – Meta repurchased $5.08 billion of Class A common stock during the second quarter of 2022. As of June 30, 2022, Meta had $24.32 billion available and authorized for buybacks.
- Cash, Cash Equivalents and Marketable Securities – Cash, cash equivalents and marketable securities were $40.49 billion as of June 30, 2022.
- Headcount – Headcount was 83,553 as of June 30, 2022, a 32% increase from the prior year.
There’s more to come.