Facebook parent Meta Q3 2022 earnings

Meta shares continued their 2022 freefall, plunging 14% in prolonged trading on Wednesday after Facebook’s parent issued a weak forecast for the fourth quarter and got here up well wanting Wall Street’s expectations for earnings.

• Earnings per share (EPS): $1.64 vs $1.89 expected, in keeping with Refinitiv
• Revenue: $27.71 billion vs. $27.38 billion expected, in keeping with Refinitiv
• Each day Energetic Users (DAUs): 1.98 billion vs 1.98 billion expected, in keeping with StreetAccount
• Monthly Energetic Users (MAUs): 2.96 billion vs 2.94 billion expected, in keeping with StreetAccount
• Average Revenue per User (ARPU): $9.41 vs. $9.83 expected, in keeping with StreetAccount

Meta is contending with a broad slowdown in online ad spending, challenges from Apple’s iOS privacy update and increased competition from TikTok. Add it up, and Meta has posted consecutive quarters of revenue declines and is anticipated to post its third straight drop within the fourth quarter.

The corporate said revenue for the last three months of the yr will likely be $30 billion to $32.5 billion. Analysts were expecting sales of $32.2 billion.

While revenue fell 4% within the third quarter, Meta’s costs and expenses rose 19% yr over yr to $22.1 billion. Operating income declined 46% from the previous yr to $5.66 billion.

Meta’s operating margin, or the profits left after accounting for costs to run the business, sank to twenty% from 36% a yr earlier. Overall net income was down 52% to $4.4 billion within the third quarter.

At its after-hours levels, Meta is trading at its lowest since July 2016, which was 4 months before the election of Donald Trump as president.

Revenue within the Reality Labs unit, which houses the corporate’s virtual reality headsets and its futuristic metaverse business, fell by almost half from a yr earlier to $285 million. Its loss widened to $3.67 billion from $2.63 in the identical quarter last yr.

Reality Labs has lost $9.4 billion up to now this yr, and there isn’t any end in immediate sight.

“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year,” Meta said. “Beyond 2023, we expect to pace Reality Labs investments such that we will achieve our goal of growing overall company operating income in the long term.”

Meta said that it’s “holding some teams flat by way of headcount, shrinking others and investing headcount growth only in our highest priorities.”

“In consequence, we expect headcount at the tip of 2023 will likely be roughly in-line with third quarter 2022 levels,” the corporate said.

Meta said that it had 197 million each day lively users within the U.S. and Canada within the period, up from 196 million throughout the same quarter in 2020. Meta derives the majority of its revenue from users in North America.

Meta’s report is the most recent sign of trouble within the internet marketing market, which is getting hammered by aspects including Apple’s 2021 iOS privacy update and fears of an impending recession. Those concerns have caused corporations to slash their marketing and ad campaigns.

Last week, Snap shares cratered 30% a day after the corporate reported weaker-than-expected revenue, which executives attributed to platform changes and a downtrodden economy.

Investors were also disenchanted with Alphabet’s third-quarter earnings report, which led on Wednesday to the most important slump in the corporate’s share price since March 2020. The YouTube business reported a 2% year-over-year sales drop, and Alphabet chief financial officer Ruth Porat said the decline “primarily reflects further pullbacks in advertiser spends.”

Even Microsoft wasn’t immune, with the tech giant reporting slowing growth rates for each its search and news promoting business and LinkedIn unit. Microsoft CFO Amy Hood attributed the slowdown to “reductions in customer promoting spend.”

WATCH: Meta must give attention to the core business, not the Metaverse