Meta Revenue Falls 4% in Q4, as Facebook Hits 2 Billion Daily Users

Meta, the parent company of Facebook and Instagram, posted a revenue decline for the third consecutive quarter as it faces a pullback in ad spending and heightened competition from the likes of TikTok.

Overall, the internet company reported revenue of $32.17 billion, down 4% year over year, for the fourth quarter of 2022. Net income decreased 55%, to $4.65 billion, as costs grew 22% year over year. Meta previously warned that Q4 sales could be down as much as 10%.

Meta’s stock climbed more than 18% in after-hours trading, as the results were not as bad as investors feared and revenue topped Wall Street’s lowered expectations. The stock is still down more than 50% from its pandemic-driven highs in 2021.

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Facebook’s user growth has slowed down — but the service remains massive. The company said the service had 2.0 billion daily active users in the fourth quarter, versus 1.984 billion daily active users on average in Q3.

“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta CEO and co-founder Mark Zuckerberg said in announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”

Wall Street consensus estimates were for revenue of $31.53 billion and earnings of $2.22 per share. Analysts expected Facebook’s Q4 DAUs to come in at 1.99 billion, according to StreetAccount.

Meta CFO Susan Li, in prepared commentary, said the company expects first quarter 2023 total revenue to be in the range of $26 billion-$28.5 billion (vs. $27.9 billion in Q1 2022). The company anticipates full-year 2023 total expenses to be $89 billion-$95 billion, lowered from its prior outlook of $94 billion-$100 billion “due to slower anticipated growth in payroll expenses and cost of revenue.”

Meta is among tech companies that have slashed their workforces amid economic uncertainty and a drop in ad spending. In November, the social-media giant announced layoffs eliminating 11,000 jobs, or 13% of its employee base, as part of its efforts to reduce costs.

For Q4, Meta recorded $4.2 billion in restructuring charges, including $975 million in severance payments and other personnel costs, $1.88 billion for facilities consolidation and a $1.34 billion write-down on data center assets.

Meta’s Reality Labs, which houses its VR and AR businesses, was again a drag on the bottom line. The Reality Labs segment generated revenue of $727 million (down 17%) and an operating loss of $4.28 billion (vs. $3.3 billion a year prior).

Meanwhile, Meta last week made the controversial announcement that it would reinstate Donald Trump’s Facebook and Instagram accounts soon, coming after the ex-president was suspended for violating the company’s policies prohibiting incitement to violence in the wake of the Jan. 6, 2021, attack on the U.S. Capitol.

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