Meta, the parent company of Facebook, WhatsApp and Instagram, posted its first yearly decline in revenue in the firm’s history this week, as advertising sales fell in the three months to July.
Meta’s total revenue fell 1% to $28.8 billion, down from $29.07 billion a year earlier, ending a relentless and prolonged period of growth since the company was first founded as Facebook. Profit was down 36% from a year earlier, to $6.69 billion, missing Wall Street prediction of $7.04 billion in profit on revenue of $28.9 billion.
The company attributed the poor financial results to a weaker demand for digital advertising and broader economic issues. Meta typically takes a 20% share of the global ad market, and warned investors that ad sales were likely to drop again in the next few months, and e-commerce sales decline after the pandemic boom and inflation spooks consumers.
“We seem to have entered an economic downturn that will have a broad impact on the digital advertising business,” Meta founder and chief executive Mark Zuckerberg said in an earnings call. “The situation seems worse than it did a quarter ago.”
As recently as 2019, Meta’s quarterly revenue growth reached 28%, putting the sharp fall into perspective.
Zuckerberg said the company would reduce the number of new staff hired “steadily” over the next year, as it plans to move investment into new areas such as its virtual reality platform Horizon.
Virtual reality forms a crucial part of Meta’s metaverse ambitions, but Zuckerberg’s ambitions in that area were also dealt a blow this week. The Federal Trade Commission sued the company over a deal to buy the virtual reality company Within, over monopoly concerns.