Facebook has reported its first-ever yearly reduction in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion. The third quarter is expected to have further reduction. overall profit for its parent company, Meta, fell 36 percent to $6.7 billion.
An increasingly sluggish economy has caused advertisers to withdraw their spending.
Meta is competing with TikTok and it is rearchitecting Facebook and Instagram to place an emphasis on short videos and posts that its system recommends to people. On a call with analysts, Zuckerberg said that the percentage of content people see on Facebook and Instagram that comes from accounts they don’t follow will more than double next year.
Even though Meta’s revenue is dwindling, it has grown Facebook’s daily users by 3 percent to 1.97 billion, reversing a concerning decline in users it observed two quarters ago. Meta reported that 2.88 billion now use its suite of social apps — Facebook, Messenger, Instagram, and WhatsApp — every day, an increase of 4 percent from a year ago.
Zuckerberg said the company had seen “engagement trends” that were “stronger than we anticipated” on Facebook, thanks largely to an increase in the consumption of videos. He said that Reels, the company’s short-form video format aimed at TikTok, is monetizing faster than Stories did after the company copied that format from Snapchat several years ago. For now, the company is prioritizing Reels and not making much money from them.
“This is a period that demands more intensity, and I expect us to get more done with fewer resources,” Zuckerberg said on the earnings call with analysts, echoing comments he recently made to employees about trimming costs. “I think we’re going to come through this period as a stronger and more disciplined organization.”