Meta CEO Mark Zuckerberg Warns of Austerity After The Company Suffers Year-on-Year Revenue: “I Expect Us To Do More With Less Resources” – Update

Updated with comments from earnings calls. Facebook’s parent company, Meta Platforms, reported its earnings per share fell 32% and the first quarterly decline in revenue from the same period of the previous year, as worsening economic conditions and increased competition adversely affected results.

Chief Executive Mark Zuckerberg told Wall Street analysts that the company will reduce its headcount growth rate in the coming months due to rising exchange rates, inflation and interest rates.

“We appear to be entering an economic downturn that will have a broad impact on the digital advertising industry,” he said. “It’s always difficult to predict how deep or long these cycles will be, but I would say the situation is worse than a quarter ago.” He went on to say that the fact that Meta hires new employees in early 2022 as it invests in new ventures means that the employee growth rate “must continue to decline over time.” This is a period that requires more intensity. I hope we do more with less resources. ”

Executives said no specific targets or growth projections were presented for staff as they continue to evaluate the company’s structure.

“We are not yet releasing benchmarks for 2023,” said David Wenner, Chief Financial Officer. “We plan to focus more on maintaining discipline around staff growth. As we get closer to this and create a budget, we’ll provide more specific guidance. “

Revenue was $28.8 billion in the quarter ended June 30, down 1%, slightly below Street’s expectations. Earnings of $2.46 per share fell one dollar from $3.61 a year ago, well below analyst estimates of $2.61.

Growth continues to slow noticeably across the company’s social media portfolio, with daily active users of Facebook increasing just 3% year-over-year to 1.97 billion.

Shares fell as much as 6% in post-news trading before regaining much of that ground. On the regular trading day, they rose more than 6.5% to close at $169.58.

Meta said it expects “broad macroeconomic uncertainty” to hurt third-quarter revenue, which it expects to be in the $26 billion to $28.5 billion range. “This outlook reflects the continuation of the weak ad demand environment we experienced in the second quarter,” the company said in its official earnings statement.

With financial results in line with Wall Street analysts’ forecasts, the company said Wenner will take on a new role as the company’s first chief strategy officer and lead corporate strategy and development. Susan Lee, who is currently Vice President of Finance for Meta, will be replaced as CFO. The pass will be effective from 1 November.

By changing the company name from Facebook to Meta last year, the company signaled its long-term plans to focus on the Metaverse and the virtual world by moving away from Instagram, Facebook and WhatsApp, which are facing increasing competition from TikTok.

Zuckerberg tried to highlight some bright spots in his earnings statement. “It was good to see the positive trend of our engagement trends this quarter coming from products like Reels and our investments in AI,” he said.

Another headache for Meta preceded its earnings report when the Federal Trade Commission said it would block the tech giant from buying Supernatural fitness app maker Within Unlimited. The regulator said Meta is already a major player in virtual reality, so the move would be anti-competitive. The company responded by saying the FTC move sends a “chilling message” to any innovator in the virtual reality space.