Lower-than-expected profits and sluggish user growth have worried Meta investors as the company expects continued ‘headwinds’.
Facebook’s daily active users have fallen for the first time in the platform’s 18-year history as Meta expects continued headwinds to impact the company.
Meta reported its fourth-quarter earnings yesterday (2 February) – the first since its big name change. The results disappointed investors with lower-than-expected profits and user numbers, causing shares to plunge by more than 20pc in after-hours trading.
Earnings per share stood at $3.67, which was less than the $3.84 expected by Refinitiv. Daily active users on Facebook stood at 1.92bn in the most recent quarter, which is less than StreetAccount expectations of 1.95bn and a dip from the previous quarter’s 1.93bn.
Total revenue in the quarter was $33.67bn, up 20pc over the previous year. This was higher than Refinitiv expectations of $33.4bn and chief executive Mark Zuckerberg described the results as the mark of a “solid quarter”.
“I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse,” he said.
However, chief financial officer David Wehner had a warning for the months ahead. “We expect our year-over-year growth in the first quarter to be impacted by headwinds to both impression and price growth,” he told investors on the earnings call.
He pointed to the “increased competition for people’s time” and a shift of engagement within Meta apps towards video features such as Reels, which “monetise at lower rates than Feed and Stories”.
Inflation, supply chain disruptions and privacy changes to Apple iOS are impacting the company’s advertisers. Wehner said that revenue in the first quarter of this year is expected to be between $27bn and $29bn, lower than the Refinitiv estimate of $30.15bn.
Across the whole year, Meta saw strong growth in revenue from its family of apps, standing at $115.66bn in 2021 compared to $84.83bn in 2020. Its Reality Labs segment, which includes augmented and virtual reality hardware and software, nearly doubled revenue in 2021 to $2.2bn.
The total number of employees working for Meta now stands at 71,970, which has increased by 23pc compared 2020.
Meta’s earnings came a day after Google-parent Alphabet broke the $200bn mark in annual revenue for the first time and a week after Microsoft saw its earnings ride high on increasing demand for cloud tech.
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