Meta shared its 2022 Q3 earnings today and, as expected, performance left a lot to be desired. Advertising revenue came in at $27.2 billion, down roughly 4% year-over-year.
The positives. Overall ad impressions were up 17%, while the cost per ad decreased 18% YoY.
Monthly active users on the platform increased 2% to 2.96 billion YoY.
Not news. Meta isn’t alone when it comes to underperforming earnings. This week Google and Microsoft also released worse-than-expected results, to the disappointment of investors. SNAP also reported their slowest-ever quarterly growth last week, but added 6% more monthly users.
Frankly, Meta’s poor performance is (probably) no surprise to anyone. Meta shares are down nearly 60% YTD and inflation, a shaky economy, and privacy changes certainly contribute. At closing today, shared decreased another 7.69%.
iOS and ongoing TikTok competition. Meta is still dealing with a host of challenges due to the implementation of iOS14, including growing competition from TikTok, all of which have taken a toll on Meta’s ability to drive interest in both organic and advertising users.
Internal company documents obtained by the Wall Street Journal, indicate that Instagram users cumulatively are spending 17.6 million hours a day watching Reels, less than one-tenth of the 197.8 million hours TikTok users spend each day on that platform.
What meta says. “Our community continues to grow and I’m pleased with the strong engagement we’re seeing driven by progress on our discovery engine and products like Reels,” said Mark Zuckerberg, Meta founder and CEO. “While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth. We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”
Dig deeper. You can review the Meta Investor Relations site with slides and a Webcast replay here.
Why we care. This quarters disappointing financials for both search and social could be a sign of an even bigger economic pitfall. Advertisers should prepare for higher CPCs, staff cuts, and increased costs all around.
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