Meta Continues to Lose Momentum in Q1 2022

Mark Zuckerberg’s pivot to the metaverse is beginning to become more important than ever, as his company’s financial momentum in the real world continued to sputter in the first quarter of 2022. While Meta’s revenue and user base remained on an upward trajectory during the period, its increases were below the pace then-Facebook set in previous years. The company reported revenue of $27.908 billion for the first three months of the year, up just 7% versus the first quarter of 2021. While revenue in the first quarter traditionally comes in below the other three periods, Meta’s $26.171 billion in last year’s first quarter was up 48% from $17.737 billion in the first three months of 2020. Daily active users and monthly active users for the Facebook flagship application continued to level off, as the company reported 2.94 billion MAUs, up just 3% year-over-year, and 1.96 billion average DAUs, up 4%. “The growth in daily active users is a good sign for Facebook, especially coming off of the fourth quarter of 2021 when it experienced its first-ever decline in DAUs,” Insider Intelligence analyst Evelyn Mitchell told Adweek, “but it’s also clear that Facebook is still struggling to bring in new users, and it’s becoming increasingly difficult for Instagram to pick up the slack. Most of the growth in both MAUs and DAUs in the first quarter came from the rest of the world, and not the U.S. and Canada, which monetize at a better rate.” While the numbers were a little higher for the company’s family of apps—Facebook, Instagram, Messenger and WhatsApp—the trends were similar, as monthly active people and daily active people each climbed 6% versus the first quarter of 2021, to 3.64 billion and 2.87 billion, respectively. Investing.com senior analyst Jesse Cohen told Adweek, “The beat on daily active users was enough to send the shorts covering and the stock surging. With that being said, it was a mixed report overall, as the social media giant continues to struggle with slowing revenue growth amid reduced ad spending amid the current inflationary environment.” Meta said ad impressions delivered across its family of apps during the period increased 15% year-over-year, with the average price per ad slipping by 8% over the same time period. CCS Insight chief operating officer Martin Garner told Adweek, “Although the advertising business should have seen improvement during the first quarter of 2022 as much of the world got back to normal following the pandemic, the ban on Facebook and Instagram in Russia will be a setback. Also, the impact of Apple’s changes to iOS during 2021 will still be felt in this set of earnings, hardware sales will be seasonally lower than in the fourth quarter of last year and slowing economic growth across the western world will weigh on its results.” Chief financial officer David Wehner shared the company’s outlook for the second quarter, forecasting revenue of $28 billion to $30 billion and citing a continuation of trends that emerged during the first quarter, including softness in the latter stages of the period due to the war in Ukraine. He said in a statement, “We continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations, and we are pleased with the progress on a political agreement.” “Meta’s ad business continues to face some very real challenges,” Insider Intelligence principal analyst Jasmine Enberg concluded. “Facebook, of course, is no stranger to obstacles, but the iOS changes are the first direct threat to its ad business. Combined with the rise of TikTok, brand safety concerns and a shift in social media user behavior, there’s a perfect storm heading straight for Meta’s ad revenues. Even so, it’s clear that advertisers are still turning to Facebook and Instagram to reach their wide audiences.”

Earnings Reports

Meta Continues to Lose Momentum in Q1 2022

Its revenue and user base grew, but at a slower pace than its historical benchmarks

David Cohen

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

David Cohen