For years, Facebook’s sales have grown unfailingly and continue to grow, defying the laws of gravity, even as the company has been dogged by privacy and misinformation scandals.
On Wednesday, Meta, the company formerly known as Facebook, reported a 1 percent drop in quarterly revenue from a year earlier. It was the first time the social media giant’s revenue fell since it went public a decade ago, as it faces increasing regulatory scrutiny and a turbulent economy while trying to build a new frontier in digital communication.
In the second quarter, Meta’s revenue was $28.15 billion, down from $29.07 billion a year earlier. Profit amounted to 6.69 billion dollars, which is 36 percent less than the previous year. Wall Street analysts had forecast a profit of $7.04 billion on revenue of $28.9 billion, according to data compiled by FactSet.
The results added to what has been a dismal day for Meta, which was also sued by the Federal Trade Commission on Wednesday over its deal to buy a virtual reality company called Within. The lawsuit directly opposes the ambitions of Mark Zuckerberg, the founder and CEO of Meta, which is spending billions of dollars to create an immersive world of social interaction in the “metaverse,” a combination of virtual and augmented reality that will be. Bound by commerce and online relationships.
Mr. Zuckerberg has told investors, technologists and others that his vision of a metaversion will take years and that the effort will be expensive. Some investors are skeptical that the effort will pay off in the long run.
Still, there were bright spots in Meta’s earnings report. The company said its daily active users for its family of apps — which includes Facebook, Instagram and WhatsApp — rose to 2.88 billion, up 4 percent from a year earlier. This exceeded analysts’ expectations that the company was losing visitors. The Facebook app also saw user growth in the United States, an area some believed to be saturated.
Mr. Zuckerberg said he was encouraged by other areas of Meta’s business that are driving growth and engagement, such as its Reels video product, a feature on Instagram that is similar to TikTok’s video offering. Investments in AI recommendation algorithms also got more people to use the service and for longer periods of time, the company said.
“It was good to see a positive trajectory in our engagement trends this quarter, coming from products like Reels and our investments in AI,” he said in a statement. “We’re putting more energy and focus around our company’s core priorities, which unlock both near-term and long-term opportunities for Meta and the people and businesses that use our services.”