What you need to know
- Meta announced Q3 2022 earnings on Wednesday, with $27.7 billion in revenue.
- This represents a 4% year-over-year decrease, which Meta partially attributes to foreign exchange rates.
- Reality Labs lost nearly $4 billion, with higher expenses expected in 2023 leading up to the launch of its next consumer VR headset.
- Meta says it will continue to focus on efficiency and expects its total headcount to remain roughly the same through next year.
Earnings season continues as Meta announces its Q3 2022 financial report. The company brought in $27.7 billion in revenue during the three months ending in September, which represents a 4% decrease from the same period last year.
Despite that, Meta's usage has increased on all accounts, with a 17% increase in ad impressions. However, the company saw an 18% decrease in price-per-ads which undoubtedly contributed to its revenue woes.
Meta also attributes the lower revenue to foreign exchange rates, saying that revenue could have been "$1.79 billion higher" if exchange rates had remained consistent with Q3 2021.
"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 Meta CEO Mark Zuckerberg in a statement. "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."
Like many other Big Tech companies, Meta has been focused on keeping the company efficient and slowing hiring. As a result, Meta says its headcount by the end of 2023 "will be approximately in-line with third quarter 2022 levels."
Meta's Reality Labs, which is responsible for the company's virtual and augmented reality efforts like the newly launched Quest Pro, is expected to continue bleeding money. The division lost $3.67 billion during the quarter, compared to a $2.63 billion loss during the same quarter last year. Furthermore, Meta expects expenses to "increase meaningfully" in 2023 as the company prepares to bring the Quest 3 to market.
Given the large expense coming from Reality Labs, Zuckerberg also touched on the company's investments in the Metaverse, which continues to come under scrutiny. During the earnings call on Wednesday, he explained how the company is focused on four major platforms: the social Metaverse platform with products like Horizon and the avatar system, VR with consumer devices like the Quest 2, augmented reality, and finally, "neural interfaces," which sounds a lot like Meta's vision for consumer wearables and interfacing with computing platforms in a discreet and natural way.
"I get that a lot of people might disagree with this investment, but from what I can tell, I think that this is going to be a very important thing, and I think it would be a mistake for us to not focus on any of these areas, which I think are going to be fundamentally important in the future. So we're gonna try to do this in a way that is responsible and matches the ways the rest of the business is growing over time."
