Overall, Meta’s third quarter revenues declined 4% and expenses increased 19% year over year to $22.1 billion. Compared to the prior year, operating income decreased 46% to $5.66 billion and overall net income decreased 52% to $4.4 billion.
To make matters worse, Meta’s metaverse and virtual reality-focused division, Reality Labs, saw revenue drop nearly 50% year-over-year to just $285 million, while that division alone lost $3.67 billion. recorded a loss of $10,000.
Other factors often cited as contributing to the company’s significant slowdown include new privacy updates to the iPhone’s iOS operating system, slower spending on online advertising, and competition from the likes of TikTok.
comment As for the results, Meta founder and CEO Mark Zuckerberg acknowledged that the company faces “short-term revenue challenges.” But he also said the fundamentals are in place to return to stronger earnings growth.
“We are heading into 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and become an even stronger company,” Zuckerberg said.
Meta’s financials have also been commented on by Chief Financial Officer David Wehner, noting in particular that Reality Labs will be a major cost driver going forward.
[…] Revenue cost growth is expected to accelerate, driven by infrastructure-related expenses, and Reality Labs’ hardware costs will also be impacted by the launch of the next generation of consumer Quest headsets later next year.” said Wehner.
Meta CFO also warned of further losses on the horizon due to the company’s metaverse push.
“We expect Reality Labs’ operating loss in 2023 to increase significantly year-on-year.”
The social media giant’s performance was not well received by the market, and Meta’s share price fell nearly 20% in after-hours trading to $104.30 per share.