The company blames this decline on the economic slowdown as well as foreign currency exchange pressure.
Meta has recently released its financial results for the second quarter of 2022 reporting its first-ever decline in revenue.
The company revealed that its total revenue in Q2 2022 was $28.82 billion which reflects a 1% decrease compared to the same period last year. Operating income for the quarter fell by 32% and amounted to $8.35 billion, and net income saw a decrease of 36% reaching $6.7 billion.
Speaking to investors, Meta CEO Mark Zuckerberg noted that the company missed targets due to an economic slowdown that impacts the whole digital ad market.
"We seem to have entered an economic downturn that will have a broad impact on the digital advertising business," Zuckerberg said. "It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago."
According to the company's COO Sheryl Sandberg, the decline is also connected with foreign currency exchange pressure, particularly decreasing value of the euro. Sandberg believes that without the currency headwinds, Meta would be able to see a 3% year-over-year growth.
In addition, the company is spending heavily on virtual reality technology and headsets that are not yet ready for mass production, spending $2.8 billion on Reality Labs (Meta's virtual reality division entrusted with building CEO Mark Zuckerberg’s vision for the metaverse) in the quarter. At the same time, large-scale plans to create a metaverse will not be able to bring profit to the company in the short term and will require billions of dollars for development.