2022 had been a tough year for the social media industry, especially the fourth quarter. This might be the reason investors and industry analysts weren’t overly surprised by Meta Platforms, Inc. (NASDAQ: META) Q4 2022 earnings results. Meta revenue in Q4 2022 declined 4.5% YoY, to $32,165 million, worldwide.
Meta reported yearly decline in its revenue across all major markets such as US & Canada, Europe and Asia-Pacific.
In addition to a yearly drop in its global revenue, Facebook’s parent company also experienced significant declines in its revenue by segments, net income, income from operations, and average price per ad for the fourth quarter of 2022.
Another worth noting fact is that Meta’s family of apps community continues to expand. The social media behemoth saw a significant increase in its Facebook Daily Active People, Monthly Active People, Daily Active Users, and Monthly Active Users during the fourth quarter of 2022. In fact, the number of Facebook’s daily active users reached 2 billion for the first time in Q4 2022. Approximately 42.7% of them came from the Asia-Pacific region.
Main highlights of Facebook Q4 2022 earnings:
- Meta’s annual revenue declined just 1% YoY, to $116,609 million, worldwide. Approximately 27.6% of that was generated during the fourth quarter.
- In Q4 2022, Meta generated a whopping 97.7% of its total revenue from the family of apps, and 2.3% from the Reality Labs.
- The family of apps revenue declined 4.13% YoY in Q4 2022, to $31,438 million, worldwide. On the other hand, Meta’s Reality Labs revenue decreased over 17% YoY, to $727 million. However, the company recorded an astonishing 155% QoQ increase in its Reality Labs’s revenue for Q4 2022, when compared to the previous quarter’s revenue of $285 million.
- Meta’s advertising revenue declined 4.2% YoY in Q4 2022, to $31,254 million, globally. That represented a whopping 97.2% of the company’s total revenue for the quarter.
- Meta’s ad revenue in Q4 2022 declined across all major regions such as the US & Canada, Europe, and Asia-Pacific. Among all, Europe reported a significant decline of 15.5% YoY in its ad revenue for the fourth quarter.
- Facebook’s parent Meta experienced a massive 54.8% YoY decline in its net income for Q4 2022, totalling $4,652 million.
- The income from operations also declined 49.2% YoY to $6,399 million in Q4 2022.
- The average price per ad across Meta’s Family of Apps decreased 22% and 16% year-over-year for Q4 2022 and 2022, respectively.
- Meta’s overall expenses in Q4 2022 increased 22.2% YoY to $25,766 million. The overall expenses for full-year 2022 increased 23.2% YoY to $87,665 million, exceeding the estimation of about $86 billion made in Q3 2022.
Facebook users growth Q4 2022
Despite the disappointing financial results, Mark Zuckerberg has got one reason to smile. As Meta managed to beat the Wall Street expectations for revenue and user growth in Q4 2022, the company’s shares jumped almost 18% in after-hours trading.
- The number of Facebook Daily Active Users worldwide grew 3.68% YoY to reach an all-time high of 2 billion people in Q4 2022. The platform added 0.71 billion DAUs during the last 12 months and 0.16 billion DAUs in the last 3 months ended on December 31, 2022.
- The number of Facebook Monthly Active Users worldwide also reached an all-time high of 2.96 billion by the end of 2022, with 1.75% YoY increase. The platform added 0.51 billion MAUs in the last 12 months and 0.05 billion MAUs in the last 3 months ended on December 31, 2022.
- Asia-Pacific region remains the biggest market for Facebook in terms of both daily and monthly active users. The region accounted for 42.7% of all Facebook DAUs worldwide in Q4 2022. Out of total 854 million DAUs in APAC, about 48 millions were added in 2022. On the other hand, 44.3% of all Facebook MAUs belong to APAC region. About 34 millions MAUs from APAC were joined Facebook in 2022.
- The growth in Facebook’s Daily and Monthly Active People was 4.96% YoY and 4.18% YoY, respectively, in Q4 2022.
- The number of Facebook daily active people (DAP) reached 2.96 billion in Q4 2022, worldwide. The social media giant added approximately 0.14 billion DAP and 0.03 billion DAP in the last 12 and 3 months ended on December 31, 2022.
- On the other hand, the number of Facebook Monthly Active People (MAP) reached to 3.74 billion by the end of 2022. The social media giant added approximately 0.15 billion MAP and 0.03 billion MAP in the last 12 and 3 months ended on December 31, 2022.
- Despite growing the number of monthly active people in Q4 2022, Facebook Family Average Revenue per Person (ARPP) declined. Facebook ARPP declined 8.09% YoY, from $9.39 in Q4 2021 to $8.63 in Q4 2022.
One of the primary reasons for declining revenue, net income and rising expenses is CEO Mark Zuckerberg’s decision to invest heavily on Metaverse projects. Reality Labs, Meta’s another division which is a home to the virtual reality projects like metaverse, has been costing Meta billions of dollars every year since 2021. The operating loss for Reality Labs in Q4 2022 soared to $4,279 million, bringing the yearly total loss to a whopping $13,717 million.
Surprisingly, Meta’s cash reserves also declined 15.1% YoY to $40,738 million in 2022.
Though stock market may have brought a smile on Zuckerberg’s face after a very long time, metaverse is slowly turning into the sword of Damocles. The big question is, how long will Zuckerberg be able to hold the situation in control as investors have started showing signs of restlessness towards the mounting losses caused by Facebook Metaverse as it appears far from massive adoption.