Mark Zuckerberg plans to continue investing in the Metaverse despite difficult circumstances. The Meta CEO expects a trillion-dollar market.
Yesterday, Meta presented its financial results for the second quarter of 2022. The main takeaways are:
- For the first time in the company's history, quarterly sales fell year-on-year. Sales are down 1 percent to $28.8B. Growth is expected to slow further in the third quarter.
- Quarterly profit fell 36 percent year-over-year to $6.7M.
- On a positive note for the company, Facebook's daily active user base increased 3 percent year-over-year. That's 60 million out of a total of 1.97 billion users.
- Further, Meta's app family (Facebook, Messenger, Instagram and WhatsApp) came in at 2.88 billion daily active users. That's up 4 percent year-over-year.
- In the second quarter, Meta hired more than 5,700 new professionals. At the end of the quarter, this brought Meta's full-time employee count to 83,500. That's up 32 percent year-over-year buteadcount growth is also expected to slow as the year progresses.
Here's how things are going for Reality Labs, Meta's Metaverse division:
- Reality Labs turned over $452M, primarily from sales of Meta Quest 2, with revenues up 48 percent year-over-year. Chief Financial Officer Dave Wehner expects weaker third-quarter sales because of the Meta Quest 2 price increase coming in August.
- Expenses were $3.3B, up 19 percent from a year ago. The operating loss was $2.8B.
Quarterly results at a glance. | Image: Meta
Metaverse investments should pay off
As you can see, Meta's investments in the Metaverse are many times greater than the revenues. And this is likely to remain the case for a long time - despite the difficulties Meta is currently facing.
The company is currently experiencing a perfect storm. Apple's app tracking measures are costing Meta close to $10B per year, its big competitor TikTok is stealing more and more market share and advertising revenue, and the ad business is also suffering due to the weakening global economy.
The fact that Zuckerberg nevertheless wants to continue investing $10B-$15B each year into the Metaverse makes investors nervous. The Meta CEO is not fazed by this and points to the future. "Given some of the product and business constraints we face now, I feel even more strongly now that developing these platforms will unlock hundreds of billions of dollars, if not trillions, over time," Zuckerberg said.
Chief Financial Officer David Wehner said Metaverse investments would continue to grow, with acquisitions remaining a part of the strategy, despite challenges from U.S. antitrust regulators.
Zuckerberg: Cambria will "blow away" people
Zuckerberg cites the expansion of the Metaverse platform Horizon, the improvement of meta-avatars, and the launch of the next headset Project Cambria (info) as the next Metaverse milestones. Later this year, he said, a web version of Horizon will appear that will be accessible on all platforms. This should "dramatically increase" the number of Horizon users. So far, Horizon is only available for Meta Quest 2.
Cambria will also be released later this year, he said. The user experience is about to get "pretty awesome," he added. The headset is just one milestone on a long road, but Zuckerberg believes people will be "pretty blown away."