Despite all of Facebook’s rebranding efforts, things seem to have gone really south for the company. While its public image has already been taking hit for quite some time now, its the financials this time — which is generally a strong suit for Facebook — which are in the crosshairs. The rebranded Meta reported its first financials post last year’s rebranding, and the numbers are bleak to say the least.
To start with, perhaps the biggest shock — to both the company and the markets — was Facebook’s first ever decline in Daily Active Users (DAUs). This is a figure, that despite the behemoth of social media it has become, has mostly favoured the 18 year old tech giant. Not this time though. Facebook’s global daily active users declined from the previous quarter for the first time, to 1.929 billion from 1.930 billion.
The reason? Multiple. Facebook says that Apple’s recent privacy changes to its operating system, that made it harder for users to be tracked for targeted ads, was one of the reason. Then there’s competition from newer but fast growing players such as TikTok, which have continued to garner in more users, despite Facebook’s blatant attempts at cloning some of the features.
In terms of monthly active users, Facebook reported 2.91 billion monthly active users in the fourth quarter, showing no growth compared with the previous quarter.
Lets talk financials now.
This was the first time that Facebook Meta released separate numbers for its ‘Reality Labs’ unit. It is the division that consists the company’s augmented and virtual reality related consumer hardware, software and content. RL will be the horse on which Meta’s metaverse reality would ride. Financially though, it still forms less than 3% of the total quarterly revenue.
Meta reported $33.67 Billion in Q4’2021 revenues, significantly up from the $28 Billion in the fourth quarter of 2020. Out of this, just $877 million came in from the ‘Reality Labs’ unit, rest coming in from the company’s usual ‘Family of Apps’ division. Family of Apps consists of Facebook, Instagram, Messenger, WhatsApp and other related services.
Meta’s chief financial officer, Dave Wehner, told analysts on a conference call that the impact of Apple’s privacy changes could be “in the order of $10 billion” for 2022.
Meta forecast first-quarter revenue in the range of $27 billion to $29 billion. According to Reuters, analysts were expecting that number to be $30.15 billion, clearly indicating the Apple privacy change induced gap.
“I’m encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we’ll continue investing in these and other key priorities in 2022 as we work towards building the metaverse,” CEO Mark Zuckerberg said in the earnings release.
In Meta’s earnings call, he said competition for users was one factor impacting the business, mentioning short video app TikTok by name and emphasizing Meta’s commitment to providing services for young adults.
Net loss from Meta’s Reality Labs, the company’s augmented and virtual reality business, was $10.2 billion for the full year 2021, compared with a $6.6 billion loss the previous year.
