Meta Q2 sales decline 1% to $28.82B, EPS drops 32%, moves CFO to new chief strategy officer role

Meta, under the gun at the moment with regulators and investors, missed estimates in its Q2 earnings, but in an attempt to offset some of that, it announced an interesting executive shift: David Wehner, the company's current chief financial officer, will be taking on a new role as its chief strategy officer, a new role at the company, where he will oversee strategy and corporate development. Susan Li, currently VP of finance, will take on the CFO role. The changes are effective November 1 of this year.

If putting a finance man in charge of bigger strategic moves at the company is intended to give investors more confidence that Meta is working to put things right, and doing so with fiscal prudence, so far investors are not buying it: The stock is currently trading about 1.7% down in after-market hours.

Nor so far is the positive spin from the top. "It was good to see positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in AI," said Mark Zuckerberg, Meta founder and CEO, in a statement. "We're putting increased energy and focus around our key company priorities that unlock both near and long term opportunities for Meta and the people and businesses that use our services."

The company reported revenues of $28.82 billion in the quarter on earnings of $2.46 per share. Both missed analysts' estimates of $28.94 billion and $2.61 per share respectively. Importantly, that revenue figure is down by about 1% on a year ago, making it the first quarterly year-on-year revenue decline at the company since it went public (ironically this was one place where analysts' expectations were met: They largely expected this decline to be the case this quarter). The EPS figure is down 32% on a year ago, when it was $3.61.

It also reported a major drop in net income for the quarter: Its Q2 2022 figure was $6.687 billion, down a full 36% on the same period a year ago, when it reported net income of $10.394 billion.

MAUs on Facebook were up 1% to 2.93 billion; people in its "family of apps" were at 3.65 billion, up 4%.

In an earnings season that has seen a lot of misses and tough outlooks, Meta is also providing a very conservative stance: It said it expects Q3 to be in the average range of $26 billion-$28.5 billion.

"This outlook reflects a continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty. We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue. Our guidance assumes foreign currency will be an approximately 6% headwind to year-over-year total revenue growth in the third quarter, based on current exchange rates," it notes.

It's also feeling a strong chill in Europe due to GDPR. "As noted on previous calls, we continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations," it noted.

Meta also lowered expenses for the year, which points to the company cutting costs, slowing hiring and doing other trimming. These will now be between $85 billion-$88 billion, versus previous estimates of $87 billion-$92 billion. "We have reduced our hiring and overall expense growth plans this year to account for the more challenging operating environment while continuing to direct resources toward our company priorities," it said.

Alongside all of this, the company has losing nearly its stock value this year, and today it was revealed that it is getting sued by the FTC over its latest acquisition in VR (which referred to Meta as an anticompetitive "behemoth" in its suit), and its apps Instagram, Facebook and WhatsApp are struggling hard to compete against popular rivals like TikTok and Snapchat.

Other important figures:

• Family daily active people (DAP) — DAP was 2.88 billion on average for June 2022, an increase of 4% year over year.

• Family monthly active people (MAP) — MAP was 3.65 billion as of June 30, 2022, an increase of 4% year over year.

• Facebook daily active users (DAUs) — DAUs were 1.97 billion on average for June 2022, an increase of 3% year over year.

• Facebook monthly active users (MAUs) — MAUs were 2.93 billion as of June 30, 2022, an increase of 1% year over year.

• Ad impressions and price per ad — In the second quarter of 2022, ad impressions delivered across Meta's family of Apps increased by 15% year over year and the average price per ad decreased by 14% year over year.

• Capital expenditures — Capital expenditures, including principal payments on finance leases, were $7.75 billion for the second quarter of 2022.

• Share repurchases — Meta repurchased $5.08 billion of Class A common stock in the second quarter of 2022. As of June 30, 2022, Meta had $24.32 billion available and authorized for repurchases.

• Cash, cash equivalents and marketable securities — Cash, cash equivalents and marketable securities were $40.49 billion as of June 30, 2022.

• Headcount — Headcount was 83,553 as of June 30, 2022, an increase of 32% year over year.

More to come.