Facebook parent Meta on Wednesday reported that its revenue declined for a second consecutive quarter, hurt by falling advertising sales as it faces competition from TikTok’s wildly popular video app.
The quarter’s weak results raised fresh questions about whether Meta’s plans to spend $10 billion US a year on the metaverse — a concept that doesn’t quite exist yet and possibly never will — is prudent while its main source of revenue is faltering.
The quarterly results from Meta Platforms Inc. sent its stock tumbling more than 20 per cent to barely above $100, a level it has not dipped below since 2016. Prior to the latest sell-off it was already down by 61 per cent for the year.
The Menlo Park, Calif., company earned $4.4 billion, or $1.64 per share, in the three month period that ended Sept. 30. Analysts were expecting a profit of $1.90 per share, on average, according to FactSet.
Revenue fell four per cent, to $27.71 billion from $29.01 billion.
Some of the company’s investors are concerned Meta is spending too much money and confusing people with its focus on the metaverse, a virtual, mixed and augmented reality concept that few people understand — while it also grapples with a weakening advertising business.
“Meta has drifted into the land of excess — too many people, too many ideas, too little urgency,” wrote Brad Gerstner, the CEO of Meta shareholder Altimeter Capital, earlier this week in a letter to Meta CEO Mark Zuckerberg. “This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes.”
In addition to an accelerating revenue decline, Meta also forecast weaker-than-expected sales for the current quarter, further raising worries that the revenue slump is more of a trend than an aberration.
“While we face near-term challenges on revenue, the fundamentals are there for a return to stronger revenue growth,” Zuckerberg said in a statement. “We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”
From August 3:
Front Burner24:02As Meta struggles, Zuckerberg puts employees under the gun
As the global economy slows down, Meta CEO Mark Zuckerberg is pushing employees to speed up. The Facebook and Instagram parent company set a record in February, losing the most stock value in a single day in U.S. history. But Zuckerberg has continued sinking billions of dollars into his vision of a “metaverse,” pressed for faster updates to compete with TikTok, and is upping the pressure on employees. According to reports of an internal Q&A in June, Zuckerberg told employees: “Realistically, there are probably a bunch of people at the company who shouldn’t be here.” Today, The Verge deputy editor Alex Heath explains the many threats to Meta that make this “the most pressure” it’s ever faced, and how struggles across the tech sector are causing an unprecedented shift in its lavish culture.
Meta said it expects staffing levels to stay roughly the same as in the current quarter. The company had about 87,000 employees as of Sept. 30, an increase of 28 per cent year-over-year.
“To return to stronger growth, Meta needs to turn its business around,” said Insider Intelligence analyst Debra Aho Williamson. “As Facebook Inc., it was a revolutionary company that changed the way people communicate and the way marketers interact with consumers. Today it’s no longer that innovative groundbreaker.”
She went on to say that “Meta would benefit from less priority on the metaverse and more on fixing its core business.”
Meta’s Reality Labs unit, which includes its metaverse and virtual reality efforts, had an operating loss of $3.67 billion in the third quarter, compared with a loss of $2.63 billion a year earlier. Its revenue was $285 million.
Despite the revenue decline, about 3.71 billion people logged in to at least one of Meta’s family of apps — Facebook, Instagram, WhatsApp or Messenger — up four per cent year-over-year.
Facebook breaches election transparency law again
In a separate development on Wednesday, a Washington state judge on Wednesday fined Meta $25 million for repeatedly and intentionally violating campaign finance disclosure law, in what is believed to be the largest campaign finance penalty in U.S. history.
The penalty issued by King County Superior Court Judge Douglass North was the maximum allowed for more than 800 violations of Washington’s Fair Campaign Practices Act. Attorney General Bob Ferguson argued that the maximum was appropriate considering his office previously sued Facebook in 2018 for violating the same law.
Washington’s transparency law requires ad sellers such as Meta to keep and make public the names and addresses of those who buy political ads, the target of such ads, how the ads were paid for and the total number of views of each ad. Ad sellers must provide the information to anyone who asks for it. Television stations and newspapers have complied with the law for decades.
But Meta has repeatedly objected to the requirements, arguing unsuccessfully in court that the law is unconstitutional because it “unduly burdens political speech” and is “virtually impossible to fully comply with.” While Facebook does keep an archive of political ads that run on the platform, the archive does not disclose all the information required under Washington’s law.
The Current30:03Full conversation with Frances Haugen: Why whistleblower thinks Canada could lead a coalition to demand change at Facebook
In an extended version of Thursday’s conversation, former Facebook employee-turned-whistleblower Frances Haugen tells Matt Galloway about why she chose to disclose thousands of documents about the social media giant, and why she thinks Canada could lead a coalition of countries to demand change.
“I have one word for Facebook’s conduct in this case — arrogance,” Ferguson said in a news release. “It intentionally disregarded Washington’s election transparency laws. But that wasn’t enough. Facebook argued in court that those laws should be declared unconstitutional. That’s breathtaking. Where’s the corporate responsibility?”
In 2018, following Ferguson’s first lawsuit, Facebook agreed to pay $238,000 and committed to transparency in campaign finance and political advertising. It subsequently said it would stop selling political ads in the state rather than comply with the requirements.
Nevertheless, the company continued selling political ads, and Ferguson sued again in 2020.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
