Facebook Stunned By Lower Revenues; Announces Massive Slowdown In Hiring New Employees
In the company’s earnings conference call on October 26, the CFO of Meta, Dave Wehner said that the company has slowed its pace of hiring in the third quarter and expects it to further slowdown next year.
This move comes amid the revenue decline reported by the company for a second straight quarter. There is also a continued slowdown of the digital advertising market and is forecasting another drop in the fourth quarter.
Hiring To Slow Down Dramatically: Meta CFO
The Chief Financial Officer said that “We are making significant changes across the board to operate more efficiently. We expect hiring to slow dramatically going forward and to hold headcount roughly flat next year relative to current levels”.
This comes amid company reporting
He said that that the company added 3,761 people in Q3, as against 5,748 people in Q2, despite Q3 typically being a seasonally stronger hiring period.
The CEO said that by 2023 end, the company expects to end 2023 as “either roughly the same size or even a slightly smaller organisation” than it is today.
At the end of September 30, 2022, company had 87,314 employees.
In 2023, the company will focus their investments on a small number of high -priority growth areas. Due to this there are some teams which will “grow meaningfully, but most other teams will stay flat or shrink over the next year”.
Susan Li, VP of Finance at Meta said that the areas or teams which could witness the growth in headcount or reallocation of employees include monetisation efforts across Reels, Discovery engine, community messaging, and its Metaverse efforts among others.
In the conference call, Zuckerberg said that “I believe that the tougher prioritisation, discipline and efficiency that we are driving across the organisation will help us navigate the current environment and emerge an even stronger company”.
Previously he mentioned that the company intends to reduce the headcount growth over the next year.
A report said that in the month of September, the Facebook founder also told employees of a company-wide hiring freeze and restructuring of some teams to reduce costs.
Advertising slowdown, Reduced Income
Meta has reduced on advertising spends and driving this decision is the rising inflation and fears of an impending recession along with other macro environment challenges.
Now there are internet firms like as Meta, Alphabet, Snap and Twitter and such ad spend cutting has impacted these organizations.
Alphabet’s Q3 revenue grew at its slowest pace in more than two years, while companies such as Microsoft and Spotify also witnessed a slowdown in their advertising businesses.
Meta’s growth has also been severely impacted by Apple’s iOS privacy changes and increased competition from rivals such as TikTok.
In a conference call, the CFO said that the impact of Apple’s changes diminished in Q3, but it was offset by weak advertising demand.
In a move which directly affects Meta, Apple earlier this week updated its app store policies enabling it to charge a 30 percent commission on sales “of boosts” for posts in a social media app.
CEO of Meta called such policies as “big risks” and challenges to the company’s advertising business.
Speaking of the net income, the companys’s net income has reduced from from $9.2 billion in the year-ago period to $4.4 billion for the quarter.
When it comes to revenue, then as compared to the $29 billion a year ago, the revenue declined to $27.7 billion this year.
As of September 30, 2022, Facebook had an average 1.98 billion daily active users and 2.96 monthly active users which reflects the fact that the company’s user base continues to rise.
Mark Zuckerberg revealed that Instagram now has more than 2 billion monthly active users while WhatsApp has more than 2 billion daily active users, with North America becoming the messaging app’s fastest-growing region. India is the biggest market for both the apps.
Meta reported an average 2.93 billion daily active users and 3.71 billion monthly active users across its family of apps for September 2022.