Meta drops users and profits in surprise result

Changes to Apple's advertising policy last year are expected to cost Meta as much as $10 billion

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Changes to Apple's advertising policy last year are expected to cost Meta as much as $10 billion

While the overall result was good, changes to social media advertising and a new investment in alternate realities pulled profits down

Meta has declared another strong set of financial results, with increased users across all apps and rising revenues and profits.

However, while overall users were up nine per cent, Facebook itself lost about 1 million daily active users worldwide in Q4'21 for the first time ever.

This is a drop in the bucket compared to the total of 1.929 billion (the actual number is only presented in the slide deck accompanying the press release, which rounds the figure up to 1.93 billion and claims a five per cent increase). However, with growth having slowed over the last year, and a drop in the quarter's net income, this could represent a turning point.

Meta announced revenues of $33.7 billion (up 20 per cent year-on-year) in Q4 and $118 billion (up 37 per cent) for the full year, with respective net incomes of $10.3 billion (down eight per cent) and $29.1 billion (up 35 per cent).

The majority of Meta's revenue came from its 'Family of Apps' segment (including Facebook, Instagram, Messenger, WhatsApp and other services): $32.8 billion for the quarter and $115.7 billion for the year, with net incomes of $15.9 billion and $56.9 billion, respectively.

But it was the Reality Labs segment - the division dealing with augmented and virtual reality, like Oculus headsets, and the company's metaverse experiments - that pulled Meta's Q4 profit down. Reality Labs declared a $3.3 billion loss for Q4 on total revenue of only $877 million. For the year, its net loss was $10.2 billion on revenue of $2.3 billion. That full-year loss represents a total investment more than five times what Meta (then Facebook) paid for Oculus in 2014.

CEO Mark Zuckerberg expects the investment to bear fruit soon, telling investors, "We are working towards a release of a high-end virtual reality headset later this year, and we continue to make progress developing Project Nazare, which is our first fully augmented reality glasses."

Advertising generated a massive proportion of Meta's revenue ($32.7 billion), but the company has warned that Apple's app tracking transparency policy is likely to hurt its future financial performance. Apple's policy change makes it more difficult to serve targeted ads to social media users; Meta expects this to cost it as much as $10 billion next year.

In response to the drop in users and profits, Meta's shares fell 22 per cent.