Q3 results: Meta profits plunge, ServiceNow stock soars
Contrasting fortunes for two Silicon Valley mainstays
Meta's profits dropped by more than 50% in the third quarter of 2022, becoming the latest big tech company to report disappointing financial results this quarter, as costs rise and across the globe economies slow.
In results announced on Wednesday, the social networking giant that owns the Facebook, WhatsApp and Instagram brands posted net income of $4.4 billion, down from $9.2 billion in Q3 2021 and representing a drop of 52%.
Meta's virtual reality division RealityLabs made a loss of $3.7 billion on revenues of $285 million, compared with last year's Q3 loss of $2.6 billion on revenues of $558 million.
Overall revenues were $27.71 billion, a decrease of 4% year-over-year, but an increase of 2% year-over-year on a constant currency basis. Like other US companies, Meta is currently being buffeted by the strong dollar.
The number of monthly active users at Facebook was 2.96 billion at the end of September, an increase of 2%, Meta said. Daily active users were 1.98 billion on average for September 2022, an increase of 3% year-over-year. These figures demonstrate a decline in enthusiasm for Facebook.
However, despite reports of hiring freezes at the company, there are now 28% more employees than a year ago, with the current head count put at 87,314. Meta said that it expects headcount to be stable over the next year.
Following the announcement Meta stocks dropped by 19% in after-market trading.
The company has been seeking to put past scandals behind it, with last year's renaming from Facebook to Meta signifying a new focus on the Metaverse. However, so far there is not much to show for this endeavour, and some analysts believe the company has moved too early.
"Meta is on shaky legs when it comes to the current state of its business," said Insider Intelligence principal analyst Debra Aho Williamson. "Mark Zuckerberg's decision to focus his company on the future promise of the metaverse took his attention away from the unfortunate realities of today."
A study commissioned by digital experience company Acquia reveals that only 28% of consumers in the UK, 34% in the US and 45% in France are excited by the Metaverse. 56% of UK consumers were at least somewhat concerned about data protection and privacy in the metaverse.
"The metaverse promises rich opportunities for marketers to deliver digital experiences that can create and strengthen consumer loyalty with the brand. However, our research suggests that there are still some pretty significant barriers that will need to be overcome before consumers can truly get excited", said Tom Bianchi, VP Corporate Marketing, Acquia.
ServiceNow soars
Meanwhile, after a difficult few months overall that have seen its stock fall, workflow platform provider ServiceNow reported total revenues of $1,831 million in Q3 2022, representing a 21% year‑over‑year growth from Q3 2021's $1.51 billion.
The company's 1,530 customers (up 22%, renewal rate 98%) brought in a Non-GaaP income of $398 million.
On Wednesday, the company named CEO Bill McDermott the company's new chairman, with former chairman and company founder Fred Luddy becoming a member of the board.
McDermott told CRN he was excited to see ServiceNow beat both its top-line and bottom-line goals in the quarter, as well as follow-through on new innovations expected for the rest of 2022 and into 2023.
"We're now making a bold move into security," McDermott said.
"Digital trust is a big thing. And think about encryption, data anonymisation, security control, and all these things to protect business critical applications, think of that vault on one platform, integrating with all the other solutions, but giving one version of the truth so managers can quickly automate and take action on threats and remediate them before they become serious."
ServiceNow's stock surged 12 percent in after-hours trading Wednesday.