Meta Reports First Revenue Decline and 36 Percent Profit Drop

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For years, Facebook’s sales grew without fail and kept on growing, defying the laws of gravity even as the company was battered by scandals over privacy and misinformation.

Not anymore.

On Wednesday, Meta, the company formerly known as Facebook, reported a 1 percent decline in quarterly revenue from the previous year. It was the first time the social media giant’s revenue had fallen since it went public a decade ago, as it confronts increased regulatory scrutiny and a turbulent economy while trying to build a new frontier of digital communication.

Meta’s revenue for the second quarter was $28.82 billion, down from $29.07 billion a year earlier. Profit was $6.69 billion, down 36 percent from a year earlier. Wall Street analysts had predicted profits of $7.04 billion on revenue of $28.9 billion, according to data compiled by FactSet.

The results compounded what was a dismal day for Meta, which was also sued on Wednesday by the Federal Trade Commission over a deal to buy a virtual reality company called Within. The lawsuit directly strikes at the ambitions of Mark Zuckerberg, Meta’s founder and chief executive, who has been spending billions of dollars to create an immersive world of social interaction in the “metaverse,” which is a combination of virtual and augmented realities that will be bound by commerce and online relationships.

Mr. Zuckerberg has told investors, technologists and others that his vision for the metaverse will take years to come to fruition and that the endeavor will be costly. Some investors are skeptical that the effort will pay off in the long term.

Still, there were bright spots in Meta’s earnings report. The company said its daily active users for its family of apps — which include Facebook, Instagram and WhatsApp — increased to 2.88 billion, up 4 percent from a year ago. That exceeded analysts’ expectations that the company was losing visitors. The Facebook app also saw user growth within the United States, an area that some believed was saturated.

Mr. Zuckerberg said that he was encouraged by other areas of Meta’s business that are driving growth and engagement, like the Reels video product, a feature within Instagram that is similar to TikTok’s video offering. Investments in artificial intelligence recommendation algorithms had also driven more people to use the service and for longer periods, the company said.

“It was good to see positive trajectory on our engagement trends this quarter coming from products like Reels and our investments in A.I.,” he said 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.”