Mark Zuckerberg-led Meta Platforms on Wednesday reported a 4% year-on-year decline in revenue to $27.7 billion in the September quarter as competition from short-video app TikTok dragged down the social media giant’s advertising sales.

Meta earned $4.4 billion, or $1.64 per share, in the quarter ended September 30, 2022, down 52% from $9.19 billion, or $3.22 per share, in the same period a year ago.

Meta's tepid quarterly results come at a time when the tech giant plans to spend $10 billion a year on the metaverse. It also follows weak earnings from Google parent Alphabet Inc. and Microsoft this week.

Shares of Meta tumbled 19% in after-hours trading to $105.20. If the sell-off holds through Thursday, it will be the lowest it's been since 2016.

The company expects fourth quarter 2022 total revenue to be in the range of $30-32.5 billion. "Our guidance assumes foreign currency will be an approximately 7% headwind to year-over-year total revenue growth in the fourth quarter, based on current exchange rates," says Meta.

Meta expects headcount at the end of 2023 to be approximately in-line with third quarter 2022 levels. “"We are making significant changes across the board to operate more efficiently. We are holding some teams flat in terms of headcount, shrinking others and investing headcount growth only in our highest priorities," the company says.

Meta says it has increased scrutiny on all areas of operating expenses. However, these moves follow a substantial investment cycle so they will take time to play out in terms of our overall expense trajectory, it adds.

Some steps, like the ongoing rationalisation of its office footprint, will lead to incremental costs in the near term, Meta says.

"We expect 2022 total expenses to be in the range of $85-87 billion, updated from our prior outlook of $85-88 billion. This includes an estimated $900 million in additional charges related to consolidating our office facilities footprint that we expect to record in the fourth quarter of 2022," the company says.

"We anticipate our full-year 2023 total expenses will be in the range of $96-101 billion. This includes an estimated $2 billion in charges related to consolidating our office facilities footprint," it adds.

Meta forecasts that operating losses associated with the Reality Labs unit responsible for its metaverse investments would grow significantly year-over-year in 2023. "Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run," the company says.

"We expect 2022 capital expenditures, including principal payments on finance leases, to be in the range of $32-33 billion, updated from our prior range of $30-34 billion. For 2023, we expect capital expenditures to be in the range of $34-39 billion, driven by our investments in data centers, servers, and network infrastructure. An increase in AI capacity is driving substantially all of our capital expenditure growth in 2023," says Meta.

meta share price

Meta Q3 revenue falls 4% to $27.71 bn; profit dips 52%