Contrasting fortunes for two Silicon Valley mainstays

Meta’s earnings fell more than 50% in the third quarter of 2022, becoming the latest major tech company to report disappointing financial results this quarter as costs rise and economies around the world slow.

In results announced on Wednesday, the social networking giant, which owns the Facebook, WhatsApp and Instagram brands, reported net income of $4.4 billion, down from $9.2 billion in the third quarter of 2021 and representing a decline from 52%.

Meta’s RealityLabs virtual reality unit reported a loss of $3.7 billion on revenue of $285 million, compared with last year’s third-quarter loss of $2.6 billion on revenue of $558 million.

Total revenue was $27.71 billion, down 4% year over year but up 2% year over year on a constant currency basis. Like other US companies, Meta is currently being hit by the strong dollar.

The number of monthly active users on Facebook was 2.96 billion at the end of September, an increase of 2%, Meta said. Daily active users averaged 1.98 billion for September 2022, up 3% year over year. These numbers show a decline in enthusiasm for Facebook.

However, despite reports of a hiring freeze, the company now has 28% more employees than a year ago, with a current headcount of 87,314. Meta said it expects headcount to be stable next year.

Following message Meta shares fell 19% in after-market trading.

The company has been trying to put past scandals behind it, with last year’s renaming by Facebook to Meta signifying a new focus on the Metaverse. So far, however, there is little to show for this venture, and some analysts believe the company has moved too soon.

“Meta is on shaky ground 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 distracted him from the unfortunate realities of today.”

A survey commissioned by digital experience company Acquia found that only 28% of consumers in the UK, 34% in the US and 45% in France were excited about 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 brand loyalty. However, our research suggests there are still some pretty significant barriers that will need to be overcome before consumers can really get excited,” said Tom Bianchi, vice president of enterprise marketing, Acquia.

ServiceNow is rising

Meanwhile, after a tough few months overall that saw its stock decline, workflow platform provider ServiceNow reported total revenue of $1.831 million in the third quarter of 2022, up 21% year-over-year from 1.51 billion in the third quarter of 2021.

The company’s 1,530 customers (22% growth, 98% renewal rate) generated Non-GaaP revenue of $398 million.

On Wednesday, the company named CEO Bill McDermott as the company’s new chairman, with former chairman and company founder Fred Luddy joining the board.

McDermott said CRN he was excited to see ServiceNow beat its top and bottom line goals in the quarteras well as tracking new innovations expected by the end of 2022 and into 2023.

“Now we’re taking a bold step toward security,” McDermott said.

“Digital trust is a big thing. And think about encryption, data anonymization, security controls, and all these things to protect business-critical applications, think about this one-platform storage, integrating with all the other solutions, but providing a single version of the truth so that managers can can quickly automate and act on threats and remediate them before they become serious.”

Shares of ServiceNow jumped 12 percent in after-hours trading on Wednesday.