Facebook parent Meta slowed its pace of hiring in the third quarter and expects it to further slow down next year, CFO Dave Wehner said during the company's earnings conference call on October 26.
The move comes as the company reported a second straight quarterly revenue decline amid a continued slowdown of the digital advertising market and is forecasting another drop in the fourth quarter.
"We are making significant changes across the board to operate more efficiently. We expect hiring to slow dramatically going forward and to hold headcount roughly flat next year relative to current levels" Wehner said.
Meta added 3,761 people in Q3, as against 5,748 people in Q2. Wehner said this was despite Q3 typically being a seasonally stronger hiring period.
Meta CEO Mark Zuckerberg said the company expects to end 2023 as "either roughly the same size or even a slightly smaller organisation" than it is today. The company had 87,314 employees at the end of September 30, 2022.
Zuckerberg said they will focus their investments on a small number of high -priority growth areas in 2023 due to which some teams will "grow meaningfully, but most other teams will stay flat or shrink over the next year".
The areas where headcount could grow are the social networking giant's monetisation efforts across Reels, Discovery engine, community messaging, and its Metaverse efforts among others and the company is reallocating employees towards them, said Susan Li, VP of Finance at Meta in a follow-up call with analysts.
"I believe that the tougher prioritisation, discipline and efficiency that we are driving across the organisation will help us navigate the current environment and emerge an even stronger company," Zuckerberg said on the conference call.
He has previously mentioned the company's intentions to reduce headcount growth over the next year. In September, the Facebook founder also told employees of a company-wide hiring freeze and restructuring of some teams to reduce costs, a Bloomberg report said.
Impact of advertising slowdown
Rising inflation and fears of an impending recession along with other macro environment challenges have resulted in advertisers cutting back their ad spends. This has impacted the revenue growth of internet firms such as Meta, Alphabet, Snap and Twitter, which depend on digital advertising.
Alphabet's Q3 revenue grew at its slowest pace in more than two years, while companies such as Microsoft and Spotify also witnessed a slowdown in their advertising businesses.
Meta's growth has also been severely impacted by Apple's iOS privacy changes and increased competition from rivals such as TikTok.
Wehner said on the conference call that the impact of Apple's changes diminished in Q3, but it was offset by weak advertising demand.
Earlier this week, Apple updated its app store policies enabling it to charge a 30 percent commission on sales "of boosts" for posts in a social media app, a move that will directly impact Meta.
Zuckerberg termed these policies as "big risks" and challenges to the company's advertising business.
Net income halves
Meta's net income halved to $4.4 billion for the quarter from $9.2 billion in the year-ago period, while revenue declined to $27.7 billion, down four percent from $29 billion a year ago.
The company's user base, however, continues to rise. Facebook had an average 1.98 billion daily active users and 2.96 monthly active users as of September 30, 2022.
Zuckerberg said that Instagram now has more than 2 billion monthly active users while WhatsApp has more than 2 billion daily active users, with North America becoming the messaging app's fastest-growing region. India is the biggest market for both the apps.
Meta reported an average 2.93 billion daily active users and 3.71 billion monthly active users across its family of apps for September 2022.
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