Meta Maintains Long-Term Focus

Meta, owner of Facebook, reported a 2% rise in revenue (on a constant currency basis) to 27.7 billion US dollars for the third quarter. Meta flagged "weak advertising demand, which we believe continues to be impacted by the uncertain and volatile macroeconomic landscape."

CEO Mark Zuckerberg described messaging as a "major monetisation opportunity." He said one of Meta's fastest growing products is Click-to-Messaging ads, which let businesses run ads on Facebook and Instagram that start a thread on Messenger, WhatsApp or Instagram Direct so they can communicate with customers directly. The product generates a 9 billion dollar annual run rate. "This revenue is mostly on Click-to-Messenger today since we started there first, but Click-to-WhatsApp just passed a 1.5 billion dollar run rate, growing more than 80% year-over-year."

Zuckerberg pointed to paid messaging as another opportunity. "We're putting the foundation in place now to scale this with key partnerships like Salesforce, which lets all businesses on their platform use WhatsApp as the main messaging service to answer customer questions, send updates, and sell directly in chat," he added. "We also launched JioMart on WhatsApp in India and it's our first end-to-end shopping experience that shows the potential for chat-based commerce through messaging."

Mete has just started shipping its new Quest Pro VR headset, which is designed to deliver "high-resolution mixed reality so you can blend virtual objects into the physical environment around you." 

"There are 200 million people who get new PCs every year, mostly for work," Zuckerberg added. "Our goal for the Quest Pro line over the next several years is to enable more and more of these people to get their work done in virtual and mixed reality, eventually even better than they could on PCs....There's still a long road ahead to build the next computing platform, but we are clearly doing leading work here. This is a massive undertaking and it’s often going to take a few versions of each product before they become mainstream. But I think our work is going to be of historic importance and create  the foundation for an entirely new way that we will interact with each other and blend technology into our lives." Source: Meta statement

Alphabet Sees Serious Slowdown

Alphabet reported a 11% year-on-year increase (at constant currencies) in consolidated revenues for the third quarter to 69.1 billion US dollars. That's down from 39% a year earlier. 

With growth slowing, Alphabet has "started our work to drive efficiency, by realigning resources to invest in our biggest growth opportunities. Over the past quarter, we’ve made several shifts away from lower priority efforts to fuel higher growth priorities," said Sundar Pichai, CEO of Alphabet and Google. "Over a decade ago, focusing the company’s efforts on mobile helped us to build and grow our business for the shift to mobile computing. We’re at a similar point now with AI, another transformational technology. Our investments in AI and deep computer science mean that we can deliver a wide range of breakthroughs across our products and services, to help people, businesses, and communities."

In October, Alphabet's unit Waymo announced Los Angeles will be the next city to be served by its ride-hailing service, joining Phoenix and San Francisco. "We’ll begin driving autonomously in several central districts over the coming months as we prepare to serve Angelenos," the company said. "We’ll deploy a round-the-clock service that provides more accessible and dependable mobility options to all residents of LA." Waymo said Los Angeles represents a market opportunity of 2 billion dollars in 2022. 

"Waymo remains the only company operating a fully autonomous, commercial ride-hailing service for passengers round the clock in Phoenix’s East Valley – no NDAs, remote operators or pre-defined pick-ups." it added. "We’re the first and only company in the world providing autonomous ride-hail trips to and from an airport (Phoenix’s Sky Harbor), and we drive more fully autonomous miles in the U.S. than any other company." Source: Alphabet and Waymo statements.

Netflix Moves Beyond Membership

Netflix forecast year-on-year revenue growth of 9% (in constant currency terms) for the fourth quarter of 2022, as it anticipates that growth in paid memberships will fall to just 2.6% from about 9% a year ago.  

In the third quarter of 2022, Netflix's revenue rose 13% to 7.9 billion US dollars, excluding the impact of foreign exchange movements. 

Netflix said: "As discussed in previous letters, we are increasingly focused on revenue as our primary top line metric. This will become particularly important heading into 2023 as we develop new revenue streams like advertising and paid sharing, where membership is just one component of our revenue growth."

Netflix is also trying to expand its year-old games proposition: "We now have 35 games on service (all included in every Netflix subscription without in-game ads or in-app purchases) and we’re seeing some encouraging signs of gameplay leading to higher retention. With 55 more games in development, including more games based on Netflix IP, we’re focused in the next few years on creating hit games that will take our game initiative to the next level. More generally, we see a big opportunity around content that crosses between TV or film and games." Source: Netflix statement