Meta Platforms (META) 30 Oct 182018 Q3 Earnings call transcript

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Facebook third quarter 2018 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. recorded. be will call This Thank you much. very Ms. Deborah begin. Facebook's Vice President may you Relations, Investor of Crawford,

Good and you. conference Thank afternoon, call. XXXX third earnings quarter welcome to Facebook's

Sheryl results Joining Mark discuss today and our me Zuckerberg, Wehner, to CEO; Sandberg, CFO. COO; Dave are

started, update may get XX-Q to like in to with that those forward-looking today's of result press Quarterly by call as no differ release you materially would and or these to include forward-looking statements. our take today these information could results on our new from differ to and remarks make SEC. I Report set will are events. statements statements opportunity cause on Factors forward-looking as today, Form statements. on remind forth we assumptions Before this undertake of that filed a Any are Actual these that results materially based contemplated future this the we we in obligation

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everyone. Thanks, afternoon, Sheryl, and good

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of will XXXX expenditures be be our approximately We our capital needs. the seeks place We to also that in ahead build rate expect anticipate capacity in full-year mid-teens. will to tax billion billion, adequate $XX continuation that that center a driven our $XX by full-year of put data XXXX strategy

marked our heavy The growth across revenue solid third globe as together. period investment the we mission make both quarter world on and closer progress to the bring of a

long-term. near loves call the new confident in that, experiences questions. And Mike, as well products are and with the ability community that the up open provide in We improve let's for our to to as our innovative

We session. will question-and-answer open lines a for now the

line Your JPMorgan. first question Anmuth from comes from the Doug of

wanted Thanks the for I taking questions. two. just to ask

the First think for And see and more Mark, Instagram that relative Facebook adoption on to some over and for was XXXX, next we about about spend secondly, last don't OpEx about at year? growth, Status. talk Thanks. Stories XX% Facebook buckets a hoping then, talking all still that Dave, just platform you little also, challenges for or traction as for I on just the the could that for think if gain the year do so, stronger prioritization within been that their for And about here? for to then you've their of Stories does How should same of in over the you time you what as bit XX% change WhatsApp well?

so I the take part. first Sure, can

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It's Hey, Dave. Doug.

as lot areas. we've guide, XXXX the expense on Just of growth investment what that big with is our been talking consistent a about

year, the at If just count up in XX%. it's past head you look growth

that expense that's growth into the there. so that a for factoring big total is guidance factor bringing the XXXX guide, So base overall we're expense compensation really into

flow like of And In safety terms investment in to significant to in starting depreciation. are around then and addition, the I'd CapEx, the been security. through video, point in investing we've AR/VR investment and areas content and P&L investments ongoing the those significantly efforts, ecosystem

UBS. Your next of line Sheridan from comes Eric the question from

creative you're looking you you make some the side much, those friction and having solve selling-through the how XXXX points the could trying to Stories, much. moves with you side of Thanks one to you and Sheryl. beyond. or maybe video friction see When out Thank and with about so either Facebook solve to the of some to out call conversations of the advertisers for can for some so for respect points think on maybe you're

question. the for Thanks

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comes next the from of question Your Brian Morgan line from Nowak Stanley.

taking for my I questions. two. Thanks have

on wondering, competitors? need to to sort talk you key one comment about of about up was comments Feed next and to engagement? few some and when overall expect engagement do video just in higher about a steps the the the that News with you I margin to monetization cetera. you appreciate of Dave, two quarter, then quarter curious how flat about I you et thought order given think I'm secondly Watch, Could outlook, Mark. over in drivers the the the And just or you drive Watch last about be multiyear some catch to one, you first key years, outlook, margin engagement feed, this two Thanks. made The one sort clear of of

Dave. It's Brian. Hey,

mean, terms for In we we're revenue opportunities, both Facebook see to growth Instagram, of I what across seeing including feed opportunities good both and continue as and Stories.

have both I going in opportunity good in more think in growth on of revenue impression to you're terms opportunities more probably places. Stories, Instagram, opportunities but growth,

what we're forward. look obviously for when we that's looking So

more have terms update revenue don't to I in that, Beyond any specific of on outlook. much

community helping video biggest we video sure make helping to build the with interact And need other. the and people questions, do people-centric the thing that we're each experience creators is and we're is to that that

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line Justin of from Your Post question Lynch. comes America Merrill next of from the Bank

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comes from Barclays. next the Sandler Your question from of Ross line

Dave, tad to deceleration. That's stated you mentioned XQ days is mid digit what than ago. going Two Great. better questions. XX a a high-single have revenue to you

think compare, looking know kind just all, anything seeing. to on small a as the initial So at long-term Instagram, guess, on then, Facebook? read can for monetization think And anything overall that Sheryl. on you you I one do we says about And compared intent if you're change, start you Has ads to folks WhatsApp? for for but just what on versus improved? turning I it's And of line in do potential of Instagram then, the what the expect Instagram shopping see on incremental what are The deceleration Facebook? terms in experience any XXXX, the on I how commercial

Ross, All I'll start right. off that. on

earnings with a the for QX how as more deceleration. around points that plays in to with gave deceleration the giving benefit little I outlook we're I just bit outlook providing specific think the visibility. that outlook made And we're reiterate I'd XXXX. quarter revenue broadly far that XXXX, the is I'd for script that that what's driving into last a as not the consistent of

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we the think are so, big. And opportunities

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from next of comes question from Lloyd Deutsche line Bank. Walmsley the Your

if questions, can. Two you. Thank I

question right give Last of user. over on margins interpret long-term Mark to guidance in actually The next the that mid-XXs that Dave. Any about you interpretation people kind way you engage that of and some for matched having the be operating the implies suggests Is they should to News help sessions already great. of the the more the on and is should Feed be to right kind could revenue then, spend recognizing would comments time your spent than of in bigger a terms stable this range. beyond based time in in of Stories there be a that OpEx engagement that net comments we on long-term? Mark, overall? it just, to be may costs medium that remarks from be kind guided for see or there. per second expect year Is we positive quarter, prepared First, potential you And as

we've But Stories-type products. is into products products will if I on anything into quickly, grow than will feeds, much of be And that across what quickly. So the the more than type continues of suggests on whole spent say into on Stories, we've the too people this where than that seen News trend the Stories will I newer right? they all with market very not distant sharing given or more don't is the in that happened sharing are time and people future metrics side. feeds moments market to that whole feed-type Stories from any and know Feed mean can a that I of days trend it all this overall be bigger their into and incredibly in trends

So we there of just there. lot a is that see upside

in my going I there I so timeframe for we'll that progress be feed. where And there careful And because remarks that or in to you opportunity ads long-term we're be this where every think country. to think will we're Stories time, to leading will bigger seen that seeing performance because what situations the space. more what try But basically with outpacing more clear ads can't made – the in of well-positioned look the in the growth that flip I have the on developing but we've will I community far those Stories tell very in is converge overall feed. than like, side, we're the Stories be we in just over yet that is on in is the over get one I that Now, be think Stories

the margin will on mentioned, as big a Lloyd, investment I And, question, XXXX be year.

to XXXX be It's to structure beyond, biggest us and too it XXXX. XXXX our change from biggest happen there. in think hard So the to expect to the I have but be in and change I about prescriptive will would margin for moderate

comes line Your from from question the of Jefferies. Brent next Thill

Thanks.

pronounced there's more on been Just Europe, deceleration. a

there in Just more you stabilization terms about maybe color forward how and going a little think your on of curious the in model pricing. the

Yeah. Dave. Brent. It's Hey,

you're that quarters. came in change from two did sequential had but some that if you on Facebook methodology I of GDPR really in, how is guess, we front the MAU, DAU Europe And talking if think, rate impact and affect last stable stable growth I aside. Europe take terms accounting of overall. The kind about over

of I Facebook rate was So from broadly think, is growth a revenue that for from point European stable perspective, healthy think it view. there. I

revenue a as world to the of of lot the areas the similar growth the and in still drive see Instagram front, overall growth. on ability Europe Europe Stories and dynamics good So good out where in rest playing like you growth we're to impression especially I in think opportunity, contributing seeing revenue in

from from the Mark comes Citi. question of line next May Your

my questions. Thanks for taking

that Instagram, more with but Instagram feed, effective monetization businesses And Stories, the also challenges. but also specifically maybe and second seeing so confident one. Stories only are more any seem eventually? those and further core for line along monetization a You the sight canvas at users transitional gives there even with And since is What a Facebook than parity, talked things ultimately will just you both maybe challenges? be to then you're Instagram Stories that not you of reaching at are

is private growth Mark how In Stories, private the use the has, also messaging, cautious addition company case. messaging a side. been In to on so, discussed understandably also monetization

optimistic could about business So building just discuss a curious meaningful if private how are around you you messaging.

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words different pictures, screens, So a intermixed new has format. is multiple phrases a in and Stories way. multiple It

so again, advertisers. And that's a for muscle new

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your take we've and so that and story, that posts a talked can rolled makes of tools it process I the make faster. about that we out Facebook your And pictures where some

long-term going of how think monetization when people depend things spend. amount experience would about it's comfortable time through. The a the to I really you really upon ads many inserting depends consumer upon the go into think feel different you opportunities, we

because So Stories, more there fewer if you in ads be there. in time be more be they'll will to engaging spend need

Stories. there's high, Now in be that possible high, high may because engagement

those So length we're how ad many there them to to see how to opportunities going quickly and have through scroll are to opportunities effective people the see and are. see how ad

with we are messaging. we're on are which businesses that business big amount starting can upon share that you if ads, we've Messenger and ads the real in to is and the price. success of and the think can doing drives ROI on the a a Our in we messaging depends WhatsApp if see then stage. transition about what early stages making really sure already And in the of connect to much effectiveness ultimately in When Stories, earlier people, up feed, messaging, made way those testing of and

virtue content is about paying, as paid send. by to of And we've think careful interesting about. be we to talked businesses messaging, they WhatsApp because are the So going have

for things people see to don't of going send You're you're lot to paying want a if not them.

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think advantage takes their have can there, experiences we explore interaction with even earlier the those And them, that but click-to-Messenger a think we're deepen of and ad of relationship lot so businesses days a of consumer. the I having opportunity So both those to there. in I platforms between

in. this wanted I Mark, is to just Dave. And, add

versus on think say asked at sight say would growth monetization in of on will take on. about feed. It's term, because near obviously significant there's Stories. they're both the line going lot dynamic, you time. auctions, least to opportunity I I that they're hard a Stories impression But that parity Pricing on the is

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So it's going to time. take

Your the next question comes from Evercore. of Anthony DiClemente from line

very you taking my question. much for Thank

much making. is I about Facebook don't think which is, one when talk for whether the has are security anyone really asked I it's investments people or to Just that And recurring. curious Mark, investors, one-off

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question. think that This important up do adversaries will is are I a evolve. to we really who sophisticated continue against

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Goldman comes Bellini Your of line from next question Sachs. the from Heather

it's think Great. And of guys growth maybe far some can guess and ahead gave touched you for of next guys two CapEx building I the capacity? Mark. you Thank you. just year, the a we should I to guess, how unit But would out with about ongoing feel on there and early I particular that you help I that that of anything about putting comments questions guess that's had ad and just advertisers And given think the in just there days think a being to about do effective your converts XXXX? CapEx But to of this, you that in be in of point. think the do you'll you you we you've do us about trend, number? I'm And in one-time growth ad this related Stories help of of how there continued light of kind question more units terms I But at far? in drive that the to is how And made about how their end dialed people been know in good just other that's item? Stories. just ad, wondering, terms process this adoption how of kind helping got technology that thus creative at

I'll Heather, question CapEx. the regarding first take

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that we're peak users lower to ARPU. Asian and building a So are capacity serve at those

intensity. capital So that impacts overall the

a So in seeing we're in growth and continuing invest albeit XXXX. rate XXXX, to increased at CapEx we're much slower than had we

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going are question. we last to one Operator, take

of Blair. from question the William line last Your Ralph from comes Schackart

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get people from, active means so more we'll we more On our the system, of advertisers ROI that to those those do ads make side, relevant, ads the the iterate demand more to ads things to and, to then again, have make choose all measure in of those can relevant. more

improve, to opportunities your relevant businesses much we in more which ago, finding around can just is ask a world people years do. them, more but of And talk right in time, that to say percentage we those one are can your as right right the but I all ads and the feed, example, well. business we've in about see will compared ways of see at improvements few the best the have honestly even giving think all it And you are made our posts real what the certainly as own there, it drives to a feed I I do ads lot there's them. to think the good And people you I you to as the of see ad from person the very most think friends. drives not and that

time. for Thank joining your today. speaking And look again. you you we forward appreciate to We Great. us with

joining conference call. for this you Thank Ladies and us. gentlemen, concludes today's

You disconnect your now may lines.