Meta Platforms (META) 3 Feb 222021 Q4 Earnings call transcript

Good afternoon. My name is Frans, and I will be your conference operator today. At this time, I would like to welcome everyone to the Meta Fourth Quarter and Full Year 2021 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. Instructions]. [Operator be will recorded. call The you much. Thank very Ms. Facebook Crawford, Vice President Relations. Investor of Deborah

may You begin.

afternoon Meta's welcome full you. and Thank Good to earnings call. year conference fourth XXXX and quarter

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

get to this Before remind started, opportunity include will would remarks our that today I forward-looking to like we take you statements.

SEC. statements obligation information in materially cause events. today, Any today's and these forward-looking are with that could these Our a update make our to the on of based by or future set no release. undertake as quarterly actual statements. forward-looking new to Form on are this press contemplated of forth call results we And as in XX-Q from those these we may assumptions on materially results differ statements that differ report Factors result filed

in of investor.fb.com. The investor call A available During I'd non-GAAP measures this financial non-GAAP our presentation call, measures. included earnings turn to to we like and now, over may GAAP at Mark. an website accompanying to GAAP on release and both today's press reconciliation And are present the is press release.

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everyone. hi, and Mark, Thanks,

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here’s Now, Dave.

everyone. afternoon, good and Sheryl, Thanks,

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the with is And question Morgan from Brian Stanley. of our Instructions]. line first [Operator Nowak

I have two.

first one transition. The the on Reels

signal all you other You Reels is that changes Then signal you've there? the second could scale the other navigated Or of help and are perspective? ad expecting of any And more format how for cetera, other anything those quarter challenging that's of think in transition than understand loss Is headwinds further been talk changes transitions potentially XXXX, Mobile and talked becoming or come Stories, as maybe through. to there successfully Dave, year-on-year and other one, anything through you products expect in first larger to the when with sort data et you in opposed on this ad you the formats you comps from the it and past us perspective? a sort there to take measurement sort about about targeting unique longer around the the makes in past? about

take probably can of I yes. -- Brad. both Thanks, or those Yes.

there's it transition of Reels, that makes the quite characteristics similar So the lot of that Reels a to before. I think on we've through gone mean I

and and very really and past focused and on driver the both As it's we're experience be we when short-form on seeing already Facebook, were growth work making of Instagram Facebook. to in on that effectively focused on really Instagram, we're video the Stories, consumer biggest on quickly growing

So experience really the what for over seeing. we're format it's think really Reels think on the effectively well have that itself right. format. and we advertising, do will Stories work the that experience we're lend in making And time, will by consumer for we encouraged we're a focused really But we

relatively sorry, in relatively there's ads Reels few monetize confident ability time. -- we're So today. in in our ads right to But over few now, story

On going headwind. in into So perspective sorry, similar QX growth in it's year that and XX obviously, be those iOS and something we're go lapping the general, a with line place period. definitely we that revenue was as the XXXX, ago we in monetization expectations saw iOS be to period just in in impact and to QX, headwind. which the not in XX, were in is -- an from with iOS our going QX, headwinds to a impression and But QX

our called out, was the comp So number area we that believe year. the notable verticals. headwind a on definitely gaming And in as headwind a that $XX seeing that the areas very overall so vertical. in significant be an in a saw a And And noticeable iOS pretty our E-commerce strength quite first in challenged. like -- of that where for QX. seen But impact e-commerce, a Google of seeing same to of of other business we for it's growth in billion, similarly, meaningful in slowdown half makes on we've it's impact the we're on tough order is XXXX business.

it, and are the a restrictions seeing. And so sense of that those between they Apple from from what given look we Apple that way apps. the know tracking prompts believe are requires we And browsers were you restrictions restrictions, were designed that out at seeing carves most for difference we is those one iOS the in e-commerce the if explanation of from for it makes that probably verticals part what impacted

far And and than optimization what is app-based measurement that search more that have means data like for ad platforms to purposes ours. third-party access could so ads

of that ours take discrepancy continue is to based you Apple. clearly really policy it not a given dollars it's apples-to-apples Search Search think incentive restrictions from Google this billions year to a So from different as relative Google us. Apple data, for believe like the a of for we result, continue. ads, And ad to can when that And services using have comes to could it business benefited set of exists

next Sachs. is Our Eric with question Goldman from Sheridan

I if can. Maybe X questions,

following about questions up Reels. First, Brian's on

on the about we've what forms compared engagement bit through think of how engagement seeing levels Sheryl, trying think differential move the first would engagement before, as innings on elements remember that and move in you've team that both acceptance you broader and community engagement of targeting standpoint efforts internally some consumer close an start give an to some wallet's scope Can on of from or you on talked gap. think stand about early be? to you might some any of first us us the implement in a Is And to the last pricing I a and half? measurement if ad might show be transitions gone from other about to when need able were the talked QX of into property levels Reels pricing into of terms efficacy. and update I can differential of half, perspective advertiser what you're how we in workaround on on willingness and where workarounds there then, correctly, the of call, we the give these little you terms workarounds you're we so differential through as transition the to the to

Sure. to biggest lot is think This is contributor upfront on engaging. mentioned a quickly. the I growing video engagements. are is we're -- short-form And question time. overall we're there Reels lot of are of a your very spending my I it's already seeing in some I start growth script what people more can what and -- that on Instagram. seeing with that on this And engagement engaging first very

not in our Feed Desktop big to ad that similarity last what there I gone already. now here new I to The major are on Stories to engagement not and we've through to to Feed, what first on for the are But all evolution. think that differences Reels is what seeing tuned positive and Mobile we've factors as -- there and question it's will going one that And think, any in transitions format. was business -- is a a are what the too time Facebook of the back from common Feed that past. biggest we're had format similarities question, beginning, system the the the contributors this to these certainly in seen the

I a that Reels well, would what the actually with past, term, Feed Reels, quite makes teams that but the and that executing with that. than say and creates The thing to revenue, is is product little pretty the bit optimistic large I engagement clear this of term, big The quickly. so a faster long with as I that also growing that new the the and near-term a it thing At over in continues starts the concern very a of So as but dynamic it of to off it's grow some point, headwind big are of engagement seen is thing, some us. the part. for as Mobile that mean unique the now very, we've not TikTok in competitor here is somewhat the rate about replace at not we're quite old different is is Stories think stuff base. the and of a near very for already not a

on before we that to make of -- it a that's engaging. are we it's was -- a is have too. to that competitor at that around the also we're to -- that so this, is kind that even But us compounding around, pretty going so overall, anything Reels, back question to there we -- before like where want to we asked rate, asked longer though that the that's quick it extremely is extremely And quickly, get question, compounding takes was

of why about engagement the we're future, here. this. but will I of think overall as there's optimistic a do that's work to lot And grow part a

the second were mitigation the part on Sheryl, then, And you front? the question of going to take

Yes.

challenges and areas Apple's said there mitigation, to iOS And are On which targeting X systems were talked rebuild performance machine to multiyear ads result it's leverage referenced. targeting. talked be we there measuring learning to as longer-term less our you last when audience part data. as enable find investing while quarter journey of iOS key changes: from using we're key reliance the right very on going within less effort, I effort changes. the reduce impacted a development a with advertisers measurement, X measurement, much to this and on So we've automation drive On as to effort. call we're performance. in the about were That's And about to optimization targeting, of a this

gap and to actually progress in happening we'll is what's believe that The made more. first to and that worry the also means more small they're last not is large with to quarter, getting. address that caution continue means progress since years make ahead. this to easier it businesses I getting they're it's advertisers campaigns harder that take real the continue want we ROI part, which and campaigns, that do And hurt On with part underreporting small this will we've underreporting Apple's here on longer, changes gap. the

challenge underneath The area delays. really -- is second measurement really are data the

other adjusting And basis. delayed ad this real-time platforms, we difficult, often holiday that's makes advertisers during during are not people and that shared As the And receive basis, what of on spending ads changes, part that decision-making, many us lot one and important basis. quarter. hourly but conversion and iOS a of daily spend a their a we on this monitoring the where on and holiday was less often an particularly with faced period, data really challenges even granular especially the we

Our Post of next America. from Justin with question is Bank

But should when about a think reason targeting get Mark, what lot short-form out content, could the you've the it thought a that get lot about platform? general friends from of And maybe think sure to about growth about your mean the issues? to be you does measurement the for couple. I'm there second October, a big on basis, A you content picture for Or the you're we of Facebook video as do lapping half, we and just from reaccelerating? actually challenges, effectively think of then just evolution the adding how Dave, it. in and worse thinking kind Facebook? of content September and revenue shifting a is to as

one. first the take can I

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Justin, it's Dave.

iOS some business the of last measurement seeing less of like which seriously going got we're on have impact the X provides it as what's landscape it's which I with iOS headwinds. relates your and of think the of to things to those measurement. like what things than And is made the from look second kind headwinds on: sort about started in really far question, XX, of On part significant coming year. are an sort and of But targeting changes targeting XX.X, incremental additional half headwinds the really we've more there, second

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where we're to regulatory use So in fix also XX restrict going But headwinds like the we're to that's biggest and impact headwinds lapping. purposes targeting as regions Europe. for it that more like further see continuing to iOS the from data relates of the

headwinds. see to continuing we're So

working to last didn't the mitigate in in be the have where same the we're the we half year. year of think big I those. period lapping first But biggest iOS will the effect XX headwinds

Our question from next Doug is JPMorgan. with Anmuth

would about Mark, then, deeper if I both Clearly, integration last could a comment drag have think, that spend product number that or process? curious you Reality in a and are quarter, become if pipeline revenue you just you on some about potentially Reels there's even curious talked where seen to you're in in willing we've Lab better and 'XX? Can Dave, the talk And more how integrated forward? into Facebook just going just loss on Instagram. greater

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in Labs and outlook. operating to We're can the be that product a we're and accelerated Reality Apps to metaverse. to of exactly No, out -- give number that's in into priorities Though I what's and drive of I for community expense And meaningfully messaging, 'XX, majority Family AI Mark in kind in that's segment, probably right. into XXXX. Doug, here. then, And of the investment support expenses priorities do headcount factored the ads, that's loss outlook, QX. XXXX and largely continue out: of our expect in expect X those of the providing expecting to laid some specifically on tech probably roles color to growth map expense segment. biggest product the contributor of think not the we Apps expense growth we guidance commerce, to increase That's we’re growth Reels, breaking Family incorporated the by But our

line Mark of Mahaney is next with Our from ISI. question the Evercore

ask I want X to questions, please.

have on in those billion -- up was a think Dave, within concerns. feature and the of political a to with ESG of came think number? arguably investment addressing ability some policy series do few that been I other Where been of steps and you headwind, of Take we've to kind some Could there's just First, have introduction the you maybe little a to that put you community? taken, color $XX you Could reducing And Break the out just then, do think in heard been of mentioned related the of targeting, a ESG. I Instagram, you changes. that you that address to policy terms as these of to the there are this that change, give some how Apple things

the what the impact overall iOS Mark, changes we're just -- on estimating revenue Yes, forecast of think cumulative headwind, is to the we XXXX XXXX where is. our

the if So that's ranges estimate. across to changes It's you of We've of an got on sort of order seeing can't our we're be the kind business. We aggregate precise this. the iOS, on impact magnitude. that

think continue specific the substantial it's to hard work our the those substantial front. and And users. effective make to to working ads -- obviously, mitigate I we're have ESG we So for headwind through. a and impacts on way relevant anything don't

that. on you can't offline on comment probably follow I I can So up that. with

Truist Youssef from is Securities. question with Squali next Our

Mark, the gradually can opened back on growth something color you kind that apps. and constituency. refocusing up something last Is kind of going the the other early, by and to signaled on of then once these Instagram think to of you. about may another seeing we of And I'm even curious interoperability we're it is? for on and goal is share but evolve? you on your mesh be earnings maybe audiences the in where only like he Or of age VR you built I that sufficiently apps when that with probably mean growth think maybe the AR focus of know engagement see you stated I matter on start think whenever that gets then call, maybe and question could groups? younger any let's users

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user is I seeing an overall growth audiences. think particularly strong said younger we're about from impact what of we competition, with kind certainly

So globally. that's kind and we're of that true, seeing

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that unique So quarter elements that's another some of of kind the on front.

can I all it avatar make well not goal before the we'll and beginning the kind Sure. some and well. your there's of as screens some immersive I our avatars show And remarks showing we've mean expand and the in both photorealistic further. up you making in that but demos how commented and at about aspects also works terms Horizon in Messenger different for of talked my so avatars increasingly and to of just yourself up, and it across when around on eventually, Facebook to VR shown apps in as I that And I think Instagram and XD we're to XXXX expressive that about in Quest, can metaverse show

well. worlds different kind Something as of you Facebook Instagram from could into potentially jump those or or apps

there. So seeing stuff some I is that you're will of already -- think

course the come of Some over this year. of it will

something the course, a message on ability for across Of apps working is to been that while. we've

Messenger You over well. and do out can that that more roll time there's as across and that we'll already there Instagram

family. think I see the are stuff work to across this So seamlessly you going

is with from question John Blackledge next Cowen. Our

Mark. Facebook? color further Two questions. And And slowing How since for any advertisers it changing on how budget versus of are YouTube is iOS other video on differentiated Sheryl, changes? the short-form one Reels and adoption for ad Maybe spend SMB TikTok, has one first services? SMBs new Shorts

Sure.

start can with So I Reels.

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even or feed the you a Pinterest of what have would are on you might example, a on kind Facebook discussions format. for from Twitter in So or that do Instagram, given in similar different relatively

communities some across with where based And create your well. So to different a content different degree, who's creator dynamic then different number, the friends across have chooses if I as social you'll on there. and think, their to the there's friends discussions even services these a reshare

different So Instagram, across seeing But this what stuff seeing TikTok and different all sure quickly. across is somewhat we're and you Reels see Facebook that growing I'm incredibly too. is

a that feeds immersive what definitely, so that that of the step virtual format I visual and mobile content that online being is just that's This have to next this reflected have the became of years more but an seen of the the kind way, engagement from -- phones from our this content of I it even spend interact short-form to to seeing company, got basically, why long-term in text It's more we're just with it's it people reality is And -- watching the consume appetite the augmented it's is to friend are and networks having in partially, share the or so the primary is commenting been lot a reality fun want at it on good, next really kind going gone and trend more is people and think by or that in after the until we've think now like is settle cameras we've and we primary really and online that this sending that running it from and other and So the whether the get on XX than we're in know apps that seeing natural there's starting TikTok thing. -- to going why we and around been there. the people photos to week, share success early be also and we're themselves. number it's times commented of to this XXXXs beginning exactly step what and thing, people where video gotten amount have over this that a video engaging. lot taking we But -- time far. had. on general, end, invested with I've And hard where the primary a time messaging becoming way video apps the

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from Walmsley is Lloyd question with next Our UBS.

I... Sorry,

I had on SMB. a we think follow-up

SMBs.

more looking said, So progress because with on more definitely which advertisers about we've with iOS they're for before, good changes as a we that the we've needs we made SMB SMBs. the across board, SMBs. for personalized a the SMBs. much harder The less. larger question are audience made talked the for have ads targeted that buy clients the really but and gap, It's the more very than the ad personalize measurement larger they're it's hurt to I business, case to also small important you're And able the progress

definitely impact we SMBs more long We do strong our over the an of has for for that SMBs. using believe we and system. that ad we're seeing feel, have benefits this run, So

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UBS. is SPXXXXXXXXX with question next our from And Lloyd Walmsley

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the I question. can Reels take

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products that that specific help us. have can we So people adopt

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last time have for X Great. Operator, question. we

good. Very

will last with be of from Sandler Our question Barclays. line the Ross

yet, coming year-on-year. come X a the And I of was Dave, the you know up you of your that question had segment margin. guess, came Apps ad down Family that folks a who that 'XX. but I on as business expense bit kind is growth surprise of about for points a thought forecasted margins. hasn't But it stable This in think downtick I fairly had at for some

has headwinds And build thoughts any share catalyze that like other around that the just how items? related other to short-form evolved driving like YouTube as that you video, shift? So or then to lumpy revenue on does? thinking experiencing Any color that, what's out that? on Is any your you're Or things rev paying more the that?

Ross. Yes,

a I a G&A see think legal-related in be amount was there. pretty mean, part will QX, terms of Those related factor tend lumpy, expenses. to so of lumpy a that in that so up is there you I substantial was to items,

of XXXX I an I'd to investments made relates think, heavily back general, Apps the in where being I investing on Family the we're in making and Family AI for making There's to of we're that's it as and segment. side CapEx Reels, come commentary Apps margin, that that that that area on and we're messaging, of primarily business, apps geared commerce ads. a priorities -- outlined, family across learning machine towards big including Mark investment the the the in so

to for expense short there's we're will What grow form, we profile also payments I'm the partners, a as that's sorry, part in into question? So -- lot guidance that we reflected of making terms of second as the so that was, Oh, yes, that as investments there. clearly of grow expenses. the play

time, outlook. into the be of side on the as that investment and Reels impact factored that's the an over will part making we're So is well, that XXXX and

your time, everybody again. appreciate with for you us we joining look forward Thanks We today. you. and Thank speaking to to

this us. And concludes joining Thank for today's you conference call.

You lines. may your now disconnect