Meta Platforms (META) 29 Jul 222022 Q2 Earnings call transcript

Good afternoon. My name is France, and I will be your conference operator today. At this time, I would like to welcome everyone to the Meta's second quarter earnings conference call. [Operator Instructions] This call will be recorded. Thank you very much. Ms. President Relations, Vice may Meta's Crawford, of you Investor begin. Deborah

to Good Second afternoon, you. Meta and Call. Thank Conference welcome Platform's Earnings Quarter XXXX

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

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

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

Thanks everyone. for Hey, right. All today. joining

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driving today longer-term The second the then the the wave of first AI. wave And of metaverse. our business is emergence is

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think there improvements that So be like are that to going this to we're able to I many make. continue

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who we've team. this Wehner also Chief for forward done her a overseeing that earnings will many for I and different I've And business overstate of deserved. a our to really had they're in our kept this our it Dave And many business, many I transitioning It's expanded into really same the call, around great how new our as we're in for will as news period time, this, in so also Strategy looking CFO, to to and him exciting our crushing we giving leaders more last talented do expanding that I more be to be And Meta's she some incredibly continuing and her ways. process starting be CFO. Susan is think carrying over big addition new job our corporate shared this They're an Chief roles Susan executive to work the me on to just All hand work our new Sheryl been year. she'll that are who Meta, is I'm and and and they and runs and going strategy team, that, parts it, people community want thank for transition role transition to I've to is I of on on a we Officer, as And impact development the financial teams. with small I'm role for the excellent so type responsibility on of that leadership keep role. Javier With new over our planning and important this later the hard well has has something Dave are Sheryl for great be to businesses leadership done for our has it promoting and Li world. to forward this hand so what Officer that do it She of before At years. also an and working an closely our personally. years. Financial already Marne Now think worked for plays an what right. everything going to with Sheryl. of part afternoon talented

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Your I on support has seat And to and to the that resilient Board, forward my are. in Meta's Meta's business look innovative years now the we helped row us where be a to serve front continuing Dave. to have ahead. amazing success I'll colleague, here's

Sheryl, everyone. afternoon, Thanks, and good

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

users. stats hear time with increase cetera. XX% changes among spent the overall a The around the about Mark, across around encouraging and Reels of you in first AI are time and and spent Reels, lot engagement It's Facebook making guys Instagram. one et to

go Reels, are those way, the studying that point, see as slowing some growth. Understanding incremental? headcount a think we are declines the Mark, half, using you time about you're points at these users among on second headcount kind for decline. your one about be in changes 'XX Said we're in another being As but to That's users Should back seeing headcount company? proving you And of year all one. headcount expecting the to those total grow? of are more the first to which a

spent. plan of in Reels we're There on more Mark impact headcount and for and is to of of is -- is getting front that take those growth we're we surfaces headcount we growth a any some that's then engagement the our XXXX. obviously, net that Stories, as But as But XXXX. think coming part it a our not but additive get rates, time reducing color on Reels. time on maintaining been said, headcount we and positive. spent. markers well into on we're putting Brian, is And like more Yes. users. have go impact is can strategy I engagement overall, focused to can cannibalistic be of out if lot of discipline as growth, does would we're reels to both And Feed like. add beneficial explicit then to yet it and he But Mark any incrementally out

guidance to So the the get Brian. setting we'll explicit be that giving as more closer budget, on that, we of and

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

you Any headwinds, usage quick headwinds? there just that didn't then you on any guidance. thoughts quarter Reel on mention the be the dollars on TikTok. contemplated increases? second, could XQ of competitive for lower or And XQ versus moving Are CPMs? pressure advertisers seeing pull question over a Is In there in because maybe revenue

first the take competitive both have We advertisers opportunities options. there I'll endless broad question. advertising advertise and online in to almost really are where market, a offline exist and

continual measure we know continue and be to ROI deliver we to forward. our on do great we focused in And and we'll going why able calls talk earn have these results. improvements we're continue to and the that's to about product that share So quarter-over-quarter

question. let got that Justin, I me make And sure

engagement excited is Reels. is Mark shifting to run overall really about pressure because billion, on QX were of It that the the business. you an we Reels mentioned because QX just is usage. but asking think Reels I that crossed on overall on and are headwind it rate $X

is but grows. in a will the optimistic weakness broad-based general, business a most haven't QX one, this we, believe of We quantified across course, of we're run headwind on seeing that's as that be there the sort happening that XXXX. macro long But but on seeing run. that we're not in tailwind long the of the Reels revenue is where overwhelmingly that, In specifically in it can We're pressure be on the verticals. a

is next Eric Goldman Sachs. Sheridan Our with question from

on be That of in both up segments easier comps areas the and the inside as Justin's impact the relative bit. to clearly the facing I the the Family investment we which be structure of the Is investments little reexamining easier of out macro, the about between cost of company margin following way question broadening just maybe think two, Reality side. One, company if honing of of be one. number X business? mix would you'll Apps is loss on and yet cost a on in and QX? the could. might unpack terms IDFA the from Because number some in of is focus And structure you should Labs year Two, and that or hone any there and some impact versus an outrunning was weaken the think and lapping How just sort of continues that of what QX a growth comp rate cycle the in of top of ago, there we're QX. IDFA on implied to about

in bit QX little unpacking headwinds of So a to some versus maybe would the helpful. QX be tailwinds

And add. can I take again, color, has if Eric, Yes, they can anybody those.

the broad-based, say company would the really on key is focusing that investments I focus, investment priorities. the making we're the On

that behind those effort key clearly one have is the we Labs. Now Metaverse of Reality priorities and the

have the When entire point. which of be QX remains operating company. posture But going in you're investment. it increasing we do comps, looking are important I think across area an So the to we making at discipline plan to an the

back As do by Apple our complete QX growth which largely of the rates get year, QX the benefit half and was of we this year-over-year rollout, iOS we year. -- from in last lapping happened into headed the

offset environment the challenges benefit headwind. on seeing But the So there. macro signals the we're we're getting being and comps favorable the of more by that is

hard-to-unpack Now factors. just course, first there some challenging but of at the And That compounding for environment generally there's order, seeing advertising. is several digital of are course, we're factors.

order some basis we which economic still some XX Of is facing we're a to of like the advertisers offsetting a e-commerce. overall just course, There signals that is be iOS that's second spend. last think are a otherwise And reflected sectors then that may year. from environment are important uncertainty But there's affecting the getting the periods be in it's the that would finally, on the first that in the just from and us, fact benefit challenges COVID the rollout was headwinds benefit in the lapping markets. that order, macro lapping we least at there the on largely

with from Our next question is Mark Shmulik Bernstein.

Two questions, may. I if

free went going a appreciated. And I've the much cash beyond along I the cadence, share quarter. engine of color hesitancy the way can certainly some what about any back remark, and you it any strategy is users' the But a this of right right discovery there the platform of think other on seems more certainly way bit pivot, versus change that Instagram to big to then about also kind the trend of forward? kind that? platforms sharing, effect kind noticed platform to little with for buybacks secondly, and here on first kind the changes. understand buyback would on differentiate would on discovery of flywheel buyback down And to flow Facebook think The the know be Is generation. any

I'll want and then take take first? product go you to question? buybacks want You to Do the

I can first. do buybacks

our it thanks, we to Obviously, So program. of comes Mark. a at buyback look lot when factors

-- program we a expect continue of then We are amount going part to our buybacks still capital substantial in allocation the buyback as we have forward. have to remaining strategy and

no We'll change So announce opportunities to there. looking be over real to in time. continue return capital posture at

the a One the social signal. going important are continue engine pieces of very few important. following an is important And And you people on different the is is are I content being here. there from context that thing, to know people Yes. Great. think discovery obviously,

types the exist. years interested were things ago, back directly you what XX a signal out go than of what other you of wasn't If to basically It you really didn't good AI in, follow, enough. figure having

AI to you're with you followed in interested that or way. in. of was it sort following might be who topic. to following And that content corpus or you're friends who whole So more you're a you're in just that might able going even you're interested that topics unlocks a be anyone accounts not that be bigger Whereas in from And not that is of amazing identify that things was this unique now signal. increasingly,

So what we do the social of always parts remain. will

think differentiated and what of very part we're be that, of important I that kind a will doing.

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next Our Doug JPMorgan. question is from Anmuth with

next of Dave, a perhaps macro and for even are year talk into platform if able return to and building ads level And slows for [dial was Sheryl, One just and advertising. out expense in could I implementing think about what you targeting to Sheryl hoping beyond one other from if inning levels or flattens ever you with for prepared to reasons, growth be and the to down] less And profitability? to to time, you'll overall more data preserve revenue over down growth before you Dave. even the margins and do for you more your the similar in, than expect do you're measurement changes? that

take first. can I the

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just see the things I that wanted to of in the going some on sort premise point question, in rate Doug, we and of like. And first hikes cyclical effects. to challenges that the It's of the often know macroeconomic hit of which just is kind we to continue lots challenges. including do broader if historically, macroeconomic are direction, there's linked economy

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to we'll planning go monitor cycles. into continue and So as we future that budget

is Nathanson with question Michael next MoffettNathanson. from Our

Mark. one in I'm Stories that for two, this faster position and interested for Sheryl than grew have Sheryl, did. juxtaposition I one maybe Reels

billion. same monetize. you're that time, You saying it's reached a Yet harder the to $X at business

faster the you to building terms advertisers, you think to And one with I what social that from is previous Mark, earlier why billions you a people, AI of and of would you're graph content digital, they questions friends. And things The think Do your built? the -- points, a high advantages then is Facebook. network the think of better entry, the moat, what those you So solve before, was Reels? the are at in even adoption you move drove is just do to one of talk those was and -- money to effects need barrier a faster? business how about moat, sticking now order of all in had going what are for my argue, So than to the pretty just given the was which when families we to social questions. better the

use integrate the job take think, the then do into On to we playbook very a have that Reels love I'll which can products a match consumer those where consumers ad So Reels, so one. they good we, formats building I and nicely products experience. building

faster create need think know I We of advertisers know really part say, the photos, to content. better there are the know video. better at make challenges. than static getting at measurable ads the that, Reels need to for we we that formats. them it I are than of better that going give we've at still at So adoption we static from next get to some and they continue businesses are and than at need ad create do learned forward. you Stories is to better to We is We we we'll are and Small we tools, this. how easy harder selling gotten Video do that think as photos photos. But product, to

them a is new this that use. help we So have format to

tools I working. that of a think have we number are

We really as those the create easily idea ads, development. and so really is improving Reels keep they them this. test of have in to tools we iterate help do But businesses a easily number can

but got of work So I think some we've promising us. ahead it's very hard

for And don't have you in a from thing So now, more which sustainable social from been been terms to than right? people the for advantages, building graph, really terms that's able Yes. that, of cited think the competitive decade phones get I right, that before, of us. in

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AI, deep back riding. really company not I the every I are dorm just room principles going technologies. can Facebook code you touching want But do advantage. that, I make place, mean when we're going better, in build But so and recommendation and Instagram apply basically my how it's long-term to why that's to These think week. of be shipping technology of same It's make the going ahead. We like is about we to better of yes, to which opening we're have that's that big systems, to think people's stay some these remarks, in terms if for a make as And It's in the in better. lives talked building things. was the I billions maps I this and sustainable AI ads do I of one still road think a waves better. multiyear going are

think underlying that. see good to execute the big truth. bunch we're I a to for certainly that's well, starting we it's our of -- business, think It's on a results I I of factor but on kind think that need and

Our is Securities. next Squali Truist with question Youssef from

$X a think of is Reels follow-up and run you far behind you mentioned on versus Just, Stories of commentary. ahead it's now? versus Stories I monetization maybe tracking the Reels thank when Instagram back, rate But I guess, billion earlier just stepping how Instagram launched. for kind that right already were

is several Stories parity matter with how agencies to accomplishing Just important long XXXX? or And in how of because of metaverse? Within, your a trying to today it the seemingly to how announced a before one maybe Mark, did quarters I sense of several acquisition to we back Feed a Is quickly years? you get just to vision app. small of regulatory the your ask VR And M&A get parity. a block of lawsuit pretty And News get fitness

Yes.

I'll Youssef, those. take

on, really spent least that Stories rolling basis, and XXXX. in, with year a got of until Feed. think in in on monetization earnest It went was basis to really developed on time the that Reels we this out in terms markets, it journey we, the a parity wasn't I Stories monetization So started at

a was multiyear journey. So it

in early very we're think Reels. still journey multiyear I that with

on trajectory proud So basis, of able in very monetization. we've gotten that Stories. we're a we'll early the have see. rate with of gap job And to run though to where of closing great do still we're a We're

that a I think good the to we're least there's different always an ways at on make our unique but that ability features towards journey format gap. on closing in exact get analogy imperfect, each optimistic

there’s In look forward. and strategy, acquisitions we'll going component of terms a M&A to at is definitely continue of our M&A --

the VR of would a we space acquisition, users would to be VR that for the to specific acquisition the would terms newsroom, in the you developers. announcement Within make it expand FTC In the attract of about to believe competition Within existing block refer looking but new and I statement our good and and the productive ecosystem for and more new

So we position on odds that. definitely FTC's take with the

next Brent Thill Jefferies. Our from question is with

sense comparing -- you just longer all this? do Is Is Dave, of have downturns, what in downturn right about think you in is to duration seeing there shallower? about in duration you're think now? now this you asking, past any that more many how this it you are we're is and there the a feel when

one think these of The and during in coincide Thanks, lot downturn of, the really now. behavior that reversion that of to cyclical offline I sort offline factors strong for what prize of against some get also I exacerbates think, advertising online make a very we the you -- is pandemic reversion there's sort finance-driven to asking One impact unique right of are more in the the the with question. periods with the just sort downturn is a it's behavior. -- for comping place Brent, that we're

on because of of comps. ecosystem kind some of the the us, So got that. I effects but not going things online seen, of exacerbate And just unique some those obviously, cyclical sort experience we've in you've that tough think others do

economists I think out. is continued the the our itself in play and prognosticating factored that that how obviously, difficult the may terms But of on for into better I leave cycle than QX environment duration, to guidance. understand I'll

is with Barclays. Sandler from Ross Our next question

putting it you folks share and already but doubting better. the XQ a a advantage, kind which out post-IDFA the gaining looking look and medium numbers, other obviously this like XQ we asked the where some Great. also It's seemingly but little have previous others had the data you gained at think times in not I side. But could this something you've they're on versus you term, on talk up. about IDFA numbers if those of big back have at are But flesh that Amazon, enjoy of Reels advantage on and that there, TikTok gaining that bit companies. call And competitive advantage revenue maybe market compared competitive guide the call Google, likes may you to anymore

are you more back? So think happen? on that that term that this you products competitive this specific revenue that that side claw maybe pumped will can advantage a the might that you're like working on, XXXX drive either up that could we flesh kind and when long is about out event or of Is

Ross. Thanks, Yes.

in think there. I lot a there's

on now, engagement that kind least, grow the really side. it think and components outlined Reels of on some to revenue focused on, revenue, So over but that to I areas a tailwind think we're monetization about is continuing grow that we're Mark right Reels and of the why time. just can address? excited don't obviously, then at I take I, that on both Sheryl of the we

advertise going we on, opportunities very of them interesting create and we're better that's what there. venue And also can us and some for that's we and explore some real our different talked excited about to investing products ads for and in So to a Sheryl the think our about make clients products time. there. AI do to We're over

So of those examples will of will that, that position think a that us we couple are -- well. things

it the different COVID like current climate iOS think in different of and mixes relates or I things on there's the the related businesses companies not at are a changes. companies affected dynamics, the vertical going As just differently or to kind to headwinds competitive also things affect are lockdown. of significantly economic Different of all There's the that by as industry. how lot not affected different by

lot consumers. a best products we're got great reach for businesses build those the want products users building engaged going for our but on, advertising to well as to you've as So who ability to be confident in to continue

last question. one for time Operator, we have

Evercore be last Our will question Mahaney ISI. from with Mark

things. just A to Sheryl, and of you. Sheryl, forward, particularly luck going want to wish and wanted congratulate couple you Dave of best

feel the and times a AI damn then, Two advantages moderation all Any I this in content so think click-to-message update you on you couple And over last thoughts America Mark, be impressive, you done on you've how couple America about but and in there? of in that going One issues? North you've it that as in strong, particularly AI. certain as AI. within the mentioned is of XX breakthroughs just Latin pretty Sheryl, for the Is like and markets it the some the $X couple it's Any the Do in a terms business billion done tackling that's talked over different Western can of to you to revenue, there opportunity best make billion calls, think, World. as Rest it congratulations. Europe? on I as $XXX of of about made things Wish is or strong good, forwards. talked years, others? are of billion marketing just a culturally those questions. opportunity,

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optimistic pretty about yes, Sheryl? All that So right. overall.

one because fastest-growing end for you a also ad excited our because, because be that thank take will of to and on Mark, digits. format. to business having a of part so and that's it's double for think a for you And it's and thank exactly the I note this It's then last of of, we're with follows is those Click-to-Messaging I be ads able growing we've us, the business already the that part question first this like being happen engagement consumer businesses. businesses words, about. kind our I'd can had multibillion-dollar again, playbook at behavior work it building one consumer

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seen So it, already the using we happening. start think lot think that's over And world. behavior it, that already increasingly other about consumers you're to we Europe continue that behavior well. And when we're the then America a as businesses I know using believers will grow And you are behavior that, and it. we've we all know in of But of parts in are right deep seeing world. North that that

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heavily. investing we're so And

and can Instagram Facebook, message Messenger a Direct. to Instagram WhatsApp, Instagram, Facebook You business from feed from Messenger, Stories

in click-to-messaging real have used account business You able we XX% can website were their case X.Xx had qualified more then they been ads the that return a small per have attribute demand. it more would they into study. that Creative, see real even the they're resulted conversions. that with generation. And doesn't it a ads, take engagement normal compared lead. And drive the to how cost RoamHowl many those important, it a measure platform. been for is measurable, And consultancy. They Click-to-Messenger this end to driving entry which ads to And same, lead And and if points I'll fact and our was the leads. to lower even directly

optimistic am area hugely very of about and this are is and we world. I So in the will work business, everywhere it our already convinced working

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

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

lines. your disconnect now may You