Meta Platforms (META) 1 Feb 232022 Q4 Earnings call transcript

Good afternoon. My name is Dave 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 2022 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 fourth afternoon you. Meta and call. Thank conference welcome Platform’s earnings quarter XXXX

CEO; Q&A the call to are will join Javier today our Susan and COO, and for and Zuckerberg, the Olivan, on me CFO. Susan also Joining is Mark Li, portion. discuss Mark results

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

call, we may of release non-GAAP reconciliation an press A measures release. presentation this to investor available on press at GAAP are website investor.fb.com. both accompanying non-GAAP earnings measures. included GAAP financial is and and The our in present today’s During

call And the I’d now, like to over Mark. to turn

I the main on trends think that last everyone this we Instagram keep setting WhatsApp Alright. and results I Apps. almost The having I that’s We long there I for efficiency. thought it’s Facebook, using ended think and Facebook, as case people of we we than look more is deliver number our on better monthly reached is Family X.X been. priorities And said across but X joining and to commentary suggests. and year, than On it highest daily our thanks good a billion the as Hey, billion actives us today. pushing product ourselves quarter challenging of XXXX ever even year out of better daily people billion now. now X most made up progress our reached And the more monthly.

while before I closed difficult XXXX, year want management Year priorities, teams. is for of my of said CapEx. last clearly restructuring steps, our to additional theme which I since infrastructure Now how and was focus on We the efficiency did our some layoffs roadmap we on with beginning like not that the less end. the with our into to we on this team Efficiency. have And spending taken and getting product working then, discuss And this, our deliver some when some

productive. structure more are some removing working on be of make to org middle faster help as tools flattening our management we engineers well Next, as and to AI deploying our layers decisions

more about As how be part But of longer focus to going of this, be priorities. execute my efficiency projects cutting we crucial. as that or proactive is aren’t performing are increasing the top no on our we main may

this sustained and way this year become and speed for can our to if stronger that And think there more build theme profitable. outperforms management the even stay on on very think am build business I to to going both us it’s structure. a this focused doing be cost I a will better more because our a over products. that, since some in goals, I that technology by productivity, think of helps So better improve period, we we that going company And is I company. our do make will us a working our

investing compounding aggressively what delivering expectation better meeting also we outlined delivering that year I results future recently financial am growth time, reported the last in Now even I technology. and of at the have on while than same focused on earnings

next, give updates And priority our on want I to some areas.

priorities today term, over our AI roadmap haven’t major are two waves The driving longer last since the the year. metaverse. and technological changed Our

solely so So faster shifting more first, apps our progress something video the and content of But across let’s organized are to people showing here. and systems. growing just format, people am you months. services since accounts AI is which And our of proud every have over our doubled in talk Facebook last social about especially than focused more follow relevant increasingly and our this component AI year, around the has Facebook X more resharing Reels both and are discovery on has makes grown being short-form while than content covers I recommended we engine. from Reels by even that plays really And doubled is Instagram quickly. unique. the Instagram Reels on last

is The generated that that’s efficiency revenue minute continue we on to next monetization focused efficiency per Reels is much Reels Feed. than bottleneck Reels less improving are or the watched. Currently, monetization growing the of of

people though see grows, that to to system though. overall, from So time Reels takes actually we the even money. adds Reels more lose it more But want it and engagement away some the Feed

improving way we So show the monetization Reels key efficiencies to can more that amounts increasing unlocking our money. that without is of losing

in past We are Facebook here monetization and efficiency doubled X making progress our on the has months.

neutral keeping on able maybe after our last by that, saw while this are has And then year next are the the that in the in resulted with revenue year cost AI to Reels should the still we profitably on end decline early be we in before. more spend. up In XX% In per ad or to acquisition, headwind, the returns advertisers with And year. of to invest broader higher than business, conversions demand grow this continuing of combined terms are see. efforts in roughly we our we and over In track we seeing the here. ads payoff quarter, be

pillar. next is the of as which this other be And is too. Online way in this. our the doing pillars hope of paid the ads, of few the are about two We is the click-to-message Instagram excited Messaging And to business. One messaging piece Business now billion first run-rate. opportunity Messaging, $XX next monetization and bring continue to with years, we Facebook the

We we directly onboard they chat. are Business here, but and sell to questions the to updates WhatsApp continue and answer where can Platform more earlier in businesses customer

So they X for us on people started messages Air more France often example, has information, WhatsApp using tell other share And to and than better XX flight WhatsApp and other other businesses their results that information, open and get passes countries channels. boarding in languages.

foundation leader and we of exciting our is the to in that apps. And it’s our business. think ads Generative AI transformations extremely it’s also AI, our enable going engine discovery an new products additional new and so many And leading Meta build in our one different for in addition to area to AI. many in generative is to research AI with applications. recommendation goals of our work become on a my

Metaverse. at first The talk I Quest setting about is standard last the end last we mean, mainstream the proud device. with We Pro shipped I mixed industry really for want to year. of It’s Reality system. the Meta am it. reality the are I that area of our the

value better physical VR world around immersion possible on are today reason is on And of that still As of the the you. building being MR deliver and experience to we platforms why can experiences, what’s is you social in presence these the while focused than always, phones. the grounded

establish going modeling, and it’s designers some relatively launch new to development; and few technology architects for which all create the headset, lot already years. are but baseline to impressive will And going We next-generation I like next that of to the Later molecules is experiences of year, a as lot for build for of going this headsets developers new, Nanome out drug Meta as seeing our think I going interiors; Reality well. MR as Arkio we AR course, feature to great is games. are and over course, glasses this expect for The a XD forward eventually, and well. ecosystem this consumer grow

over Beyond ecosystem that There more VR now our devices growing. $X apps VR revenue. MR, million on made in have the than XXX broader are continues

of the We avatars And in are Reality the just Labs WhatsApp our WhatsApp profile that, an example those, how Family launched going We as are to interesting XXX the last of on visions progress of is in was using quarter with software about million have X their make more and Metaverse and X avatars come most app. future also avatar continuing photo. Apps that their headsets than I created people investment run computing already of thought and them. avatars. though even glasses, towards because together, platforms, to

experience develops, up the their on people our start As apps. are Metaverse and identities across digital the the most going building then time technology to phones first for

Alright.

priorities and generative as you increasingly to the these on journey work all as improving the of so from as grateful our important performance. focused better for focused I execute perspective, are company being on areas and well those And platforms while So we engine, including for messaging us. future always, areas efficiency we operating streamline your a and are business ads, Metaverse. our can build to to all discovery our teams with business possible and am continuing this these on, we and the on of for the And an are company AI, AI

to Susan. And over now

Thanks, Mark everyone. afternoon and good

comparisons unless with year-over-year on Let’s All consolidated begin a basis, are noted. results. our otherwise

remained a billion, higher. $XX.X last basis. X% constant total year. on were foreign been Had year, billion down revenue of up compared billion, rates was QX expenses up XX% with constant total QX revenue total would QX or $X approximately X% have $XX.X last exchange to currency year-over-year

driven G&A XX%, specific growth Operating for as costs. costs center the the R&D and were largest of terms infrastructure-related write-down and impairments contributors decreased increased growth mostly sales to marketing well of In all expense items, a lines. cost data XX%, increased revenue X%. three of X%, in lease by increased line certain employee-related as and assets

legal-related offset and marketing partially in marketing However, in than offset expenses. sales was more fully spend a by G&A in growth growth and was lower decrease by

XX,XXX We ended remained with to by applicable the December which announced due previously a as the impacted who includes fourth of majority layoffs XX,XXX requirements. approximately employees payroll XX of our quarter employees, legal substantial on over

XXXX. majority our end impacted captured We headcount expect quarter figures reported will of of be vast no employees the in the the the of first longer by

representing Fourth income quarter billion, XX% operating a $X.X was operating margin.

including principal was in servers, $X.X for data tax leases, on or and rate $X.X Our billion, payments by finance infrastructure. Capital XX%. were billion share. investments expenditures, network driven Net $X.XX centers the per income quarter was

$XX.X we today, stock announced December And repurchases our a the authorization prior authorization. billion XX. billion repurchase share We of and in remaining and fourth year total $X.X on our A stock, cash Free cash common we flow $X.X repurchased with bringing our ended billion $XX.X year the of billion the marketable billion Class In we securities. $XX.X in was $XX full our had quarter, for billion. to increase as

I segment. Moving now results. Family our to our of segment Apps begin will with

engagement community year. of monthly the of represented approximately grow X.XX of XX% continues first reached on for and X on million across compared XX daily users X% least that grow. approximately users X.XX Apps grew to MAUs or X% basis. in in used last active our or X.XX up XX approximately to active least a of at to and remains time million basis the last Our Facebook monthly strong. used DAUs compared Family billion Apps that to billion December, in a billion the December. Family December daily by one billion continues We year. people Facebook globally people at one estimate We

Family billion, uncertain $XX.X year-over-year which in but financial weak landscape. X%, The of and our continues QX basis. we both under the pressure relatively billion, verticals total demand from shares smaller was by X% Family constant negative revenue. remained revenue revenue technology down our decline Apps volatile on believe currency QX a ad were up $XX.X X% QX, down expectations, services be to revenue with the Consistent the of QX largest to of but year-over-year. was advertising impacted have contributors and macroeconomic Apps

growth slowed both relatively in year-over-year in The in negative though contributors last are largest CPG, travel compared positive online verticals, quarter. smaller commerce share. online of pace verticals QX the healthcare verticals, has were to Growth absolute decline and the remained largest to though our in year-over-year commerce and

served strong monetizing growth geography while was across of remained and our Foreign by revenue services growth increased XX% price and X%. primarily Impression and Asia-Pacific ad per and advertising in the number pricing World advertiser North of and of significant headwind driven lower was average strongest driven was surfaces currency lower impressions from America World especially X% XX%. international a The the year-over-year by demand XX% was currency user in impression growth, the to depreciation. and QX, revenue primarily ad flat, a at regions. total in decline On Asia-Pacific foreign Rest Europe decreased regions, In all growth basis, declined respectively. regions. ad Rest

we our make overall While we are remains factors, that these ads driving under continued believe to and and advertisers. pricing conversions targeting for pressure more have from measurement improvements better to returns

was other decline platform revenue XX%, with strong revenue our a Family of WhatsApp in million $XXX growth QX, Apps’ items. line in business from by partially offset other business messaging up

sales. of continue costs. primarily majority the and our and XX% towards to Reality Family $XX.X In to of our XX% XX% of due direct $X expenses. investments X operating Labs overall QX was were development billion. XX% Labs of costs restructuring-related billion, QX, expenses expenses Family due our up was of expenses and Family billion, the a segment, Family down to Apps. primarily in employee-related million, operating our revenue expenses. Apps Within margin. We of restructuring-related $XX.X due Reality Quest Apps’ representing XX% loss Labs income Reality to $X.X of were was operation infrastructure-related lower Apps’ growth billion, $XXX representing were up operating expenses

levers like people and gives demand. improving that get outlook, Growing scaling growing a of and profitability primary to on more our operational efficiency. supply work to growing and the we to turning are to I’d our grow ways. Before businesses to focused There of monetization: supply ad monetization increasing opportunities are in couple front enabling in discuss by two

use who apps. experiences we foremost, and for people focused building the our First engaging on remain

seeing we into XXXX coming as strong to with recommendations we are to foundation Reels engagement feeds. content in discover are continues scale as a in-feed people and contribute We help new their

in making experiences to We these will invest best-in-class. continue

monetization ads growing side that the term, of those The of have a from the nearer monetizing ramping today. lower comes more primary level a apps, In other focus. remains Reels supply surfaces including our effectively within

revenue Over messaging the monetization advertiser here Instagram while longer term, effort our scaling is big see Facebook is continuing and to demand and focus advertiser also Growing drive performance. other platforms. opportunities around we continue the to improving from contributions a

good advertiser as broader are We to are have run uncertainty see the a to AI are still and we from signals While enable the opportunities and weighing add advertisers continue with our for of to landscape and making our in progress automation near-term, improve lot seeing medium-term, ads in their gains we performance with and already continued and demand the macro near for ranking for increased made. contending our the on campaigns it investments and on measurement to improvements powering we work performance. roadmap systems this we optimize easier make them to use investments

click-to-WhatsApp exclusively advertisers of to newer continue scale our as is scale in formats platform, and and click-to-message, to ads. like products opportunity demand ads incremental using like on further half lead opportunity continue click-to-messaging have see Another further our we we bringing and with investing We ads quickly ads. they Click-to-message growing conversions we shop onsite platform. shop ads grow are click-to-message believe over to onto through ads are

long-term, in heavily privacy-enhancing technologies advertisers will the building deploy create easier make it to and to continue develop deliver are engaging relevant tools Over more and and ads. new we AI investing and for that

to non-headcount-related decision to certain to the now in expenses. efficiently. XXXX and QX, we significant more projects In our layoff difficult we made took deprioritizing Moving while operate efficiency work, actions curtailing employees

and workloads. that to architecture, believe optionality We office non-AI have both to assets. us physical applied the will future a centers flexible identified same scrutiny our cost and We support streamlined be and provides more have to which AI consolidate we new we facilities to efficient our more data opportunities our

In in be efforts as QX, this areas $X.X restructuring billion impairments these connection of like total in recorded with additional XXXX costs and expect all there of work. in to we we some facilities continue costs office

this As said, and just Mark in focused beginning actions remain the our efforts, these on has of are keenly efficiency XXXX. we

deprioritize productivity to company the the costs reduce across ROI faster, across move working work, are We business. and lower increase

company-wide this, scrutinizing layers. will our organization As us productive efficiency that on management hiring forward. be an focus projects our going I’m actively to carefully even reevaluating more reducing confident we part of needs, position are and

total in the $XX.X be Turning expect now outlook, billion. to $XX XXXX the we revenue billion to range revenue to first of quarter

will approximately first assumes revenue the rates. Our in growth currency headwind X% quarter to guidance foreign on be total an exchange current year-over-year based

Turning now in our to of from $XX billion, to our restructuring the the we in office is may our as payroll revenue. expenses $X year consolidating of billion expect facilities in our to record additional from in footprint. billion $XXX $XX XXXX. outlook $X the the portion progress prior efforts. will we expenses We growth billion $XX XXXX expense as our full slower of of billion outlook, we and recorded range efficiency charges now estimated We to of XXXX anticipate anticipated to due restructuring in total quarter related cost down to lower fourth estimate in an a of charges This billion further be prior incur charges

Turning a Substantially, XXXX outlook in in both $XX center Apps. any we capital data full percentage year Family Absent architecture our XXs. center be the to to efficient law, cost U.S. expenditures and of AI tax. our expect the in is and continue more reduced estimate rate prior construction expenditures lower outlook that of can capital to to $XX workloads. tax support changes non-AI our expect all now support new to On tax to our low CapEx we $XX the the be for data for lowered XXXX billion plans of spend billion. updated $XX billion, as reflects range The billion of from we XXXX, to to shift to

on impact developments their on transfers of operations. the regarding calls, monitor as previous our and noted to addition, potential we European viability transatlantic continue data In

was for but XXXX our challenging business. closing, steps pivotal made improve significant efficiency important productivity. our and We progress have and on In taken a our priorities year to

on to delivering in We well work investing financial we up for are this future performance. focused continue build set strong on XXXX growth while as remaining

Dave, call With up questions. let’s the open that, for

first Thank from the with Instructions] Brian you. comes question Your [Operator line of Stanley. Nowak Morgan

is Your open. line

then one advertiser Great. of dig Mark, generative Mark, I some the how you more blue-sky into have see on to Susan. it’s questions. for just And anymore cash those CapEx cases of the per and the to think do taking should data of color platform? potential you And center AI? architecture one of we little user intensity second Thanks for two, one and how on about whether a about the per minute, for first CapEx could think timeline about the overall Thanks. sort a flow? AI. my How glimpses of long-term be wanted change use long-term business, benefit the one the for your DAU? Susan, on the how capital I new this is think big generative

AI. with then can is to really the and I I’d biggest exciting the two be the Yes, say this area year I product themes on one start work. generative think that generative efficiency area. a kind this and for the mean, And Yes, focused going I AI new is is of

use well over kinds lot especially all and working run things creators different XD large accounts. long-term, as work and avatars all be of across and that different products one models we’re and across a We of really on, work way the working of the and videos empower productive bunch the creative of streams stuff have technologies, on different almost could the assets every and diffusion across to as and to apps different more for that a single models of streams language the images generating new our

exciting So the kind to get not I I some to too of here. ahead be far want stuff it. development of there know of really is careful

you’ll think and that quickly. they a updates expect I will see this will So them, things I how space do are move we different launch will and the on we talk us number of year, doing. about share

interaction. image doesn’t. I of to what think like lot cents lot of or about, These expensive, generate video or an a chat a works we learn and things what we’re stuff fraction is the will or a about kind a talking of A cent. right,

to to we use scale there exciting a So going work for challenges to base. interesting that, one and be of over very make to bring more I we details I a big But that I this how high-level also realize do the are pretty here coming think going the be it can efficient user now, answer a think much able more will share way we of this so this number months. larger is we once do but cases. is be

about center data outlook. Thanks, questions so your architecture is underpinning talked question Brian. lower the we On about your was which about, new CapEx, first that the CapEx

can demand going AI to we both more we’re centers shifting optionality architecture give more over better that’s support efficiently And non-AI So our for data us understand new a AI to workloads. that our as and time.

optimize Additionally, than we’re expecting going previous to that cheaper will design data building we’re the architecture. and center the data to to centers. center faster approach be build Along data new architecture, new our with

have approach but needed. plans capacity So flex us allows to base up initial quickly less future then outlay, that we less build capacity if capital new with phased and initial a

the in AI think, things that that describing earlier still to and Mark of grow to planning a his lot connects, We’re I was significantly, capacity question.

current we have we incremental last and due which is In still to and are benefit into The CapEx of outlook longer-run that’s we building focused year that CapEx AI in surge percent infrastructure, intensity, this term. year. lower on the the revenue, out certainly over longer are expect terms of CapEx began to a will of the really something continuing some really as that capital really

their investments, AI spend. be to will continue returns ROI inform and measuring future these the our will We of

and capacity nearest to is future is the bring percent revenue CapEx in outlook depend, for going term still really part, down, the as build in intensity AI capital further intention of a revenue to demand. Our but needs our on to

Eric question comes the Sheridan Goldman with Sachs. next of from line Your

open. is line Your

How can you some us on the then products. comments might how Reels. quantify at levels lagged little short-form as much. short-form on evolve of short-form years? of I color grow conversations engagement build adoption and be, has of lastly letting video that look brand continue video and and had multiparter bit your you monetization and still we and to new product? give a next of of all as And of this can going couple engagement, the the video to would advertiser user back philosophy letting to just ask Canvas monetization sort on Maybe around mixture mixture of and a a that to always Mark, so that you so DR of that you can means the the of messages? a deliver going engagement the think Second, of sort utilization of continue much. continuing Thank out monetization you the Thanks little eventually the do bit exists the the higher over sort gap of adoption about between to close continue against how a deeper around to of consumer of drive of versus always

I’ve Yes. scaling somewhat often monetization. the of the a up the for use – than different the building case these is take the on second always at looked I consumer products, product way first this, working that and discipline part is mean

as of simple hard problem of as a such possible. as you goals to clarity it’s and kind types teams build new these want give of that to much products the So

approach. works focus has for people make then it, get beginning, billions that general people. the many just okay, of on we or That’s once we using to the of us. formula been a ramping people millions something just will then And in up worked So that’s the for saying, of monetization, which hundreds let’s

lot using it people Now a now. with Reels, we do of have

or I profitable strategic do? at letting certain any would points the bit clear think much it strategic at But you are distribution. than I at it’s – it’s not think right and is feedback than a scale is, there And more good there at certain this from will to be get So data point, that scale. mean that scale little advantage. question pretty is the now, a be we’re further point, flywheels, there more this advantage I to

Reels, the the that and those will philosophy the these have I more right naturally we think bringing then will right for of to do to well. now, I to So And been monetization It demand working, ability some and to efficiency of them last Reels. confidence thing as balance X that But just is And teams improve getting focusing that are there. unlock we Facebook, to approach. efficiency, think the of naturally work good that’s to the on of there more overall trends, or doubling show some doing the know on monetization it, that’s and the we that focusing served approach. more and I us I about months we think see continue can stat efficiency. the over building because from products, in shared millions the as is is continue grow which our do hundreds consumer we billions people then work, and beyond the on I in on as monetization

things or do, to that doing. hopefully, – we expect can that new of some future the continue You that some generative new us on Metaverse we’re some stuff doing of AI including products the

We’re the same well. as take there going to approach

So to on the Reels. reaction advertisers

Direct specifically to retailer, more per our our Reels higher lower participate advertisers are to progress now create been of cost lift XX% And the but advertisers Reels objectives, making continue with them. a brand, Reels app, Xx German actually is with fashion on focused. a And both, working are between they use to as more be across XX% good more over of sales. an in purchase, Outletcity, Direct continues impact apps. just advertisers enabling versus where in tools in and we resulted more conversions. ROIs, test We which Reels that And Response progress higher Response for – found we’ve to formats, XXx And example, developed seeing created

results. So overall, good very

we monetization in said efficiency close Eric, On Stories for we efficiency we year gap both on of that that, a end take from track are place Reels. And the will the Reels Reels. bring it several to services. growing neutral and Reels incremental Feed roughly still your by know took third between year We this that Ads. or are between are through next engagement revenue and to years the improving monetization other to Reels and planning expect question, to Having quantifying gap overall bring do this us we the early and longer not headwind

line with comes question Shmulik next Bernstein. the Mark of from Your

line open. is Your

questions. a Yes. couple Thanks got for taking as I’ve the well.

one, for know Javier. First I or Susan

and Thanks. of theme balancing intensity about that What’s we we’ve rate. think appreciate we color other you’re Labs to it intensity on some of think computing improving of would year any where should at next color about kind platform. that I kind to conversion to of in with be annual that the – IDFA through just of more the kind think that the say fair last And ambition now investment of to right be the of of post. headwinds there diving for? Reality of for build Would Mark, about? those AI-driven in Is journey on be right efficiency of Or kind And way are this looking and talking adage about the any or so? the As right been following long-term milestones kind the appreciated. the side you’re secondly, Buzz’s

Thanks Mark.

impact of first But in generally the change. make continuing just your that more operate is we progress now. this we are from the ATT question, on reality the mitigating So environment in online advertising the to

mitigate and tools to adoption see like tools, including the we’ve of work Gateway, strong on changes, those continuing CAPI we’re So impact those before of talked about that etcetera. tools we building

that? over technologies us in is Javi, privacy-enhancing and anything then continuing And to site. more performance the run, on privacy-safe there want to have bring you ad also advertisers. longer that conversions lead to enable ads, instrumental and we and investing have on been a shop click-to-messaging being – doing formats conversions to adds ways in We’re ads site, bring in that ads deliver ads to to add our across of lot formats both invest leads so fundamentally we’re on more

Yes. a look seeing ads, two AI if it, that’s Susan, on really And the are which the at I XX% conversions combined I touched decline over investing we high lot year, and relevance. you where the think you than continue we cost parts, most think, is in strategy have improvement per on in we prior saying, the of of in Mark in on which, was ads saw with more ROIs. results as And acquisition,

which on are to for to which obviously We in allow a offsetting part resorts. it measurement, experiences on Xx in per leads, agency achieve better app helping advertisers, onsite decisions. basically for onsite more also second conversions more final They automation advertisers online for leads links than offsite. opportunity. to cost the sales leads Signal bookings with also with we use an reframing a Xx so example based versus But alternative column at another And lower bringing the cost, is X.Xx is higher [indiscernible]. Indeed, more acquisition and and improvements Italy hotels a onsite, give where [ph], IRIS lead Signal use example, do the to that qualified this to the the managed loss. marketing one lead the of volume option which believe onsite lower growth They collect automated a are we just this qualified of offsite compared

guess And ways I as I give thinking and about color a – there that was Labs we’re I over on there to some about applies. this Reality think this time. efficiency are how applies two think question theme it I can Alright.

but it’s The are one augmented still which reality the VR, There think, work thing, is work there like Quest to just as is three biggest first starting right? right? thing area, hasn’t which – is, did the X, we about a a problem. not actually areas, large but There major Reality Labs research long-term, is it’s to think haven’t important right, product yet. lot actually ramp, shipped quite the I well. I of There that is think

Metaverse multiple there – it with product the size that’s the is software it. Pro. kind doesn’t of program. reflect smallest importance And the lines today by We Quest And have of then the budget

critical intensive less than software capital build a think we’re and of might platform just software but is part be I the doing, lot to the most hardware. what the social

that each And of within a So doing. it’s are the program. things those smallest there part the we’re of of different areas, lot

And the is advance. doing, and we’re some are constantly are obviously, would of the looking things, the constantly start the going learning of market any do it experiments these that what we and X, overall, forward. are different things, to we’re sense to reaction So map. how that that how out. constantly road makes run like right? project of X evolving signals shipped hardware what So longer-term kind what and the planning we’ve decisions just products we’re in years about And from being But to doing, and how competitors are are making tuning played they kind at ship out you learning you’re seeing

going the of even that And should far the Reality we – I’m to we continue. none that’s long-term. so signals seen So will though suggests shift I’ve definitely – strategy that Lab

of adjusting We execute specifics how – this. of we are adjust we constantly the how

think will part So efficiency that ongoing I work. that look as at the of we certainly

other things tactics, going whole the is like to are things different just apply to flatten company. that. The the Those trying org, like across piece

there people trying a road on a prioritization to can you’re and I that lot more you operating efficiently, more of want efficiency, can making Labs and that our the do think over you and is Reality things able execute, both of with get focus what more fewer of to just which But on lot we time, company the better things we So A actually map execute makes focus all work because you resources. cut. of expect things we’re to talk is about efficient. time big within and Apps, done being when Family on

makes that to quickly quickly kind a where mean, we’ve to efficiency I a grew level where phase in for on And still environment And to XX growing extremely now we the crank a will like future, you’re on right think just first making like growing it’s think more which have think I what bunch we had we’re in just for growth. I’d a while company, just of sure that a so lot the the somewhat of guess hard a for lot you’re just previously years be So areas work different of I focus think can of higher which growth. this, exciting point that we’re we more do I line to I of focus that quickly. the where is really it on and we we in very entered company’s to But the do, top – that, change the get gets strategy mode efficiency us me really and kind effectively. of sense to than I really more,

done. it’s if be think to do do to And we work what for think I are a they be able stuff I will work. get better will worth, it we think well, place For going will think – I I to fun be more that because it more people product

we’re all it’s this, going committed to things I’m across go of So doing. to and different pretty that the

next Anmuth Your from the with JPMorgan. question Doug of comes line

open. Your is line

areas around expense How get outlook you Great. think what still? use the the separately, in risk was down new I outlook the increased able Meta? taking just efficiency could issues ads. about on the Thanks $X about And then to could I data Thanks. suggest then And I some where could this may was we ‘XX? of get how first-party the know should by to resolved? came hoping does And for you hiring the levels talk you hoping for billion. questions. to in Meta’s comment of Susan, be Europe target expense

expense XXXX, with I will outlook. start the the

are XXXX expense areas. components three of primary the So, the across outlook reduction the in

growth. is payroll slower first The

the how So, allocate to we this. on scrutinize resources across company we are continuing

broad a of expect freeze And we I your place ongoing year. have target slower this process now. right roles have for will the in a to going pace we of to are we year the to open. in We us. hiring end here, don’t a as second for role hiring hiring question presently is We the in the which share answer an what continue evaluate to is

of is component outlook on second expense the of The cost revenue. lower

were by We are useful already last from expecting is our now Depreciation the us prior consolidation $X billion servers $X charges. guidance the a outlook of previously charges recognized is slower QX That’s in the gave in range portion reflects estimate of non-AI QX. extending facilities’ the billion in down then third an since XXXX. the component that in growth. we And impacted estimated lives estimated here

the as are really are those lower really the issues those primary to pertains – So, the outlook. big expense it

target question using Meta Your ads. the was on second to Europe around data issues in

in contractual is So, I ruling the don’t as a that’s our change current legal referring reliance to a we basis approach Europe, our approach compliant, think are EU if regarding GDPR it. believe that our to our We that ability appealing for substance that decision. EU, continue We to and DPC have with you to we and be on our the ads to customers businesses. use necessity rulings fines. going are should to and and that advertisers don’t We able their reach the platforms in decisions affect of the provide to grow are those the expect personalized advertising agree

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

Your line is open.

the you and Thank a still are or Great. quarter, use. that kind headwinds past on with then on as in the the be next out Maybe we And data over you of or follow-up thinking anything year, you ATT? aware you. Are privacy EU or Act, from or Digital or Markets you. look Thank of? anything the facing about in first should Android IDFA

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Android from it’s where oh, to early on, part headwinds. of will was anything On know other question and land. second too your Android, The this

third industry, we third will there. we I this the updates in DSA. that is the your is have think think which collaborating I on then – think EU, is elapses of issues an and critical, regulatory more on the taking time think Google And part I was as your was approach with question,

– costs. come to have of we are into compliance the expecting We meet we but and for been comply segment effect this DSA are to manageable year. that some expect time meaningful deadlines Those with preparing

factored We preparing been have for guidance. total into expense our and time, a already been those long have costs

of Squali with And the line your next comes question Truist. Youssef use of from

open. is line Your

Two Thank me, Great. questions you. please. for

First, Susan. for one maybe

other your staying and was the basis trying the tandem time? cost the lately, maybe OpEx, to we build CapEx growth of revenue are efficiency to to just with theme I between over back adjustments to last you or time relationship all Just growth in think in the XXXX. on saw you can each speak the them move close and

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coming three if that as you. ago? months curious incrementally are months Thank you cautious bullish as you or six are QX, Just or still of you out are

first I question. happy the take am Thanks. to

So in better for lower outlook puts certainly, performance position this us CapEx the a of expense terms outlook and year. in financial

are think we still that enabling aggressively be continues principle while compounding – that are by of the are which Mark our growth, financial I technology. focused plans. we to quarter we outlined, on We future which by I are earnings the think in guiding And the delivering – goal last

but for within I is update this year-over-year. can color. again, we jump question range the in us, start – commerce the fell I if ad on our – to modestly online Javi, feel you take you health add with holiday growth Trends for free of the to on season, can in that is expectations. the encouraging, negative second improved us, more and mostly us, of broader space. want QX, The which oh, saw digital still for should was

there overall, is if jump the how a to I It’s you anything, in know to would volatile in. early like macro XXXX. So, Javi, this this will is can environment. year And up for add, think pretty you shape still

you covered think well, I Susan. No, it

next question come of Your Ron Citi. will with from the Josey line

open. is line Your

I about just Thank produce are and this added insights gaining taking engine for and content and seeing signal maybe to the we getting in But Stories talk content talk Thanks Meta usage AI you. more of on seeing just that categories can would a like even that the around see. is you Feed you to and more question. Great. we to to to to discovery across wanted Mark, content in Messenger? relevant Reels. more in little And the the progress and our bit terms it own Reels

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more from have models the CPU-based being GPU-based. shifted to being We

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from comes with of Blackledge question next Cowen. Your John the line

open. line Your is

questions. Two Thanks. Great.

follow-up to early Reality up peak Just in shop this be should on should if expect year? Susan monetization. And second, ads Labs, bucket Labs Reality Reality mentioned at ‘XX? And we to the Labs a we so, expect in a accelerating then losses continue of losses

on Thank scale color any this how there might year. Just we see that you.

Yes.

Reality in we can growth are investment, still our increase shop expect overall go operating I Labs, question our On this area shop profit long-term Labs, a Realty XXXX, investments continue the we need by in take see. question turn Sorry, I going ads. invest while we given to we are and and it about full will drive ads. on Labs to second is It to here the the the to and on Reality significant long-duration and investments. year take that Javi, ahead are losses underpinned opportunities making will meaningfully these you first the accompanying Javi to

Yes.

the in place test So, where consumer QX, we shop the and purchase. continued they by helping to are ads increased likely are in U.S., direct to most performance the we seeing to

to finally both really base. saw a rate revenue of growth QX. lower market to to across millions And hundreds the ads this normalize adoption the and expect we And has dollars. a shop XXXX. in level beta a give of run saw triple-digit It’s to So, product But sense, but fit growth you just we the early a small it’s in off know, in revenue test. we in

a normalize small it but a rate small you It’s So, revenue to gives but that it’s XXXX. growing lower more in we continue, expect base. run to rapidly. yet, levels And

Your of Mahaney ISI. with Evercore next question comes from Mark the line

Your line is open.

to seen been just that could you. This obviously profit. you on are the it tonight, and is now the but for XX forward? the of that about when year today is about And the that talked you you rate. it before? I do maturity it’s – you way. this what Two that’s you the about minds changes. advantage who new kind in maybe Like But over why much Like take bringing on $XX crisis, driving a about of from X give last that the and out efficiency, I to hadn’t business on there Mark, of guess on you ask questions, And Meta that talking to – to want just think hiccups. they revenue do advertisers the months why I few is going the of efficiency, year trying terms click-to-messaging just please. last if is coming The greater almost or crisis a it’s operating mean the How there a that? path like does a like ask path? focus markets think brand-new not question. what the business? early just And economy, journey but growing in in run Thanks. growth maybe find of has going I forced a billion with Is just then, – growth for And there since months hearing

the Just more Thanks why. a on little lot. bit a color

This Susan. Thanks. is

is On of one the script ads click-to-messaging we ads believe use this demand that I exclusively my of so mentioned in onto fastest-growing that And incremental ads, they over we click-to-message click-to-message our – on products. are advertisers our our are bringing platform. platform. half

In we think terms there are scale – dimensions. couple a of how are going I asked to you and

piece creation of getting businesses click-to-messaging more points, adopt ads creating here I demand, to biggest simplifying terms more via flows. entry In think the is

are trying can businesses with to We integrate partners scale. smaller help who

there. lot a is work on of there So, going

from the get we focus continuing on On performance advertisers to driving are that just up side, click-to-messaging the ROI ads.

flows our case, advertisers drive in-thread optimization, on are the we always more to conversion. app. We and ecosystem better to by supply this create connect and growing give help messaging them ways people more for And then do and growing in messaging trying business experiences down-funnel are to the businesses ultimately, that across creating simplify ability focused

research like example So, something of would direct an I be think that WhatsApp. on business

about it have we efficiency to on have invested a and very lot it’s seen are in excited So, question. I very growth. an the opportunity and will Mark we healthy we turn

Yes.

every And year, right. point, I few the efficiency XXXX, the for one that years, for think And history. of in like negative company’s a our growth first places. So, time journey dramatically XX on a changed was company. come then I the the mean the XX% XX%, I we from more just is the think at revenue mean for first compound grew we it I or to the in obviously, lot where very

it back anticipate don’t And So, that, going we down. I but going also go that big pretty was to it’s that’s before. was way to the a don’t step think to continue, necessarily

just now do that us pretty basically I like say, this think of take think to going of it’s of – and kind are or to forced that business a that just also be rapid But a are can’t we rapidly that and somewhat investments a treat areas them should be step some have support of change people are and differently. lot we back large phase just very to hyper There is lot future there kind that to we make. everything that growth. want are growing very we I going a things operate okay, have So, using of think amounts we

build am we more and right. at roadmap this space able a products we that be But would there that better, of So, we as it. done. some will save work, will that point, other better things we more efficient doing right. mind And how optimistic are make piece would want. actually I against would things think I trade-off us somewhat that kind can would and that is to But actually do pretty us occupy and them started right. that, just say amount this just to it that that Not of I the a of there of is are of part fairly all our build that the of I it that things historically thought of actually was good makes unexpected, able get the that help have money,

going help reduce engineer focusing AI to for costs. not on necessarily tools it’s example, to So, improve productivity,

do so it can and that help and think environment. the right, But us fewer to layers flows just will smaller the better products, you help decisions. faster-moving over retain it longer. only company people a want of we things ultimately, faster And company make management a the hire think – so think make I I for through us in best make just maybe will less, information better it and work but I so make not who have attract will we can Although stay long-term, like reducing it

was this we will the is, as that started digging to that And bit But how surprising, have think continue start little we things can into I that would we know to the long And a feel honestly so me. company right, if that actually like that roadmap – better will like things of good the long amount be how that do a what to that. do case. where I don’t

the first but a So, going one I company just I we dual even They now. also especially people focus that business And of want this communicate, way, I a make that’s that this, focused think am it’s with inside to of goals over if profitability. this year, increasing important company here our why the because to to it are to are making the us long-term. and stick better really want better a just to making just because goals company better outperform company going technology the we I the emphasize our on continue to it’s on think important, I both really do company the

So, think for that’s it now. I

have one time last for question. we Operator,

Jefferies. the you. from of come Brent will That Thank with Thill line

line Your open. is

What’s you how that Thanks. all can guidance, remind embedded about your Susan, guidance? embedded market seasonality? in conditions, QX you your for for think what just expectations are us

Brent. Thanks

it X% range billion that mean range environment of $XX billion given we the again, to a than guidance talked have in we performance demand in it headwind less in. general And advertising was continuation reflects But and to $XX.X to growth. the with trends core are corresponds we keeping FX QX advertisers QX, to in that X% operating about And and and volatility. with of For Again, on our to we – growth the I for – improvements a that have be of QX. on we are of a delivering investments the plus AI. year-over-year are been our expect engagement pleased uncertainty we close work negative wide macro we macroeconomic for year-over-year the monetization our eye are ongoing

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

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

now disconnect lines. You may your