Meta Platforms (META) 26 Jul 232023 Q2 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 Second Quarter 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. will call This Instructions] be recorded. [Operator very you much. Thank

Relations, Ken begin. Director Investor Dorell, and you may Meta's

Good and you. Earnings Thank afternoon Conference Quarter Platforms Call. XXXX Second welcome to Meta

CEO; our Joining to results and Susan are me Li, discuss Mark today CFO. Zuckerberg,

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

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

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

X billion US world, with who quarter people one apps everyone use This Thanks the than There and now actives our apps. for engagement Thanks, Ken. trends our billion business. more every was for a monthly joining. of least than actives We're good our Facebook across Canada. strong at more seeing are X.X now the grow continuing month. daily in including around to has

investments we while. now Llama roadmap that core continued play-out. start on Quest to We've and our the as I've the some see products well products seen all we've right Reels, think have decisions this most made the exciting a fall. to to executing up ahead and AI Threads, addition got progress as groundbreaking in this X performing launch well, X it's pipeline, the really and We're In heads-down, coming on in good I

quite growth improving the out-of-the-gate. And our On start scale that have to and daily here. on growing I'd on focused after coming going going be more. that, retention basics. hoped briefly, seeing then about we're We've back We as that focus And I'm than trajectory run community WhatsApp, now could Threads are for. the and optimistic Reels expected. more to is we're the we people to this Instagram, on as And we'll monetization. think times more we many importantly, focus saw Only possible. And is playbook with this of a we Facebook, Stories, good before after unprecedented

with So that I'm path really the we're happy here. on

to about faster that, made was want aggressively the year by so our two team number seen about and The long-term roadmap. technology efficiency our relatively product changes of of a examples mention cultural small a on to I a note efficiency the the how launch One related organization and our is the our timeline. leaner of some Thread tight built company already of We've so different this far. of probably we've in higher-quality always ambitious example becoming invest biggest build can stronger year products was results, can that we even goals, an and financial is improving

employees, XXXX AI-powered introducing Now removing be will so to creating down, speed the and up new layoffs, barriers rest that gotten through us of on. that we've tools the slow major us about for stability

to be financial that even headcount in to be I'm I but next going have going planning for the continuing areas, hire these going to XXXX results the we're we're lean budgeted as to improved. possible relatively and though months, few going newly after company expect to low. reasons, on key focused run start as our growth Over still is cultural

they that as people with of order in skills layoffs, chose let to that go many teams said, different hire people different this Now need. part year's to

that So hiring of to is much going spill into XXXX.

other new handle the know of products level we're a support major grow, Since CapEx how later is roadmap. we this to budget don't through working right the quickly our may have AI AI The is point what's we not until that our will year. on clear in

said ranking the the we're over on the product Investments to moving of years riding content from that infrastructure on longer-term. accounts our the AI including waves the and the two follow are we've that AI, you Facebook's recommendation AI are billions our these on improving spent and paying-off and calls fastest-growing number AI and Now clearly I've is of don't feed. technological category dollars Metaverse roadmap, systems across over monetization. on the engagement content of that in made we've in recommended a near-term now

Instagram. discover overall introducing in increase they've Now, followed things have otherwise might since with Facebook you this run-rate progress you discovery these annual spent across. engine We're is part because the experience day Reels a recommendations, or the billion XXX time and of now a platform. Reels X% This on revenue plays fall. last driven that across apps come can the from key our Reels not improves on billion billion, good and exceeding seeing monetization per $XX $X now exceed across up as well

generative tools testing and new a generation, outcropping. background datasets ads text AI model generation playground all least Lattice, products, across introduced to which optimization automated ads we automatic results learns Advantage. call and a of our our an monetization image deployed are advertisers predict of Meta driving products. is variety Sandbox, goals. one driven And like architecture AI Almost performance that AI through Meta powered for using across We've our Reels, also AI our Beyond we tools, at a

our doubled another Paid bit messaging earlier, key ads showing now is products in particularly our WhatsApp the also be Facebook needing Business year-over-year. recently to for Facebook their to account. without it's where is and has countries we messaging is app often strategy and create business XXX step Business a our WhatsApp unlock, of first good of able piece adoption. of that big monetization pretty using million users a businesses This Instagram announced will is the paid but The number a online. messaging bring Click-to-WhatsApp

on we that And I and a simple, channels product way to rest receive the quite mentioned excited of WhatsApp It's started more this I'm people countries we're to month. reliable bring out important rolling private messaging, more organizations. we to through on year. last people as While from and the for try it updates

new latest systems large version Beyond use. language with research model commercial partnered and our our building Llama-X, also AI of and products, support to for the to open-source of recommendations it and the available We leading ranking to models we're a generation products. make across foundation both Microsoft

which from us, as the work models compute We that everywhere. have of project. a basic part open-sourcing framework that industry, our to work to And from open is allows and infrastructure open-sourcing benefit and machine-learning come segment leading from the long history innovations we our of to anything, found infrastructure image like AI PyTorch, including DINO bind the

run should fixes And and with improvements often identify less hopefully models The forward. open-source these software form to of infrastructure gains, and more which investment often scrutinized improvements safety efficiency also the find are in going is come these allow us and in others and can issues. since people for security more

improvements the I'm community that makes to So really Llama-X. seeing to the looking forward

as our across services. in on new people ourselves going more act it share later imagine agents building across and products interact And both a express we coaches Llama people that more. apps, our that using lots helping improve tools worlds Metaverse, mobile that content, will with well. and number but inhabit share also help can connect that more everything of fun the I'm these or as are apps themselves this creators and do AI to objects to and you that and of create help and ways that We will assistance, avatars year, make that can work products businesses details and can that new easier the you creative them

We've for AI in two And many as committed working We and ways, fully many complementary. overlapping now. on years are investments Metaverse both parallel to remain two continue. vision the these areas Our priorities major the in of well. in been

X launch will library around mixed you. out yet X the also seamlessly Quest there better at Reality headset and content most intelligently headset with next-gen and big reality level. Quest Its is your performance. our it's best our The next Quest headset powerful reality next the the XX% understanding space by our Connect. virtual It Qualcomm thing Pro have thinner resolution than pioneered and that It's mixed side Quest and X. the immersive takes graphics to Labs on physical We world displays the and reality mixed physical with one blends the chipset of the twice with

to X expect millions accessible working course, of too, are, industry main be the reality the stream first experience the many Quest people bringing in to going market we but that to with. others Now this get technology on will mixed is of device

content Metaverse and We an Quest beta open on as is coming that announced recently lab. vision together app with software The well. continues coming to Roblox

bridge For experiences. now going on be making Horizon, the and on VR between and team and We progress and that. mixed on that's we're well a right our reality improvements mobile made focused is to as retention avatars good our apps big

on to you'll in We which have It's XX. September work I hope Hacker a at to AI tune going hosting be conference, so our our coming Connect and up in. Square on both Metaverse good headquarters more share our a lot going at to we're be one,

accomplished to a I'm ahead of our impactful been this I'm quite teams we've all it's that also an I'm to wanted with been year. but up, one. so I to about year you for being in road grateful of of proud journey on just the optimistic everything us. this a far Alright, lot really for It's and wrap ways, tough that say

hand And now, to over Susan. I'm going it to

Thanks, good everyone. Mark, and afternoon,

a XX% billion, year. results. a All with total on QX are XX% or comparisons basis, constant $XX compared up last begin was billion, consolidated to noted. total $XX.X on our QX basis. Let's otherwise expenses XX% revenue up unless were currency year-over-year

items, of costs. R&D costs driven segments, of by increased infrastructure the Apps mainly headcount-related well In as X%, line terms of by and specific our increased Family XX%, cost Reality from revenue related driven restructuring Labs primarily costs. as

by legal to G&A the primarily lower We X% quarter. offset And and decreased XX%, sales lower to from second which mostly down and was payroll-related payroll-related ended costs. XX%, over employees, marketing spend quarter in costs. the increased XX,XXX Marketing due partially an increase accruals, first with due

by headcount the impacted approximately still half included of XX,XXX quarter second Our employees the XXXX layoffs. roughly

employees. our quarter expect impacted We include the vast third majority of no that longer headcount will

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

Capital share. than tax higher was servers deduction price a including Our outlook payments and tax our leases infrastructure. as billion $X.X centers, This provided and or our driven $X.XX $X.X quarter XX%. per share were by Net previous our billion, full-year lower lowered data for investments expenditures, income was the is rate taxes. principal finance on higher in network

$XX deferral the quarter million $XX.X billion, be significantly We the common will a the that in Free-cash and repurchased and taxes Class-A our expect flow ended income of we fourth from marketable was securities. second-quarter in $XXX paid cash stock quarter. benefiting in with billion of

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

across on X.XX the at approximately that grow continues of one continues basis strong. in Family a on at community Family Our Apps to of billion used billion and people least that and globally engagement monthly estimate Facebook We June least remains approximately of to our X.XX basis. Apps one people daily a used grow.

MAUs. Facebook X billion million. X% MAU users June, DAUs Facebook's X% or crossed XX time, active million last monthly up billion, For with compared represented ending year. at to XX we approximately in up were X.XX active users daily X.XX the or of billion XX% first

among $XX.X online was XX% vertical basis. of revenue year-over-year up QX was revenue, QX Europe, the contributor respectively. Apps the a Online and at growth strong XX%, billion, benefited user in geography ad other at billion, or XX%, advertisers On XX% media Family revenue and XX% a basis, by Apps $XX.X Rest Within constant to strongest North-America CPG. ad XX% by and in and largest World in total China, XX%, Asia-Pacific Family up from growth, of markets. commerce span of was followed on revenue customers ad year-over-year. was followed entertainment currency commerce reaching

growth revenue advertising regions. to headwind a was international currency all in Foreign

was by from and impressions QX, especially total XX%. ad of driven number of Rest price was XX% the growth lower impression year-over-year across per driven decline average our primarily decreased World. strong monetizing increased pricing In ad services The and and Impression the Asia-Pacific by regions. surfaces in served growth,

continuing under to While factors, overall targeting we for our improvements from pricing measurement remains drive are results pressure to and advertisers. improved ad ongoing believe these

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

X% our Family to expenses of development the the majority of due overall representing direct by operating marketing. related billion, offset of was expenses to partially Apps restructuring Family charges, in billion, $XX.X continue and a We our of operating up approximately and XX% Family were QX, Apps. non-headcount primarily legal-related a XX% toward Apps expenses income expenses. $XX.X margin. FoA investments representing of expenses, In operating our of operation decrease were including

Reality last Within Labs to Reality $X billion. well a due Labs as Labs loss of lower Labs million, year, growth our up as reduction revenue expenses operating $XXX in segment, down billion, Reality QX due in Reality were $X.X was Quest reserves sales. was to X costs. QX loss XX% XX% in employee-related lapping

business our community; the effectiveness outlook. deliver experiences engagement for ability and our to that performance; to two are that There at primary our over revenue time. factors our drive now engaging monetizing Turning

Facebook On Reels overall engagement. significantly from while accounts more don't Facebook the to engagement over strong. engagement, demonstrating content that remained feed, recommended the you added-value getting to and Instagram accounts. first, people discovering drive has On incremental year, from from past becoming also unconnected particular, content increased continues grow within are and follow in incremental

value are AI increase improve even to optimistic that our recommendations. by advanced ability we leveraging techniques Looking-forward, about further to

AI-powered with standalone will the for give to Family which new tools connect. people initial today, been services, of products value to themselves also our month. launch earlier We're since within improving pleased new Apps and And express of up investing more to future. across get the addition Threads we've reception In infrastructure people entirely our app our new support standing in experiences its the we're this

valuable developing set a be on Our focus for will of product into a people now large this that is further over-time.

improving of driver monetization. Moving other to the revenue,

like efficiency and on on gap Here, surfaces. revenue of and for driving efficiency monetization Reels making we're messaging three are and narrowing with focused with performance improving now today that our monetization focused Reels, On at progress monetize using advertisers. our the We services products broadly, than returns ads. monetization measurable our lower rates more reducing headwind good remain mature our Reels on and advertisers more the further quarters of Reels we more

future rate than Reels and the slowly However, will monetize content. a at expect since more we video Feed to on continue for time through Stories lower foreseeable people scroll

build of Within help early messaging, to paid promising messaging use with businesses to businesses millions and billions of see every functionality a messaging interactions people day our WhatsApp's progress today. facilitate We services and solution seeing and connect. tools significant opportunity those are for to but

work in and In onsite AI it's measurable performance terms conversions. of advertisers, our concentrated areas, primary drive for to two

shopping, efficiently. deploy us continues conversion adoption. leveraging We're advertisers which larger this AI and also strong results We're across We're remained seeing Advantage+ QX. power our move advanced broadly fewer in AI towards into translate to gain like ads growth enable for learnings using that surfaces leveraging models to as product and systems work products more leverage to quickly, improvements to

with ads of are In over of very to driving well conversions, we terms applications. see results on-site given Daily messaging click-to-WhatsApp revenue continue suite click-to-messaging at ads our and continues positioned year-over-year. XX% quickly grow to strong

has to the more million recently from buy now We Business which WhatsApp started monthly app, the also click-to-WhatsApp users. ads ability directly testing XXX than

ads. to the and Looking funnel our focused optimize in generation onsite on applications. We're for like also down lead ahead, messaging in other objectives businesses scaling we're enabling conversions investing shops further

investment Before also talk turning like philosophy. our outlook, I'd our to to revenue about

the plan remain we we them and with us these year supporting come bring built habits We and shifting expect will the work on in to efficiency resources. for of the At discipline during Part time, prioritizing areas this initiatives we investing opportunities same that future. significant other against as focused of the ahead. from of

see the which the some true in the areas However, in opportunity, include will we Metaverse. AI particularly This is require incremental cases, they and most significant investment.

over expect in last offering toward I cash bond we a focused remain quarter, were we pace our our to as future net our and modestly second debt improving May maintaining while work evolving pleased mentioned of execute As cost-of-capital, time. capital or balance. raises on measured also positive a neutral We overall structure

see could results. is we This monitor a our regulatory we data provide saw the US our impact legal speaking, Commission's addition, broadly to services we transfers, which continue With business landscape. increasing continue positive news. and headwinds good respect decision, to In regulatory final with in financial active that EU-US the our and continue to in European EU Europe. the significantly the a Though and of to us to development adoption adequacy allows

Turning the now revenue to outlook.

We quarter of range revenue XXXX $XX.X $XX be billion total to expect to third the billion. in

revenue guidance Our in foreign current approximately assumes of the third year-over-year currency total quarter rates. on tailwind X% to a based growth exchange

to the now personnel will $X legal-related of billion, includes of of to QX. other $XX and the in charges Turning outlook in billion $XX billion billion anticipate our approximately $XX due range $XX our and range from consolidation increased facilities total costs. prior full-year that recorded expense outlook. be costs severance to We restructuring to to expenses related expenses This billion XXXX

operating losses We expect to Reality year-over-year XXXX. increase in Labs

outlook growth few and point, AI opportunities, be in While this to we a our in not we XXXX beyond continue total a factors we including Metaverse. providing compelling expect are expense at XXXX drivers the to most invest quantitative as of

year. First, we costs expect next higher infrastructure-related

depreciation than in by expenses increased in XXXX amount XXXX. our a we expect capital to Given increase in recent investments years, larger

from to a operating infrastructure costs expect higher also larger incur footprint. We running

roles. we toward as cost our expenses we growth payroll in evolve composition technical anticipate higher Second, workforce

our scale to investments our efforts losses operating to in development AR, increase our meaningfully ongoing expect we due Labs, and product further Reality to for VR, ecosystem. Finally, year-over-year

outlook. CapEx to now the Turning

be $XX overall our We cost-savings, rather servers, deliveries, to of billion than lowered a investment expect The $XX into billion of equipment in both XXXX expenditures projects in forecast $XX in delays $XX reduced billion, range the as in CapEx as plans. prior well due reduction to from on particularly to non-AI is and to capital estimate from billion. shifts

Looking ahead, in capital investments plans of while we to AI expect XXXX, our servers, throughout to currently both by driven our particularly year, the continue refine across and total support datacenters progressed our expenditures in grow we we work. as

the closing, for rate executing priorities the quarter On to to law, tax, to tax across business. good on QX our a was continuing QX we delivering any In similar changes for of our US core make XXXX. absent to community. to tax experiences rest the for be expect our exciting new well year progress and We're are

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

thank very And much. Certainly. you

open We the Brian will Morgan line Your now Stanley. with for from comes question session. the question-and-answer Nowak lines first [Operator Instructions] of

Your line is open.

taking and two-parter for questions. few a you've spoken times through Mark, types for few agent over sort on the I Llama. building last my Thanks Mark. months Maybe of AI guess, assistants of different the a sort the or some enabling these AI the us question for talk agents? of about bit two of of part cases offerings is, use consumer some about a excited most you're can you advertiser to little

need And larger scale ecosystem? bit, barriers some Thanks. second your in level-set the understand you the sort we of agent these then of across timing mind, technological the a just to help the products types really can to just overcome of one, teams to on us

Sure.

a for will we things is to out a that Llama a going this of we're when on is, lot we're more going on for the additional we're that down That's of thing products launching. a lot start we're that's stuff going year kind new up tune to the of -- about road-map coming out going and to some think September, in now journey rolling bunch now. these talk but later products think of lot building have these years, and wanted the to be main model get things. now this to Connect I say I'll be to on that of X nailing So, working I start and into the the We this that underpin we're

on categories our our building basic were kinds I of in think -- that with of AI. or Two, AI-powered talk I'll of agents, about around features. are three technologies generative just products generative there kind overall, we're But a One, which planning second. different

say, basically some as examples things ads an or, run if able image, fit of that image So have helping are fill-in the it the they supply without in advertising, format, advertisers to for like them. but much canonical to needing doesn't of be accretive let's the

in my stuff about every talked that there's like comments, that I upfront So app. a across little but bit

then category company base helping productivity engineers of I'd to everything write say the from that. on and at It's focused things, efficiency knowledge internally. the And people like broadly code and helping faster the things we're understand overall internally third

do to lot a zones. those there's of So on each

of businesses that one compared going entities what single AI is, or on different the For apps AI that guess the there just is with, some in whether or to creators we people this that's things basis are day-to-day about come we agent a specifically, you there's I others these don't say different I'd that about they're to all think one think different because different industry that how things use. interact different across, or people be

and connect be So, of to a on there sort helping just people I are facilitating expression are and creativity think connections. handful of around that things focused going

to handful think a who with connect be care experiences are and their helping about the creators foster going of I creators they communities. helping there around people

on is people And I going is a this a interact can message lot a out. on can I And over build to with and basically to then that with going going helping that's have think road is going interact them. time be world side that of has alleviate biggest you order relatively to to that businesses business, around around it's interaction, I monetization that issues this of fastest messaging every with But if one low. currently business take to it's for an to I human is as the does loop work, to of well countries mean, a interact person why quite there, the person other agent some that reasons the the be we've time people going get that in a mean, of be cost the -- we're intensive to where it one right. is AI interactions that labor one think to should have as take-off business for direct is the labor with having businesses. in where of the long which the people this improve imagine some seen that

you imagine kind every spread But we exciting. business can could seeing we to where But normally on in products. the world can Vietnam playbook similar that's a business quite in follow what do has going Thailand an of kind think, AI and or a we're see that's I that overall, with agent we're success that I messaging everywhere to of think

know how quickly to is, scale, amount AI quickly, to because that's precedents In through we're unknowns want when kind one it's new hard how that place for some this, aren't things case things capacity products online. and and in of terms very scale forecast. we to there for but quite of new the they're the that quickly thinking don't reality one many the of they like have heavily of in actually big the the we CapEx these of these brand of will scale bring debating things the just and Because business

jump-in just excited well. it to know really that's now. this I'm -- be So about for I'll the different on you products last we're fits to if going probably I that on. Susan, I on But think all there's But the don't segment. say anything all This want that that into really is building point

really complement that is and in both this and single for doing transform thing Connect. so tune it, we're and to I'm every to think touch going I excited

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

is line open. Your

of just questions. following by a sort Thanks ask Mark, question, for of Susan. And were one bit a Microsoft extensions so community did for we growing announcement. about platform for just on up developer up much to draw one I you little Mark, out Llama want how the Brian's Maybe more, intrigued that think taking the the X? like around the to

more avenue flush strategy facing maybe is You there the in Could of we over company past? facing seen to an bit. that be I'd love company been there have product. traditionally with And the out more provide haven't a consumer a you to of a an this from long-term? little you enterprise

one for to the you, think a and of are struggle how continue just those what build continue I little just the and we Susan VRL losses of to And bit drivers frame timeframe should the we of Mark some on versus Metaverse. a of sort term losses medium-to-long elements think about the as over those earning driving the return losses components of the around losses

you So any color VRL in to there so I or Thanks losses components both. of be change helpful. the about sort much of rate would of think super

wants to there All there's I'll there's if anything can she sure. of add cut a Yes, any take as well. both at those second one, if that right. and Susan jump into -- the

project, and around servers of in from basic and we've well some little bunch So this. we've done upfront, out like seen work, and a as Llama we've datacenters a there will released in our a open-source other of AI. developer And open-source as building lot in of core pointed PyTorch I that remarks my just models design be is a different recently. is infrastructure What an that infrastructure we've ecosystem these an out although around bit of work platform, done, which which

makes. One these be that open-source, community release is of when the categories in publicly that, innovations the of things there a that projects few tend to we've you seen

makes things the built these a here is building that a that else from to are it I work else used the hand, and recruiting, it's community one They think the standardized with on and to good helps come place of best at work working. that everyone lot come the it's So, people can they're that just on the want uses, -- that get because we're to wherever doing tools here. people

to through But in security. the expect good around be safer. to the we we very It's seen and likely history few it community, work, in we launch, of improvements will In that's first-party making the a One chance the easy that and across for issue we as as more outcome more that and in whatever that -- people software a very AI. there's industry to and scrutinized AI from that really uses types. and a that make specifically that overall, well just gets terms our both able roll that's different in everyone open-source harden being improvements important to up ends here. will is think secure we've the that And open-source products And software the safety were see community, therefore make there safer. the here it propagate to that

I hope to mean, as efficiency things were the the way even like improvements. the and run improvements was initial that released project, quantization able from of a being Llama around would some also to research more just I model see efficiently.

infrastructure we're Now, all spending stuff just that run quite that into can savings. more get hopefully laptop a can or without their translate huge locally individuals for that on from the individuals models we not on hopefully make to afford the but the a it, be could more powerful for be of run just CapEx a AI helpful, which efficient big so so to amount help to or us, to over-time compute, community help should much efficient will

there. So seeing that's more of we're what

partnered We don't public-cloud a with we have specifically Microsoft offering. because

they them think that to out. on thing like public-cloud you're have you're include for. opened. basically one Microsoft for and someone and Amazon should that, in that's it's planning aren't their opposite. offerings that this But to portion But and we making that we revenue are that be noticed services, actually to specifically reselling don't others of Google of the using going about a the use have they isn't that the or to they don't the work intent have everyone that this a We companies, building the to us want -- things our a come license be ones free going just We and we get through the that might And So that. we because open-source getting to did is, is, this, there into this was license, open something be to we with get some if make addition that want arrangement have with us. term largest that or want business you to need

So a bit. out started those intend deals that we've the are making and we doing little be to

going don't jump-in else long of revenue add-on to near-term, can in to want. that but you if the can something. Not the a large anything if but Susan, amount you think there's over sure that that's I be hopefully that, term be

this. this I'll defer next Susan to to we've drivers let On major that's on X. over now, mean, with one that. there's just break-out that to for to be Quest X] of headset going in year the of thing of And a came biggest that [Quest least I don't bringing be going numbers just the me XXXX And is basically, we think I that the for a think big we're to to right. but second. is out one lot the launch the going since at RL, released market I when related near-term (ph), and expenses jump to right that of

thing the would that there. to I that's think I point probably main So

to doing continuing neural AR to the that interfaces continue work, -- think, the looking work. we're We're some work VR the at and

get these areas. degree, leading time of industry I gives done, we're that. even what are as standpoint, though, been we're here, see because an most in think And more investor people that to we confidence quite aren't others from as on track. horizon good kind right so to the It's the long on have of investing it in some I know a I us

might investors spending to business areas. the are leading we big I We're we've that in believe to -- over investing might to near-term of that long-term. that, see My ambitiously in term. here lot in results think time. be view us while they're the deliver want going A these less in the near can good is want we shown -- I

did continuing that. over-time I So I'm we planning that on that. continue will to And we do do be believe to that happy

Susan there's anything don't I to you know if want add there. So,

I sure just clear. don't that making enterprise first a of revenue separate we're clarify quickly that so a just me want just to couple let lines, going we to result topline totally things. Sure, the on question, expect Llama add Very in is

that growth platforms, have the in here. components long-term our fact are on Labs ambitious question And Reality to social Mark really horizon for Metaverse, alluded this interfaces. is about the the On across to second lots roadmap. Reality in operating of Labs There VR, losses we multifaceted an the portfolio time XXXX. AR, long-term horizon the neural a return investments evaluating

R&D products use our that of we're about But more we're the are weigh smaller, going make conducting growing learning devices technology growth demand the existing to et subsequent lot vision investment our cetera. the lot constantly is driving and enable of A near-term, focused around in hard here. inform the clearing to that cases less, less, future So technical cost here solve on and will fundamental adoption hurdles is plans. of problems around that's that the

think But Reality be said, to In year-over-year be combination changed we increase haven't both it really significant long-term costs. us. Labs expect to Labs operating that's side. specifically, losses a on Again, and our meaningfully driven XXXX. of will So and Reality a again, for that the we in I opportunity as continues headcount-related ambitions operating in XXXX by

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

open. Your is line

a we we Great. month question. for Llama, move year taking talking things ago talking the were AI. quickly, start about Mark, Thanks a talking like Reels, weren't we were about the barely of ago, about quarter

changing your at where spending are kind how really and the of your of Would the you some of time to and changed? of If just are where get that kind start year priorities you back time. color think kind today prioritizing you you're and the on to love kind just of how

core what are you. improved that especially sector? you driving growth, the of And obviously, we've would in be color seeing then in impressive, contribution, just Advantage+ question, rest the the second in terms vertical love of acceleration the of of relative ad seen kind on what growth get to I the to business. really kind of some really Thank products adoption kind of some of

second. with first actually can our now. pretty I for the Yes, the start I few and been think then priorities consistent years Susan can have a take

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of that the are, of are gives makes us we adopted are from hold of great faster the we're do there from that way. that the us it work. market that signals I the getting is certainly we think the sort think side, but much and in there. than So leaders that nothing confidence which a somewhat the except change expected. there's getting and it we're don't a that necessarily it's That's I that We are in we're a not otherwise we long-term We think building think fundamental will doing, other things of lot still on sobering don't seeing lot sort that where companies market signal, ahead thesis going view we be to respect rethink

thrust we're going fall on in I and that. AI to we're So, continue Metaverse of as think of the focusing kind the other doing what of out big the all two things

the take acceleration. that And the will around asked Mark I question second QX you revenue

there So, was the Advantage+ core of the I think the in couple ads on products. One around were was business, acceleration parts. the second

there of highlight the factors driving are revenue few I'd terms that. acceleration, QX In

quarter Ukraine of the demand we're services in period, The weaker first is, full including first and our the frankly in of lapping the suspension war a Russia.

to lower saw were headwinds supply and to add Reels we for as third, continue FX improved down And there the us improvements increased quarter. we in including headwind. Second, work monetization Reels performance this revenue

helps three the So drive in acceleration all QX. things were that revenue those

question the to and that the Advantage+ DTC launch especially right cases their brands of Advantage+ unlock gains. success multiple AI-powered have adopt strong Advantage+ seeing to like verticals good terms we ad it CPG, advertisers seen traction with use adoption, easier for measure we're we've continuing and we're products performance and features make one other verticals retail and market. about and then campaigns to specifically, them of in With particular, is e-commerce with now In specifically, in the Advantage+ for

So pipeline we're about. got we've there a in excited lot the that

first different advertisers iterate which into shopping then to to the imply test and same very Advantage+ portfolio were many the Advantage+ area, helping the steps experience. quickly this campaigns, both For and ad-buying take of that enables our playbook basically us of sort but broadly it of that specifically foray end-to-end more

ways really and to that So is we're invest to deliver measurement we ranking continuing seen continue of recommendations good a it's and and using we've our advertisers the systems that of and it's but many engines, help we're performance AI advertisers. in, to one area that results and results from to more better promising think feedback sort make to ads

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

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billion in want to on annually follow-up and Great. Reality Thank you next question. passing taking just I for year. increasing my $XX Labs, losses

complement standalone Apps Just you're of maybe it Thank about if a the either from think about Family the or about thinking investment, as perspective? on business, the to you. -- investor understand thinking help how you're an a basis that ROI us on

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

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taking you've that it but little touched look specifically, Mark, the for from as leverage time. Apps more on, a to product you learned to a also over Family one you Thanks just for One bit, questions. about Susan. of bit for the for platform can on what Mark, but additional launch not just you early Threads talk products

you color in way outlook any And to frame then you. XXXX? CapEx And on Susan, projects Can billion. provide just increase XXXX? Thank in this there the be how could lowered and equipment the year meaningful in by $X the more delays is you CapEx

out. do over-time. exception is experiences that and Threads, of too early And spun of apps. tried general, course standalone that inside was haven't functionality had -- on it's but a in Messenger, started-off bunch with building kind to mean, analysis. this the a its lot I'm biggest Yes, on one-hand, I we of standalone success kind we've Facebook to The of of maybe

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the experiences, just I it When like at like social should be this. all seems different there look one

to ahead. But a to and there it's have were where work that of that this long been why about case it's historically, on really be reasons a I awesome optimistic the road think I'm but point chance you that going get are. we can to might not a lot we

And impact our and Doug, XXXX. about your question on second forecast CapEx the on XXXX

way particularly forecast start that we capacity that that our on call, center I'll some of we gave is with XXXX, efficient needs, that's we by ways which had towards more XXXX. So coming into to were in well that'll reduced and and we XXXX just be in in deliveries The driven servers savings, and shifts XXXX. some projects CapEx, allocate that previously various planning both where for push as server mentioned in delays in data the we've as XXXX associated from all I CapEx on for non-AI the underutilized been cost capacity identifying

plans. We're on XXXX still our working CapEx

higher I be XXXX on than in that this finalized working XXXX. But we'll yet we that through course that haven't be We and that will expect CapEx of mentioned in the year.

expect and data continued the all to both servers of AI the the in growth workloads ramp-up across across spend then, both servers work sites we AI core the certainly data course, efforts. XXXX announced our we've the grow capacity late that center expect construction along last that then AI ranking in And work invest as add we in support also We architecture of workloads also recommendation we to more new refresh center just for gen next some year. to with AI support of site. our on with XXXX And we non-AI to talked as about

Youssef with of Squali Truist. line the from comes question next Your

Your line open. is

therefore Llama you the this touched open-source little maybe. Llama over-time. and source Great, process see this to potential on greater has garner likely Do with and be market to and just one it on companies early is win-win how for Meta really potentially One approach on this Susan [indiscernible]. and this for of one superior very Mark, as there you thank in adoption, we the situation, with or but the earlier, much this how is one versus going you will one-side close- taking a large see you you how questions. for considering do evolving the are debate been other of Mark X

from a of And of which steep just QX easy, then, XX% sustainable remain you. midpoint of acceleration XX% QX, or year-end. XX%, you look could help the is into pretty drivers the Thank pretty for implies Susan, at us that is that understand that comp your acceleration? at And QX growth, into guidance maybe as the we

that to of bunch were briefly first it. the will speak And there companies that can reasons I There and to build model a a then I a for to Yes, of one. model this. AI continue be lot think there their both closed models. and access do open business obviously is to sell

we sort that of want it we business making products. have building business That would to undermine them, open model -- view to building, our for foundation not the we're for is model, their model. the So

quality that we So that the model improve of for by basically working building we a on the team quality our business the that. is it sharing can products. have and improve of of win That’s better the

So, I those you'll think see models. both of

the everyone of need the saying them safety past that of certain for can out a get a once will AI openly. also become thinking are it who important become of number There questions There I continue to capability over-time. some we hands people to that, are there think, just level about are models dangerous in

clear I today. point think we're at what not that I is that, pretty think

folks exactly reach policy the point generally what that. people who not and that today consensus were think point not and among you it's on this working at is clear at I that industry in are there that

So I making were concerned there of safety kind actually good who people think risks. argument are are faith, about the in that who

we business, that think so wary close, want that's I that probably making I there because to be there they out are more So to need are of think be businesses argument, that. their that because some it

for think safety the reasons. business reasons of the I reasons, those and But both

and be to whatever be opened one of it's a is going I think to be closed continued mix there just models, will thing and not like end-users.

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not dynamic to second open-source but out we're at the because be we threshold future, a for and open-source evolves selling that going model, we around in to want the space do may and lot easier critical now question the -- on community not business landscape stuff, really sourcing future other at do access that not of by the it in for we single us And Llama to thing to go and the it's open have people's cross safety and a I did for some we're every to we're just the to safety. it's in We our and if there right intentionally with not makes healthy since the industry. the least, the because look better able future, our products to kind be thing share think how think the it say this

And you, Youssef. thank

question, will For take. I which your second

forward You that maybe and outlook our revenue looking QX asked implies QX. what also into about

further QX. the that to on acceleration we've So, guided in

year-over-year. I'd First of XXXX revenue out just declined point that X.X% all, QX

a a year-ago. lapping demand much stabilize. really year certainly we've we're demand this And weaker So seen period

easier And so, really compare. a it's much

are tailwind to is from flip going a last quarter. point that one to also currency headwind expecting a We point three

core really benefit time our been long historical think earlier those I and monetization executing mentioned this I've And the I investing in priorities of for work call, as for we've us. on grow well and finally, investments from key to to engagement. And made that we've we're going a continuing think across all and

It's in about terms there We're same what sharing year-over-year again, compare outlook not this for the fluctuations last obviously than year. period. expecting demand larger be in advertiser volatile would current we're been in had in rates tailwind QX growth some a to applies a weaker QX. yet, a FX sizable are QX. the be QX point In QX, a pretty it and of we've But to means over tailwinds revenue at

wide predict So, our outcomes And while we're advertiser harder are that's outlook, certainly a to look QX. strong informing possible there forward. of and now seeing we range as it's further in demand

question. Dave, one last for we time have

the RBC Erickson of Thank you, Ken. Brad will open. your come Markets, line line That Capital from with is

Yes. Thanks.

Just the CapEx. guess, I follow-up, a had on

outlook. keep Just XXXX in to you CapEx process, planning for that alluding the

new here to I lot central really think product, you're instructing number. like of that to going it commentary be implies that sounds your

on in Thanks. dependent is just based growth also Just curious it the XXXX the view relationship and there? how revenue

that and Yes. Thank one. can I Brad. you, go-ahead take

engagement AI underpins lot So recommendation an to the monetization powers there is and is the where our systems, that the both we're of as growth of to and able our which and growth, well feel-good components XXXX about to to ROI drive measure the want we couple is think content ranking growth. our those in there, I and outlook. and a of our driving our growth AI that. area investments core the continue as thing investments ROI revenue that's we investing both work There And of ranking work, in which are really investments the CapEx appropriately a

capacity, of There where advanced mindful about is Gen need AI what the features and our consumer decreased don't don't inform products place business next-generation yet we of of the we're another to any training efforts intensity. ultimately going we've to have the that much same clusters over a capacity that's time, research and around and those of but component, of XXXX we exactly which in also AI and capital desire the talked adoption At know since at-scale scale being is standing inference long-term deployments we facing will need. already is the how

We think is going compelling capacity and some be of both opportunities are these investment AI fungible. the to

of and some supporting need to work working we to Gen ads needing able be investments these intensity plans, intention allocate have of if don't AI XXXX up. to our will mindful core over So the reduce planned really will as are quantitative it time. But work our for we're capital a the but capacity outlook end-up we AI on still those and clearer we of shape more our our engagement,

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

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

your now may disconnect lines. You