Meta Platforms (META) 25 Oct 232023 Q3 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 Third Quarter Earnings Conference Call. [Operator Instructions] This call will be recorded. Ken Dorell, Meta's Director of Investor Relations, you may begin.

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

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

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

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

news smart are in. There be discussed everyone, XXXX. first X, of quarter mainstream reality all parts of our Thanks, expect start describe Meta next are rolling our ton meaningful over all out apps people mixed lot every coming billions new more. continues every our one take rolled AI that to business We fun. We access we with Ken. quarter today. some Ray-Ban started Thanks, The generation advertising, to fast. consumer the our use new creators a than business apps joining and questions, AI, millions and across And and information their plan this our year, X.X interface our is of AI of our AIs be photorealistic can can up that's messaging, to product good that eventually, started going just is But different more AI produces getting annual innovation And people articulated rolling going the get that business with of We now very experiences a first going to we just right. built it's AIs their All platform glasses, of launched launching to an year. have creator out real-time the experiences We estimate in the Connect a was AI experiences expect can image to use them of vision help theme and or images these enables our a the it's that fans AI who use that for going which and least device is and business used be at them. and images. time which that to our of to This in you every to all work and we of interacting community there our are to for glasses that much interact going our launching conference, business. these for launch so of people think Meta that and Quest our with build of services, having billion AI held Emu, doing. The smart messaging, AI, smart And things just the before Meta that transform big people we hundreds tune so with we that and an a all month. to And Connect do an can to engage feeds, and we community. creator at Connect we're studio messaging generate the I snapshot let are high-quality we have way our We stickers become customers the with of access dialing that creation years. that AI of next answer create that exciting support. and assistant glasses the to to alpha Connect and started early done the lots for and next model of products I experiences help at sales out to to that hardware,

operating stability creates culture very focusing on see forward, both efficiently lean also because next As it results provides to more a we're been continue our long-term because are this we planning what world. share And far. year and thoughts I'm to going it and on few ahead initiatives a through planning and a I've to disciplined with volatile in so happy for our looking year, want I expecting.

I headcount. Now priorities, in AI compute in avoid our engineering investment XXXX, be resources. terms biggest to and allocating area want But in lot a will both investment of of new

to we're number the projects of company going deprioritizing non-AI across on towards instead. people to a So AI working shift continue

right to to teams backlog On year sizable layoffs going our a that we since those is into skill X hiring still being included to XXXX. And sets of be the that certain flag recruiting hiring want out front, now we're roles hire dynamic others. for this part able swapping earlier I have

temporarily product next the updates. work we get we're now though to into our going year slower actual hiring So let's headcount that much may though grow planning that this backlog. All we're right, as through going at faster a even -- means rate be even rate forward,

well. estimate now increase that with since which continues than Reels, time driven with ranking all has and to spent very Instagram XX% do the in We start more we've Let's that launch. improvements on made, Reels product

from to initiative to overall now company We apps. being neutral our earlier graduated expected, ad than a net that also Reels ways, reached early being a many monetization estimate part Reels revenue. of an we In now milestone has now core and is

XX overall growing to also than as part top lot our is that forward, time it of focusing of X, are driving will Facebook we're models on the And we're going across all AI model video open forward. half that, which map of building going the AI. month. more is foundation advances do business be than at spent Llama there's of but AI So earlier. last downloads with product like a I And leading which lot now a our source performance. to these. All important Generative and our and Llama product on portfolio more up believe going services, on also Reels, outlined of we increasingly make continue million Instagram. look road we'll of right, more

was engagement. and X% a on generative hype technology alone, in also And improving seen very quickly. AI-driven on it set increase also right time there that, feed and of a on powers recommendations than has of Facebook a a is recommendation spent ads systems continue sophisticated This improvements. to as Instagram now year recommendation important impact that increase this grow result AI our Feeds, less we've Beyond incremental AI their different integrity systems. and very Reels, but X%

a ads to are reaching and week give believe click our continues day rate globally, billion advertisers of are using in you than the be of also creative. Business message our images a a businesses every AI and XX% advertisers has their XXX sense than WhatsApp messaging half across run to more tools of like million India look creative optimize next more scaled and from for could ads $XX driving and will to now, major business every business. India conversations our more our grow platforms. with of on when shopping and services There doubled on than text Revenue year-over-year. Our also in tools To between people Advantage+ what this results account. campaigns Advantage+ people message app pillar I it's our

commerce Thailand way. But expensive and expand for this down this customers makes have And the I Now those will there's most with earlier new for messaging and text. be too into and that over to in commerce support. Today, and is of is message I an world, world. hope AI a is the to that be AIs labor that messaging up sense for of across of have AIs, lots commerce is set larger commerce people parts people labor in business like help the that the cost low to enough Vietnam, countries cost talked business a economies business But or in this we any it can big enable of huge to to with opportunity we where businesses countries that corresponding with about really our in think that happens amount opportunity that to cost easily the of bring going viable.

far. I'm vision can I I we is billion-person time million and give public trajectory. getting a for have work important further. few a X so going we're on the to And to point more businesses a a be be chance There for think to app that we this love that positive. tell, are to quick on Threads. actives there From us AIs should community business We're in I making is it achieving thought now a that be update just the with So growing conversations we're our if XXX for happy people what for an where want good keep right. there. All X more into months bit now monthly more XXXX. I we of under a focusing at then the very point. And this at years, going focus long think

next-generation We other And just powerful X, addition in packed a reviews workstation, is great. best or price. this. to it's And finally, holograms. The around been to when or Now with and TV competitive our your how Quest that's play digital games metaverse. into pingpong to factor mainstream objects big-screen than the is graphics very people Quest the physical we on device, you at first to a a in And there, it's thinner whether table long-term displays your But on bring have chipset Xbox most yet friends a for major that breakthrough see X. that headset lot and you, you and including XX% Quest most space, that's room you the your AI, that focus put improvements important means launched early your yet been games of our can the Xx performance, X a mixed our form a see the device. reality respond fun physical as

first Meta also And But smart can you classes We glasses. now they're next upgraded the basically generation the built first lighter, in. them. from clear of Meta every more livestream camera, generation with even way, They're the styles. importantly, in AI shipping audio, smart better Ray-Ban have launched from these they most are video

device So form are it'll your for day, questions glasses right ear. And the you they your the ask in ways, factor can an in ideal AI AI throughout because forward and your I'm and answer to positive, you glasses early many evolving assistant to enable and hear. over hear you what see what the coming reviews see years. Again, the the it's so good are quickly see looking to them space

is We Horizon growing Super and X. also come on online. progress worlds are Rumble like new as making Citadel faster software more the Metaverse for now

express well, off Horizon an out Codec phones, a And both of important devices. important couple recently. We we which and showed of our I be milestones PCs, across for testing as had going tablets that build metaverse how Avatars for also started and the to we've latest with is the avatars avatars part

together Now going Connect, and is decades most physical experience. digital the of at and worlds our to a industry be for interesting as one the over I coherent how think our bring I we coming good said into questions

the come world. I bringing think see physical of mixed some to reality building digital objects we're together between into starting the for blocks

with Our AIs all kinds smart interactions all different AI stylish studio form and factor. eventually bring work glasses of for into to a this together enabling

the long-term We're a I of very in good our initiatives. for update recorded while pleased efficiency And excited state quarter. our So organization, on investing a right. today. X we operating with about am for future, years. leaner my and shipping I'm this This the ahead. All was highest just That faster progress our is margin the also all the map year. heavily of advancing in art road

product this operating forward and discipline looking I'm to forward. So carrying momentum

Susan. and always, who on with And As team are this our all on you us. of to here's thank journey you now everyone

afternoon, good and Mark, Thanks, everyone.

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

Family In lower offset Apps R&D costs as lower terms content X% sales were X% costs the from cost and quarter of the specific employees, primarily G&A down higher operating of decreased headcount-related and marketing by and non-headcount-related revenue partially headcount-related line Labs XX% increased as infrastructure-related costs. costs. the legal-related increased lower partially to Reality to by Labs items, were We expenses. Marketing ended Reality primarily decreased higher offset quarter. due due with lower from second XX% X% over XX,XXX expenses. spend of

headcount quarter of majority third by announced longer employees Our no the substantial layoffs. previously included impacted the the

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

the construction center income lower data $XX.X cash Our $X.XX in ended income and prior to billion, design and on as tax which and paid we A billion and per timing. expenditures, centers $XX.X payment as was was finance a our rate quarter from billion in the network or the of stock repurchased billion to common the Capital leases, by year billion, $XX.X XX%. Net share. third were prepare including as quarter center flow with data $X.X and infrastructure. in marketable for spend principal below quarter. was due data in primarily the quarter Free Class new We billion $X.X taxes server shift expenditures was in securities deferral benefiting investments to servers, levels, well cash our driven debt. were Capital of fourth payments $XX.X

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

Facebook used total to Family continues one $XX.X approximately ad our CPG commerce X.XX currency Apps September of people estimate in vertical the revenue a on a people year-over-year year-over-year. at up gaming. largest of XX% at of Family on least billion was monthly that X the on X.XX basis. Within ad billion, Apps least and of XX% revenue, basis. billion across billion, community users the approximately QX We Apps by Apps continues compared Our to daily basis remains growth, revenue grow. and to that or $XX.X of compared was contributor grow Family Family approximately QX up billion XX% Facebook Online constant used online was million followed user globally to commerce Pacific users and represented September. to daily Europe X.XX and reaching was the monthly at active XX% geography North strong X% year. X.XX and DAUs of MAUs among China last followed last strong. ad of in spend revenue growth advertisers or XX On year. gaming respectively, XX%. engagement grew in active were basis, X% million XXX in billion, benefited from strongest and America XX% customers XX% by in XX%, up a markets. Asia Rest and World other a by at at or

in strong impression The pricing regions. price currency especially total regions. services Rest year-over-year ad decline from decreased lower Foreign and revenue a the growth growth by tailwind mainly international driven impressions World. was growth across was X%. Asia in Impression the our XX%, average and to and services Pacific monetizing all served was QX, number driven In per of advertising by of ad increased

platform. While from WhatsApp business overall ongoing improvements growth QX, drive $XXX our continuing our improved targeting pressure to strong from results to add we by factors, for pricing Business advertisers. Family driven Apps measurement and under in messaging of these remains other believe XX%, up million was revenue revenue are

our was $X.X billion, billion, lower Labs down growth direct QX, sales. loss our to representing Family income expenses operating expenses operating lower higher than primarily Reality Apps infrastructure-related as offset operating Family Labs lower Labs headcount-related the offset was FoA continue down XX% segment, margin. Within $XXX in legal-related investments was marketing revenue by XX% operation $XX.X X We QX Apps billion, our expenses, Family operating of the and representing were $X was were XX% expenses. of development of X% a expenses more Reality year-over-year by majority expenses Reality due In million, overall $XX.X of toward to costs Quest flat expenses. as costs. non-headcount-related our and headcount-related of were approximately of Apps. billion. were

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

advance first, community. from Facebook and our systems, content developing more and entirely additional see even broadly in and video advanced the opportunities content grow systems incremental continues recommendation to engagement Canada. continues engagement. further feed unconnected new to Instagram models. We're overall to our being U.S. our These to improvements accounts On Reels and deploy to increasingly the in as driven we gains experiences drive future strong. also for AI-recommended remains including engagement, on incremental by and we the become are more and

are years investments our the pace to of AI valuable in products. consumer Our into that have research, gen meaningfully our support on and make first are learn enabled capacity over bringing we're tools leading use time. to in month built that models AI top these how generative research us experiences and to accelerating recent our last of people launched AI increasingly from them excited foundation We

from year. also we remains strong Aside going momentum AI, compelling a on the long-term we're to product Threads opportunity, generative build and next into have excited

Turning to second driver, monetization. the improving

it Facebook. on-platform level on on monetization On experience systems progress data is core and made has products. part to this Instagram business ad connect ad now Reels, to and drive performance neutral Reels the year, and We've last messaging. X businesses, where to across are of overall and it a a and we Reels areas over scaling building tremendous focus their improve consumer at now experiences, revenue. continued the is AI have product, as become making for Reels There are leveraging increasingly work: continuing for of including monetization, our Here, through improving and marketing easier to creating marketing advertisers engaging our

the As Reels revenue we don't from such, going anticipate forward. quantifying contribution net

We also give increasingly help be will supply front ranking Reels more will while performance engagement to while Reels product and to anticipate of revenue ads revenue work will we Instagram still going growing this ads get work revenue XXXX Facebook. on improvements businesses video modest and focus balance and in across and continue to ongoing Reels our further through tailwind in improve to holistically overall a the strike to our forward interactive people. making We and within growth. be growing But lines right between more engagement on opportunities

a Next, complement to on-site quickly progressing be continues also Facebook develop of with once business by relationships and to the in already click-to-messaging commerce we're messaging, very We're enable annual AI messaging, for conversions. customers Click-to-WhatsApp we're click-to-message integrations to we partners at efficiently in businesses thread. Outside announced services the run ads excited which to it And to helping work and third-party ongoing traction grow quarter, easier ads. few shop right, in run this big for believe seeing experiences. Instagram but businesses seeing a messaging experience we they're particular rate. sustained is expanded set down-the-funnel future. shops We're nice ads. revenue more take good excited up to shops customers make of ads. a potential third and ad momentum unlock with testing or early at on with scale. in about messaging the We're time as paid serves multibillion-dollar with a further started business a about for with And term, capabilities the longer businesses get our We've to recently we'll AI help a will the potential message with our

it Conversions data. their for investing ways impact a for across easier use advertisers it it our third API, of understand marketing work adopt easier of to making its our advertisers in broader make The connect and We're set to objectives. to is piece

click-to-message our announced business to and understand and out the better AI. API for Messenger for In for of performance. Last, Gateway. WhatsApp now we also improve API their support AWS, addition the the in existing advertisers Conversions Cloud can support September, messaging reporting and We've Google value of enhanced introduced so Conversions rolled

is the advanced Advantage+ AI our automate commerce to ads their We improved other continuing advertisers. use are with provide systems performance of for advertisers AI particularly products, within We're more products to products shopping ads driving seeing leveraging that to drive campaigns. and suite solution, using advertisers. which We're increasingly larger, models and to adopting ad advertisers strong online to sales. and looking increased suite of power across our of automation around traction optimize we're several invest our online help Advantage+ more And in CPG Meta and

provide we headcount. as XXXX. a our are turning outlook, that note to our currently our significant to point on important with to to like revenue is One operating Before we plans budgeted hiring look I'd underrun against XXXX color

freeze early undertook XXXX, much late a broad-based as hiring had we and efforts. our For instituted of XXXX we restructuring

to teams deeper part order restructuring different as sets they to need. that addition, skill reductions In many of elected those in efforts, hire make headcount

that planned since have and for originally will We that of was much expect occur but hiring hiring resumed our XXXX. in in XXXX budgeted

part hiring underruns that focus this to the to year out areas our our end efficiency is in-seat current our company close in to rate monetization expect budget, to grow the selectively and higher effect of expect we slower area plan We by those than we of other efficiency-focused our across at core process investment products, efforts further a we that. tooling toward our XXXX and largest AI incremental headcount some and reducing priorities: be reported Labs As budgeting as compliance and in generative company offset across invest internal our efforts. continuing Reality with areas, and AI, but XXXX. The net in meaningfully aim research increased allocate XXXX infrastructure, to our AI needs. as regulatory Of X headcount well we to beyond of next growth XXXX as headcount of planned hiring key toward our

in infrastructure-related an we growth costs higher running from as expense next and depreciation expect operating We also recognize year step-up expanded infrastructure a footprint.

substantially that the regulatory Of landscape, our and financial could business the and monitor In FTC note, on our impose including active the addition, additional and is seeking restrictions to in continue results. our the U.S. significantly existing legal we to EU regulatory to modify operate. headwinds the order our consent and impact increasing ability

matter, we are but it impact our on are have if an contesting this unsuccessful, would adverse We business.

to revenue outlook. the now Turning

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

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

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

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

sharing outlook expenses, tax We for XXXX are our preliminary also and rate. CapEx a

expect We billion. $XX expenses to of total $XX the range in be year to full XXXX billion

few in to XXXX. of to expect a We drivers expense growth factors be continue total

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

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

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

we expenses down expect workforce will add payroll toward our we to higher-cost in priority incremental current support we to which in Second, XXXX, anticipate technical continue roles. composition growth and areas as work talent underrun shift our hiring

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

CapEx the outlook. to Turning now

range driven billion XXXX the We the will in in efficiency preliminary quarter expect future, expenditures tax quarter range announced we anticipate rate late as to and tax our including growth $XX to by year call. In financial any billion. for to the and our expenditures non-AI forward Please Absent -- to the from improved be $XX third our billion priorities. similar capital of rate center tax in XXXX. for the in XXXX forward capital In we XXXX XXXX and expense, as $XX fourth year. On a of capital results, to $XX full that into on and on architecture our CapEx closing, AI and of are year was we our last initial U.S. across note with estimate $XX new year servers, fourth We and tax. billion, we be expect data our billion $XX billion, to law, changes expenditures quarter both expect our prior to tax rates centers construction ramp data of sites outlook business investments up quarter with good updated translating to momentum to be full XXXX are this expenses, company our seeing estimates. we're the provide outlooks efforts our hardware

and each are on this in with work the to in that excited that, our people We how as we XXXX transform engage let's up years With meaningfully open potential areas invest the build for have to in services Dave, with other the call ahead. questions.

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

I have X.

Mark, The first one, about just you wanted to model strategy. ask the open source

in unique source models. open of developing AI leader a You've been lot a

Labs Can Family for on Apps or ported you that the do understand time? the then at at And you second the strategic Labs. over from How I just source expenditure could give product now. Susan, development help think partners about distribution and growing opportunity adoption? Reality high-profile on efforts Meta to the open the scale some got model operating losses Reality of You've over used ecosystem. within be us going and examples also of us the perhaps understand one,

I AI the Sure, start models. okay. can with

things forward and our as we think are and so kind often there's direct innovation the and around security standard benefit of we We And this not of there. is pretty open of it we so that well which increases do drives there's a creates industry, product that reason adoption products why lot benefit of as more a faster our a scrutiny history safety-related kind of benefit on a have the the because infrastructure sourcing long code. parts

that And sometimes, something more reduce our which efficiently, as seen can which run running compute. infrastructure helps models make it costs we've is open more companies with well, or

that think efficiency a a I innovating here happens that of big our in any there. over is on big a good sort there's our time. aid so of chance obviously, So that, thing costs, And expenses driver are CapEx

with time work over our the AI that come that with of that work as the to will we've ourselves attracts shared does being just distinguish lot is place tried here. piece be other The to that industry people and best a a efforts,

people do that go way billions also to industry. to you're to But the touch that's One of thing the want engineer most work focused work this researcher in be people of for lot use. a So going building is really that by to products to where place or to to people. going you standard is the a area, the build if their want

and do exciting us work. So leading that's helps it pretty

lot the secret at to on same sauce internally. that we While our models we're have with the and model, logic the product into that able the of train product also has specific time, of top further data goes a

a while think of economics improving I good a So the improving balance do we and it leading product. of build what improving the us still recruiting and around quality it's enabling to

operating some And go at and ahead question, Apps whether losses work. your Brian, take is Reality I'll to the which on second of Family that any benefit from and of Labs there's

benefit Reality work. such get that are of costs based should operating I the first, Reality their majority our Labs. our are Labs COGS of headcount, to on the direct Reality product remainder of estimate indirect costs Reality and expenses The as Labs costs facilities the clarify, in allocated total Labs So costs for

the is of work near online into Now you'll some Labs ways of see the as interactions. interesting working future Family that term. do expect the build And you with Apps we alluded Reality in translate to, to

avatars, created seen far. X billion avatars so already For you've example, with

times. create the Facebook create with Family we will how to of obviously, a And engaging making a as Labs that more we that obviously Family new increasingly and glasses within really expect easier there's you're view the a Meta capture Ray-Ban having on our for the will ecosystem. Longer ahead, our that and unique content And years operating Apps helped that ecosystems content moment by shared Family of Apps we smart you're increasing to should live-streaming, of experiences. they'll on even experiences capture top that this the But hardware it Instagram operating have our Reality become of we're think of work develop, term, our all share across including glasses person of segment will first Apps. doing while computing and the Apps, driven that the to are in you assistant staying AI losses Labs also from We further. make enrich starting the from directly. compelling that there And over Reality arc example, glasses benefits occurring we of of Family Meta for for content can and or today the increasingly scale, the think to platform are content our be value sort of that lot at enable it see again, you think our help sharing important content the point easy content with to activity

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

macroeconomic anything view that of business, wider to divergence to globe business in Maybe levels on ad parts led conditions world a maybe the a of but might CapEx in on by or divergence see that the terms teams about able region across throughput ago some maybe capital of regional thought two, on product the being architecture, on higher different rolled call update been terms this number the businesses, be center of be you allocating I and Susan, wider thinking of about we business. output in a deployed efficiencies any operating would capital a we performance into than the data and said achieving Is the X. should concept advertising initiatives you're introduced couple less one? And it's way quarters you deploy out then the those be and have of performance there region you spent? how of dollars out having now with either the in multiyear in of a when to in additional or One,

Thanks, Eric.

regions. question, or There benefit due and demand for from in region, advertisers. this in X a other some To acceleration you EU first advertisers broad-based points. was our bit that across color, North all accelerate a you was North think, saw EU So or points strong currency your in revenue, regions. regional that little China to about America ad themes trends of in give Note in by primarily I including saw we quarter America, which regional from demand year-over-year accelerated QX. as after currency the In XX that same experience the headwinds didn't from in accelerate tailwinds saw facing our acceleration the we the tailwinds drove currency region, China growth

points. Rest flip points. was users World headwinds part Southeast X countries, Asian dynamic due the in Brazil. XX the region's stronger accelerated targeting both currency demand contributor and from again, China stronger to QX. accelerated from same We to versus in advertisers' Brazil tailwinds pricing currency advertisers demand of saw Pacific a Asia acceleration in increased strong to We and benefited the there. in

impact of on the new second was data architecture the to center the years Your come. our investments CapEx in around question

XXXX relatively through some switch We center early over work data introduced the I our data we of this construction of in us. said more on the for that be are some architecture, efficient to center had dynamics. still when we to this. as new we CapEx concept of our think to to cost played existing And pause expect We architecture going forward, it

will greater we it capacity. us and GPU in CPU for plan fungibility expect that give way the We

that the the and that we'll be benefits architecture expect gives planning So in efficiencies and us come. flexibility to we realizing years the the cost

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

here how look geopolitical then of we globe. ads been on that a of to it out ad creating behalf? first hear just the kind on secondly, going. better how And gen color kind there's some of this unfortunate love activity as that's bit The kind first their ad started a tools ahead of to this? kind of kind fourth AI to Would you understand roll month, really, quarter, for Meta's certainly little around I'd of the those creative. love to lot is advertisers Are of some using is And affects business. about

both I can Mark. of those. take Thanks,

into an that better see around this products testing these are you'll they advertiser's So we of ads manager sandbox. AI quarter ad out advertisers and text gen for as the solutions. increasingly A their tools, highlight We've of was copy selling more especially services, versions on rolling directly. AI question highlight helps Advantage+ would multiple of few so their options some then variations, our we're And them your that text first text reach original and mature, to generating that multiple that points our audience. I based them incorporate giving we them incorporated into our have in become been

helps different to which creative across ratios allows advertisers time assets or multiple creative less themselves repurpose these in formats. different Feed assets fit is X expansion, Another spend image trying adjust aspect Reels. That like services to their to

to Advantage+ advertisers' X is we're different background multiple their advertisers the audiences. catalog And images, available assets creative complement generation, making backgrounds product to creating Another for ads. actually this tailor allowing through

we feel lot new so we've really introduced And a of like products and ads features. quite

improve Advantage+ help experience the the we over You AI holidays We've dimensions in those specifically expect highlighted. I advertisers suite. our performance, to are will related about ad introduced especially ones so help asked creation sales, and are shopping gen a especially other of others of the that one the that actually number the drive will advertising

those of feedback we excited very positive. the we're advertiser think that very about So been early upcoming launches, has and all

that second the looking affecting be we've QX impact our of around was question on Your of activity world ahead business. and some that geopolitical the seen the might in and how

with East, in by services saying been a think that I can violence everyone be we this. vital monitor our the and who and services a at I moment Middle tool our our to and for to impacted by doing safe know like first, everything information that we situation continuing and the So keep can we're start people thoughts to and the connection has should expression are are And keep secure. horrific

commerce this Now say QX volatility the in online translates that, terms capture segments, that the gaming. and start how coming to of key on I we seeing at But part also guidance into seeing into advertiser That's range QX, that all, including the why continued impact we uncertainty. been first strong we've of should more widened of business, are in in our having said quarter. demand

to exposure direct Middle so quarter, ad the the as any of demand outlook. It's material we have directly captured attribute specific And our event. spend in revenue of instance, to follow other in we conflicts don't fourth the for seen demand revenue Ukraine and observed start the hard which is beginning Historically, regional conflict, for Israel with geopolitical the have while East, correlating the the softness softer softness in in war. such broader have to us past QX we

seen want drive fundamentals the advertiser to add reflects the too, into We're in here, company pleased uncertainty the continuing reaction promising business with priorities. seen we're our ad again, our continuing So to this and that engagement that are the reflected well that We've we the think, improvements. on and We're executing which trends we've to is volatility with monitor. our ahead. and outlook, I greater trends. We've of something we execution. performance landscape latest QX

areas, those we'll and to focused remain as environment. approach we'll we a navigate in So stay continue volatile our also disciplined with investment

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

and it's XXXX and faster And base the monetization a then backing time? revenue little whether chatbots know than a grow hoping to Susan, Meta Connect Susan. the products rolled about out weeks And normalized I out talk but I restructuring? about you of the could about Mark then How these hoping was ago. a do more was Mark, could and vertical off expect to over X gen for potential both of engagement bit in qualitatively revenue for AI for revenue to early One growth. talk some assistant expenses you I particular, think AI-driven improve takes you and few puts you'd

ask most real-time to that can the first. generating We talk be most interact going can could help to is the creators launched are some as community. going an drive AI AI basic ultimately, information think grow are initial assistant but to and help AI, to support also customers one lots I AIs going think and are -- are And different to about of launched Meta one we and is think with want commerce. studio launches assistant part their is And people really Sure. to engage businesses of you with. We access of their of to that get there help sort important, different images. which AI well here that think AI that several that as of that having interact idea want version characters you going with. we questions We that people we the first a

be to we different lot that So a going AIs. there think are of

you'll engaging. to that ways and really I of terms more first making use that that can AIs with, experiences to encourage think you're the order communicate things the is, so make that and at is and to a so kind think they time effect of our I AIs. What scale, can don't should talk will that you is, I of we're like I -- interacting some things people take shift it think, be over that. messaging is by these new to use and that people anyone of away interactions chats this it people can people designing make one just facilitate In from between mix fun doesn't to engagement, and make into the it group and and in apps talk with predict case If to drop But the people. of going this anything, more going these think help

additional new content, and to AIs interact think can with I almost and Facebook to should going of art going engagement. The over And and and that's also in create other. form. dynamic a and Instagram be be profiles produce to this incremental interesting interesting, medium an time, So an each and kind have be able

as will that be for think vector I increasing well. and entertainment engagement interesting So an

about excited I'm So that.

upfront opportunity messaging. which more the for the there's the on whenever other big business that so then side. about monetization, is And apps, engagement that in the there's monetization course, on more just creates I Of talked opportunity monetization,

way, things for think big to engage making it's a business I there's cost is AI so can an that that the the so in that messages that prohibitive effectively that work for unlock type in where respond of countries of can messaging -- not is a customers. people to it One model making interaction around globe cost that making the businesses key business have labor of them higher from with for

if can So think get that to to can grow that we unlock really do able the business -- to business have we that, I big but messaging and I roll a as work way, there. out think business a lot are the AIs, in we of

of kind engagement business. how view that's a this in the basic on So I think will affect

not have second to I'm the Doug. a obviously shared question. take happy We XXXX outlook Thanks, revenue yet.

and what what back some what believe we to a highlight puts QX You just volatile asked maybe about are I takes, and significant to point I'd environment the the said outlook of earlier we're in. macro about

of have an obviously will But be will be in big We're volatility area is especially that subject we that driving saw of important where models the eye lapping very ads a -- very been lot, be have deliver, the that that not to we're the delivery on and this our their continuing and periods, spend think our ads higher an we'll obviously you I our to new in tool, in a ad and continuing increasing improve on enroll ranking quarter's marketers. we're underlie performance to ads close both higher We'll on. also with keeping lot results. we've and landscape. Certainly, it's for infrastructure. own we've stronger so -- offering we the we impact think and a We've factor. conversions return market been features, advertising AI gen invested increased ultimately, something next lot year, value and a seen macro a as

will outlook. So think, of into XXXX I factors, those play all revenue the

running in investments years, than higher a talked about You And outlook expect around incur preliminary amount expect, is to next depreciation to will what's guide the operating we recent -- infrastructure of are XXXX. kind increase bit the whether will increased Obviously, for the in footprint. be asked made We the have there by a from we that tied costs the expense XXXX components the The expenses. capital larger growth growth. expense do big a year, expenses infrastructure given revenue philosophy about expense going We revenue into that XXXX. also uncertain. in larger little

second is had we on big hiring a XXXX. The that driven the driver be of into Family will payroll XXXX. we Reality do expense for spillover in of Apps by And Labs growth larger payroll XXXX that anticipate than payroll. of We intended expect growth source

we've get the as expect we earn We Reality of our influence long come talked technical consolidated outlook growth horizon, to delivering a time of in to to map all horizon shift losses, ability in that. will more concentrated which the workforce higher recognize that operating support roles, Ultimately, VR/AR investments piece -- And well the to from we things that added cost hiring year, growth higher expense information we have XXXX on cost Additionally, higher towards work And the about over we next Labs both that operating the newer, we continue with together? generally by across being ambitious composition as we and have we course, will a increase in ambitious which investments very revenue recognize be our the over of in will basis. have the on AI framework the expense the revenue non-headcount products. How that's costs outlook Reality next-gen as and Obviously, for that payroll introduced recently. our development final including past. the more those to road invest Labs time. equally income in gen

we're something very that's focused on. much So

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

how in I you there subscription how advertisers. Europe. a do an next guess a I know do with growth for you DMA that update on we'll and talked evolution ask that. comp thinking Maybe about think then going you the model the in Mark, year? about about of the Meta lot start affect you've And How could you're Europe. offering as Susan, Chinese and and DSA Maybe about that how that Facebook? Maybe, the Verified could be I'll reports Great. also press subscription for usage is think

question. for you the thank Justin,

and to course, address are my of know parts I of but I will them, think all there I if best multiple let miss do anything. there me

So the for first around legal in question Europe, the was particular, sort basis of ads. in operating

time. data a announced we personal the don't August, other in details provide DPC in as ads the an authorities intend legal for on any those possible, we consent on to have given model exact regulatory and when our the implementation EEA model, engage share committed recent update in this will We this to it. as to and the for we to at regulatory we have with evolve continuing EU, developments in our So regions. We're to further consent processing as we're the Switzerland, basis move proposed making soon but

The you was asked second about question Meta Verified.

to I markets Meta quite still, think, early creators Verified rolled we've here we're but most out for globally. So

Facebook presence continue we've to them We Instagram. establish hear feedback creators helped from as positive more easily their on and

chatting have countries, select this Instagram expand easily have plans let that to know Meta on build confidence and we WhatsApp testing businesses apps more allow businesses their begun for and with also in business. that recently to Facebook We and customers their and in they're to on the And out will with Verified customers on the future. stand businesses our right

the by So more but and we're early seeing encouraged that right early not now. very a again, to lot we're signs there, share

around Chinese your advertisers. of part question was third The

for So further Chinese advertisers spend in us QX. accelerated from

from like tailwinds and generally as the costs shipping easing we've has whether back of periods advertisers there you China, few I story other in the improved costs think advertiser of have the served accelerated has I of and shipping lockdowns, strong overall believe even alluded periods there's benefited from higher the and of advertisers, a excluding say and there of X weighing strength across particularly to broader-based with our QX, even that China seen larger such demand. And past with industry factors But gaming we've growth growth this kind also a with growth has also seen lower broader We've to revenue with strong seen years here. year, regulation longer-term from have years, would We we revenue. a past, the China investments trend clients. as nicely. And regulations sustainability of in growth been on last segment regions though in dating volatility all this been -- advertising on

the there play So future and quite for that potential are that especially many macro in there's predict. well volatility as hard recognize we to are the so given factors at

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

for quick questions me. Two

second, read X? from XX days XXXX ]? or its early growth, into First, at I about speak how is can for [ you been that last for profit share orders spend demand And It's any And as inform we X contribution think political you've it that how be and breakeven XXXX? about priced not we least been contribution for Susan, but you've weeks to then necessarily? XXXX taking gross maybe you Quest out had back in think can think should for may about

Sure.

So the with Quest first of early your signals part sort was of question X.

lot But a reviews in are time. first revenue, for early in either there cetera. Quest sharing have during for to sales, And explicit introduce reality that QX any We very holiday to X a to are have to very going excited the Quest the been think of we're people Reality shopping great. experiences period. expectations as product mixed excited out We Labs particular, et X, have we market, not unit are

early. very it's So

more the it I to many think specifics. we're it season. quite have we particular during again, excited and don't holiday in the market But in very have have to marketing

Your second about was political question spend.

which except is lapping growth saw acceleration to really in midterms would U.S. year-over-year verticals where of all the place say year. XXXX politics, we positive lead-up And the quarter last is a I so this this

not I there. too much for so this also add more So will to vertical though is very just us that a there's say small

Dave, we have time last for X question.

come with of Ross will That Barclays. from Certainly. Sandler the line

FoA core of as you AI transition studio back than that it's more and that? the business this AI initiatives And the big know AI your of rank high here other the responses, level images big bit the just agents these bigger the in And kind expensive up theme. any as on made transition? early aggregating serving little compared Stories Meta Mark, stickers than the overall but or especially Feed. cost News agent going how strategy I and thoughts to has Is would over is around to then the Reels or of a just years?

can So cost expensive, things how are much question? bring more that down? to And is there do the guess, I you

sure. Yes,

were because part, we're on precedents market going the doing, predict Meta but with this pretty there's working sure Reels, characters consumer like part don't what ChatGPT, before a there's think part. of of piece, that. a a AI OpenAI doing the they're to Maybe big that of I overlaps different that, AI Stories is analogy things it's else creators there mean, that of that but I'm is here. to do. trying we're when has type just and with how terms we're hard business to like work not some anyone In that's what there's be, we're I doing what this. And part building anyone from there's doing is the what is built some

But be. that is that build. transform which generative an AI quite to think extremely don't of there's part what and that we the technology how think is going big I thing how developing in different the know means new what But apps you is going I each predict use area Here, technology do is leading a of exciting. to I fundamental meaningfully it's around people

content is AI. either think be people more I the generated going of by edited or think that apps, time, I Feed the to for over that consume

time, content just people think they now directly based more these even for can might fun. I point make and to all the maybe will where over we have And in. Some more on be content what creators generate we'll will to of it get easily tools be interested

think that, be I that could really compelling.

these whether the but to think message message you to to that help wouldn't different to want about AI creator them can. we're with to want side, I with favorite into the or or game or otherwise they you On for AIs you where a of it's be you'll have fun, Meta a want something, that for these a you something, that you messaging any able AIs ties play kind for representing you time with at back, doing AI to looking that question directly way of have business now they normally your want commerce engage an and message have

or much video images I think have AI. run the to really advertising won't their creative, Businesses way. make kind to of own to that paired able exciting, will to had messaging would when more so to in it create to that. before creative versions eventually or going of They'll behavior. It's images a recommendation basically going with It's to easier it's text. change or that have do big accrue now ads. be to whether That's test especially

type killer off. of think being deliver to use glasses now that and may the ability mean, hardware get glasses the up It's the still. smart for out, through reality, displays of get there smart eventually reality end just to a for precursor not I case holograms will of and I even augmented obviously, think that side, cases. I a we that before sort use the were to thought kind that to On But you augmented far AI we we rolled eventually getting

the industry you're I in is be lot lot technology. everything working so is to that I seeing partially that companies building just focus I think efficiency mean, And and in. To most to doing and and I makes every efficiency, this all everything product the for you're very creative we why awesome, able like exciting like is balance like to be And weighs to to going is and costs, But the kind content metrics is this to of or broad worth to something for energizing you while, CapEx question what of like and like sitting confident the company. fit. AI comes between better I'm that this. But Feeds mean, people a I I think rethink I on between market economic be right? just and predict there it's mean, about technology company going better balance a highly are AIs think -- content on costs and the So what that's care I serve. model a is basically it's the like and now that right, obviously and one think be anything this, things or and what's of your yes, lot to of that. a to people around be that the things investing people a going once think changes just significant, very the it's important about main that along a of messaging thing the that our getting frankly, are the in hard around, and be the ability this fun are here it's initially,

on going serve have So of people, get models this hand, on bigger right efficiency, on the we we to to which train the amount be to to more things X able and can the gets as do based we're as we're scales currently, that that like now, infrastructure improve to. aspire we bottlenecked the

long about still on term, we'll once to the that over deliver economic been be that. compute. be, But we all work that. early more near be continue the will in primarily want but just on able curve. on think our we're understanding going what that to the part think wins have over we'll on work and an more time, better efficiency to of products to do pretty kind I working efficiency of these of to able throughout, pretty drive based model then good we're And products people. And I hardware the we've to the on So term, in But

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

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

now may your disconnect lines. You