Facebook 4Q15 Earnings Call Notes

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Mark Zuckerberg

Free WhatsApp

“As WhatsApp has grown, we work to keep it fast, simple and reliable. And we’ve seen many communities come to depend on this as their main communication service. To serve these communities well, this month we announced that WhatsApp will now be free to everyone and will no longer charge the subscription fees that many people were charged after their first year. We think this is an important step towards creating and even more ubiquitous product without affecting our plans for building WhatsApp into important business in the coming years. Later this year, we’ll be testing new ways for people to use WhatsApp to communicate with businesses and organizations that they want hear from.”

We continue to make progress with AI

“With our working AI, we continue to make progress towards the new generation of computers that can see and under understand. Over the last year, we published dozens of research papers including some of the leading work on image recognition and language understanding. To drive the entire AI community forward, we’ve also open-sourced software and a lot of new AI hardware platform.”

We’re happy with Oculus preorders. Gaming is going to be the initial market

“I will take the Oculus one first. Yes, I am happy. I don’t show much joy, but I am happy. It’s going to be gaming for the beginning. That’s the initial market. There are about — I think it’s around 250 million people who have Xboxes, Play Station, or Wiis. That’s the initial marketer folks who we think are going to be most interested from the early VR experiences, especially at some of the higher price points.”

If you show me a desktop product, I’m going to kick you out

“What happened is we realized that mobile was growing faster than desktop and that people were shifting their usage and that it was the more important thing for people’s consumer experience. And that’s when we made the shift, not in our business first but in how we develop products. And I told all of our product team and when they come in reviews really just coming with mobile. If you come in and you try to show me a desktop product, then I am going to kick you out; you have to come in and show me a mobile product. And that I think was just as a crude leadership tactic, somewhat effective and helping to motivate the organization to shift its energy towards focusing on mobile.”

Sheryl Sandberg

2.5m active advertisers

“Last quarter we announced that we had over 2.5 million active advertisers and since then our growth has remained strong. This represents small fraction of the over 50 million small businesses now actively using pages.”

Advertisers are still underindexed to mobile

“n terms of monetizing time spent, it’s certainly the case that consumers have shifted to mobile and businesses need to catch up. The exact [ph] percentage we can monetize that we’ll see, but we certainly think that we will continue to benefit from the consumer shift to mobile, because businesses are behind. If you ask even our largest clients, our largest clients, if they drew a pie chart of where their consumer spend their time and money and whether they spend their time, we’re still under-indexed.”

2016 election is a big deal for ad spend but so are a lot of events

“Yes, the 2016 election is a big deal in terms of ad spend but so is the World Cup, so Super Bowl every year, so are events like the Olympics. We are excited about the targeting we’re able to offer for our ad platform. ”

Dave Wehner

Non-GAAP measures exclude stock based compensation

“our non-GAAP measures exclude stock-based compensation and the amortization of intangibles.”

Mix shift driving changes in price and impressions

“in Q4 the average price per ad increased 21% while total ad impressions increased 29% on a year-over-year basis. It’s worth noting that this was the first quarter since Q3 2013 that total ad impressions increased on a year-over-year basis. This was driven by an increase in mobile ad impressions and was partially offset by a decline in ad impressions that were heard on personal computers, consistent with the ongoing declines in PC usage. The reported increase in price is being driven by the continued mix shift towards mobile which contains higher price newsfeed ads rather than the mix we have on PCs of both newsfeed ads and lower price right-hand column ads.”

Do expect tougher comps in 2016

“the overall macro-environment introduces the level of uncertainty around global growth and exchange rates that could impact our business in 2016. And we do expect to face tougher comparables as the year progresses, given the remarkably strong advertising performance in 2015.”

Quality of ads has allowed us to show more without harming hte experience

“ad load is definitely up significantly from where we were a couple of years ago. And as I mentioned, it’s one of the factors driving an increasing inventory. Really one thing to kind of think about here is that improving the quality and the relevance of the ads has enabled us to show more of them and without harming the experience, and our focus really remains on the experience.”

We think we’re benefitting from a strong secular shift to mobile

“We’re obviously benefiting from a strong secular shift to usage of mobile and we feel we’re very well positioned in that. We’re see more and more advertisers move to mobile; they realize that it’s no still longer question of whether they need to be on mobile, but it’s really how they’re going to be on mobile, and we think we’ve got the best solution for that and we’re investing to make it even better”