Facebook 2Q17 Earnings Call Notes

Mark Zuckerberg

2B people use FB every month

“This quarter we reached an important milestone for our community. 2 billion people now use Facebook every month, and more than 1.3 billion people use it daily. ”

AI police on FB

“I am excited about how AI will improve people’s experiences across our products. We’re finding AI is both delivering consistent improvements to many of our systems, like News Feed, search, ads, security, and spam filtering and more. But more than just improving these existing experiences, I expect AI to change the way that we do business in some important ways. So for example, today to keep our community safe, we rely on people flagging content that might violate our community standards for us to review. In the future, AI will be able to help flag more of this content faster before people have even seen it. Now we’ve started using AI to fight terrorism and keep propaganda and extremist accounts off Facebook. We’ve even started experimenting with using AI to understand texts that might be used to promote terrorism.”

Now AI can target you with Ads

“On the business side, we’re seeing a large shift in the way that marketing works. In the first wave of marketing, people would buy ads and media they thought their customers might watch like a TV show that had similar demographics, but they wouldn’t know who saw their ads. The Internet gave people the power to target their messages to people who actually might be interested and to measure results much more precisely, and that was a big improvement. And now AI is taking this a step further. Now you can put a creative message out there, and AI can help you figure out who will be most interested.”

Sheryl Kara Sandberg – Facebook, Inc.

David M. Wehner – Facebook, Inc.

Slower supply growth leads to higher pricing

“I would really just point to the overall dynamics of the system. And again, what we’re seeing is with slower supply growth, that’s going to play out to higher pricing. And again, are we effective? And we’ve been effective at delivering good return on investment for our advertisers and getting better at converting what we have as inventory into what they care about as outcomes. And that from a systemic point of view is what’s playing through there.”

Facebook (FB) Q1 2017

Mark Elliot Zuckerberg – Facebook, Inc.

On augmented reality

“One of the examples I showed at F8 was around using object recognition and computer vision to be able to point your camera at something and then tap on it and get a card of information and maybe even a buy button. So there are lots of different ways that over time this kind of content is going to both augment existing real-world objects and eventually replace them, which I think is going to be an interesting opportunity. maybe not on augmented reality on the phone but on glasses eventually. When you have that, I think we’re going get to a point where things like TVs, you no longer need a physical TV. You’ll get a $1 app that you can watch it screen on.”

AI will take time

“Over time, the AI tools will get better. Right now there are certain things that AI can do in terms of understanding text and understanding what’s in a photo and what’s in a video. That will get better over time. That will take a period of years, though, to really reach the quality level that we want.”

Sheryl Kara Sandberg – Facebook, Inc.

The shift to mobile

“Mobile ad revenue was $6.7 billion, up 58% year over year, and was approximately 85% of total ad revenue….Our first priority is helping businesses leverage the power of mobile. More businesses around the world are shifting to marketing on mobile. Over 70 million businesses are now using Facebook Pages around the world on a monthly basis, and more and more of them are becoming advertisers. We also recently announced that over 5 million businesses are actively advertising on Facebook, including more than 1 million in emerging markets….People are increasingly recognizing that the small screen is big.  ”

The big question: Can people do without mobile? 

“we are definitely seeing people continue to advertise on TV and use us as a complement. So over time, we believe that the dollar shifts with eyeballs and we want to earn it from our clients and be the best dollar and the best minute they spend and help them measure across channels. I think increasingly, the question is not if you can do without TV, but it’s if you can do without mobile. And we’re working hard to help advertisers develop the video creative that really works for mobile because that really makes a really big difference.”

Leveraging internet to create sales

“We are pretty excited to have 1 million advertisers and 8 million Instagram business profiles on the platform. To share one example, an online store in Brazil called Loja Nama, they sell decorative items and accessories. Their business owner, Joanna [Cariello], took photos of her products on her phone and then created ads with our Shop Now button. She targeted young audiences in Brazil who are interested in fashion, decoration, movies, and architecture. And during the period of her campaign, Instagram accounted for 79% of her sales.”


Facebook 4Q16 Earnings Call Notes

Mark Elliot Zuckerberg – Facebook, Inc.

taking on fake news

“In the past, we’ve taken steps to reduce spam and clickbait, and now we’re approaching misinformation and hoaxes the same way. In Q4, we started working with third-party fact-checkers in the U.S. to flag disputed stories and make them less likely to appear in News Feed. We’ve made it easier to report and identify misinformation and we’re working to build stronger ties between Facebook and the news industry. Our primary goal here is to do the right thing for our community. If we can help people stay informed and make Facebook a better place to understand what’s going on in the world, then we think that’s going to make our community stronger and a more positive force for good in the world.”

We have 3x as many messages sent per day on WhatsApp and Messenger than peak SMS

“My understanding from looking at a bunch of analytics is that the peak of global SMS reached somewhere in the low 20 billion messages per day, and we already have many times more than that. Three times or more, more than that across WhatsApp and Messenger. And, of course, there are other messaging products in the world besides these as well. So we’re pretty confident that this is going to keep on growing.”

We can train AI to make sure objectionable content stays off the network

“Another area where I’m really excited about this is our ability to keep the community safe, right? So there’s an increasing focus on objectionable content, right, and a lot of unfortunate things, right, that people share on Facebook. And it’s a minority of the content, but I’m really focused on making sure that our company gets faster at taking the bad stuff down. And we can do better with people, but ultimately the best thing that we can do is build AI systems that can watch a video and understand that it’s going to be problematic and violate the policies of our community and that people aren’t going to want to see it and then just not show it to people before bad experiences happen and things like violence gets spread through – violent content gets spread through the network.”

Sheryl K. Sandberg – Facebook, Inc.

David M. Wehner – Facebook, Inc.

Mobile represents 84% of rev

“Mobile ad revenue was $7.2 billion, up 61%, and represented approximately 84% of total ad revenue. Desktop ad revenue grew 22%, despite a decline in desktop usage, helped by our efforts to limit the impact of ad blockers on advertisements served on personal computers.”

We continue to expect that our ad revenue growth rate will come down meaningfully in 2017

“Consistent with my comments on the Q3 call, we continue to expect that our ad revenue growth rate will come down meaningfully in 2017. The factors driving this expectation remain the same. We also expect that our full year 2017 payments and other fees revenue will decline compared to full year 2016.”

Expect expenses to ramp meaningfully

“Consistent with what I said last quarter, we expect that 2017 will be an aggressive investment year. We saw hiring growth accelerate in Q4, and we plan to accelerate hiring further in 2017 from the 34% growth rate. In addition to head count, we expect to increase investments in R&D, content, sales and marketing and other areas as we execute on our near, medium and long-term priorities. We expect that full year 2017 total GAAP expenses will grow 40% to 50% compared to the full year 2016.”

Opportunities for price

“In terms of the opportunities for price, it’s really just continuing to focus on making our ads better targeted, more relevant, improving all the different ways in which we can drive better outcomes for our advertisers and sort of meeting them with the results that they care about and delivering those results. We think there’s – continue to be great opportunities to do that, and how the supply-demand dynamics play out will kind of impact the overall direction of price. And it’s going to depend obviously also on regional mixes too, because some regions have obviously lower prices”

Have built the engineering infrastructure to hire in several locations

” One thing that we’re optimistic about is our ability to hire technical talent outside of the Bay Area as well as in the Bay Area. And that’s because we’ve built up engineering locations in key areas like Seattle, London, New York, Boston, Tel Aviv. So we’ve got other markets in which we can recruit and grow engineering and other technical team. And that’s really different from where we were a couple years ago. So that’s an important part of the infrastructure that we’ve put in place in the last two years that we’re pleased with.”

Facebook 3Q16 Earnings Call Notes

Facebook (FB) Q3 2016 Results

Mark Elliot Zuckerberg

1.2 billion DAUs

“We’re pleased to see nearly 1.8 billion people now use Facebook every month and nearly 1.2 billion people use it every day. It’s also great to see the continued growth and strength of engagement on our platform, and our ads growth is growing at a healthy rate as well. ”

We have 33k bots live in messenger

“So I mentioned this stat earlier that we have about 33,000 bots that are live in Messenger, including experiences across a range of verticals, from news to e-commerce to local businesses and all kinds of different things, and we’re seeing some early progress. I’d say we’re still pretty early on in getting this to be widely rolled out. I think we’re going to need many more than 33,000. And the number of people using them, I think it’s still pretty early in terms of there are more than 1 billion people using Messenger, so we need to get that rolled out pretty widely. So I’m not sure that I have an answer for you just yet on exactly when we’re going to move to the third phase.”

What we’re doing with AI

“I did not fully understand the first question, so I’m going to talk about our AI work overall. In general, what we want to do is try to understand the content that people are sharing and that’s out there for them to see as best as possible. So for example, that means being able to read and understand news articles or posts that people make or messages that a person might send to a business so we can help that business auto-reply to them and get information back to the person really quickly, or understand the content so we can better understand what might be interesting to a person and show it in News Feed. Similarly, aside from the conversational and linguistic understanding, there’s a whole thread of the work that we’re doing on visual understanding. So understanding photos, what’s in photos, what’s in videos, what people are doing.”

Sheryl K. Sandberg

David M. Wehner

Net income up 166%

“Total revenue grew 56% and exceeded $7 billion for the first time. And we delivered $2.4 billion in GAAP net income, up 166%. We saw healthy growth and engagement in our community as well as broad-based strength in our mobile ads business.”

As we slow ad load we’re gonna slow ad load as well

“So I do think as we look into 2017, we do expect that as you get to mid-2017, ad load will be a less significant factor contributing. We’ll continue to get benefits of being able to grow our revenue with advertiser demand and continuing to innovate there. But I do think that as we slow ad load growth, we’re going to have a slowing in revenue as well. So that’s our expectation, but obviously we’re going to continue to work hard to innovate in the ad product space.”

Facebook 2Q16 Earnings Call Notes

Facebook (FB) Mark Elliot Zuckerberg on Q2 2016 Results

$1.1B people use FB every day

” Our community continues to grow around the world. 1.7 billion people now use Facebook every month and 1.1 billion people use it every day. Our business is growing at a healthy rate as well. Total revenue grew by 59% year-over-year to $6.4 billion and advertising revenue was up 63% to $6.2 billion.”

Video will be at the heart of all our apps and service

” Ten years ago, most of what we shared and consumed online was text. Now it’s photos, and soon most of it will be video. We see a world that is video first with video at the heart of all of our apps and service.”

Deep learning

“This quarter, we announced DeepText, a deep learning based engine that can understand the context of several thousand posts per second across 20 different languages. This is a long-term project, but it also has some near-term benefits like helping show people more of what they want to see and filtering out less of what they don’t want to see.”

Importance of Pokemon go is that it shows that the phone will be the first way that AR becomes mainstream

“Well, I, like everyone else, am enjoying Pokémon Go. And the biggest thing that I think we can take away from this as we invest in augmented reality in addition to virtual reality, is that the phone is probably going to be the mainstream consumer platform that a lot of these AR features first become mainstream rather than glasses form factor that people will wear on their face.”

Sheryl K. Sandberg – Chief Operating Officer & Director

Example of a small business boosting sales with FB

“For example, Lighting Etc., a third generation family-owned business used Facebook and Instagram ads to drive in-store sales. They targeted 25-year-old to 45-year-old homeowners interested in interior design living within 35 miles of their showroom in Fort Worth, Texas. It was striking to them that on Facebook, the size of our community meant that they could reach over 300,000 people even with such specific targeting. They’ve seen a 40% increase in revenue in 2016, and they attribute this increase to their ads on Facebook and Instagram.”

David M. Wehner – Chief Financial Officer

Price per ad increased 9%, total ad impressions increased 49%

“‘ Advertiser demand was particularly strong in Q2 across a broad range of verticals and advertiser objectives. Additionally, supply side factors, including growth in users, time spent and ad load, all contributed to our Q2 revenue growth. In Q2, the average price per ad increased 9% while total ad impressions increased 49%. The reported increase in price was again driven by the continued mix shift towards mobile where we only show higher price News Feed ads compared to the mix of News Feed ads and lower priced right-hand column ads on personal computers.”

Majority of hires was in technical functions

“We ended Q2 with approximately 14,500 employees, up 32% year-over-year. We added about 900 employees in the quarter, the majority of those in technical functions. We are seeing continued success with our efforts to hire top talent in a market that remains very competitive.”

Expecting lower revenue growth rates going forward

“As I discussed on our last call, while we expect the main drivers of our advertising revenue growth will continue throughout 2016, we will face tougher comparables as the year progresses, given the accelerating revenue growth rates we experienced in the second half of 2015. Consequently, we anticipate lower advertising revenue growth rates in each successive quarter in 2016.”

Peaking out on ad load

“Additionally, we anticipate ad load on Facebook will continue to grow modestly over the next 12 months, and then will be a less significant factor driving revenue growth after mid-2017. Since ad load has been one of the important factors in our recent strong period of revenue growth, we expect the rate at which we are able to grow revenue will be impacted accordingly.”

Teens continue to use our service

“On the teen front, younger users, we continue to be the best way to reach the largest global audience of teens and millennials. Teens remain very – remain engaged on Facebook. Clearly, how they’ve used our service has evolved over the years. And in addition to Facebook, they’re using Instagram, Messenger and WhatsApp. So, from a teen perspective, that’s some color there.”

The optimal ad load is an art and a science

“We do expect that ad load will be a less significant factor driving overall growth, especially after mid-2017. The optimal ad load is really a mix of art and science. We’ve carefully tracked the impact of ads on the user experience over the last several years. We aren’t seeing a cause for concern. We also want to be thoughtful about making sure that each person’s overall feed experience has the right balance of organic and ad content.”

Facebook 1Q16 Earnings Call Notes

Mark Elliot Zuckerberg – Founder, Chairman & Chief Executive Officer

A “foundry light?” company

“Facebook has always been a foundry-light company, so we can focus on our mission and build long-term value. This structure has served our shareholders well. Early on, we received some generous offers for companies trying to buy Facebook, and our structure helped us resist that pressure. More recently, we navigated a challenging transition to mobile. But because we were a controlled company, we were able to focus on improving the user and product experience of our apps first and then build a strong mobile business over time rather than being forced to do something shortsighted. And over the years, our structure has helped us make big bets on acquisitions like Instagram that were very controversial initially but were good decisions for our community and our business.”

Facebook was built by a series of bold moves

“Facebook has been built by a series of bold moves. And when I look out into the future, I see more bold moves ahead of us than behind us. We’re focused not on what Facebook is, but on what it can be and on what it needs to be, and that means doing bold things. A lot of what we’re building today in areas like connectivity, artificial intelligence, and virtual and augmented reality may not pay off for years, but they’re important to our mission of connecting the world. And I’m committed to seeing this mission through and to leading Facebook there over the long term.”

There are more things I want to do that connecting the world

“While helping to connect the world will always be the most important thing that I do, there are more global challenges that I also feel a responsibility to help solve to create a better world for my daughter and all future generations, things like: helping to cure all disease by the end of the century; upgrading our education system so it’s personalized for each student; and protecting our environment from climate change.”

Shareclass split allows me to fund the Chan Zuckerberg initiative

“Today’s board proposal will allow us to maintain and improve the voting structure that has served us well and allow me to fund the Chan Zuckerberg Initiative. In December, I also announced that I won’t sell more than $1 billion worth of stock – Facebook shares per year over the next three years. That’s still my commitment, and I’ll update our shareholders on future plans beyond that”

Bots allow people to interact with businesses with lower latency

“one of the good things about bots that we’ve seen is that it can decrease the amount of time that you have to wait before you get a reply back from interacting with a message. So what we’ve seen – we’ve done some research on this. A lot of people every day in Facebook today are already messaging pages and businesses directly, and the businesses respond. But what we’ve actually also found is that through some of our AI research, we can look at the responses that businesses give to common questions and can confidently provide the right reply a lot of the time. And when we can do that, then that decreases the latency. And predictably, people want to do more of that activity.”

Acquisition strategy is to find things that will be ubiquitous tools and who are the most talented people in the world to build it

“” think that people come up from time to time and suggest, should we buy this company or that. And what we look at are what are the things that we think are going to be ubiquitous tools, and who are the most talented people in the world to build this. And so when you think about something like virtual and augmented reality, that’s how we thought about that.”

We’re focused on building AI that is better than people at things like seeing, hearing, language

“So the biggest thing that we’re focused on with artificial intelligence is building computer services that have better perception than people, so the basic human senses like seeing, hearing, language, core things that we do. I think it’s possible to get to the point in the next five to 10 years where we have computer systems that are better than people at each of those things. That doesn’t mean that the computers will be thinking or be generally better, but that is useful for a number of things.”

Sheryl K. Sandberg – Chief Operating Officer & Director

Consumers have shifted to mobile and businesses know they need to catch up

“First, capitalizing on the shift to mobile. Consumers have shifted to mobile, and businesses know they need to catch up. We hear from marketers that figuring out mobile today is like figuring out TV in its early days. But given where consumers spend their time, the question now is not if they should market on mobile, but how.”

David M. Wehner – Chief Financial Officer

The new voting structure is to allow Mark to fund the Chan Zuckerberg initiative while maintaining an active leadership role at FB

“As Mark mentioned, this structure will allow for the preservation of the voting structure that has served the company well to date while allowing for Mark to fund the Chan Zuckerberg Initiative over the course of his lifetime. Importantly, as part of this proposal, the preservation of the multi-class capital structure would be generally predicated on Mark continuing to maintain an active leadership role at Facebook.’

Facebook 4Q15 Earnings Call Notes

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”

Facebook at UBS Conference Notes

Facebook’s Management Presents at UBS 43rd Annual Global Media and Communications Broker Conference

Carolyn Everson, who is the Vice President of Global Marketing Solutions

Big companies are asking how to adopt Facebook’s culture

“a lot of my conversations today with marketers are to help them understand the Facebook culture and how that could adapt the companies that have been around for 100 plus years. That’s the first thing that’s on every company — every big company’s mind.”

Mobile is changing advertising

“Now that consumers have the most personal device they have ever had in the history of devices, their expectation around marketing has changed dramatically. The expectation is if you are going to show up on my phone, which is very personal, it’s my contacts, it’s my app, you need to show up in a relevant, useful, delightful manner.”

Seeing different brand marketers at different stages

“we have the privilege of working with all of the top brand marketers in the world. And from that vantage point, we see them at very different points of the journey. We have major marketers that have been with us for over five years where we have very sophisticated global joint business plans and we are absolutely driving business outcomes for a very majority of their large brands. We have other large marketers that are very early in their stage of understanding the digital transformation.”

Biggest shift is that brand marketing is becoming more like DR market, lines are blurring

“I think the biggest shift that I’m seeing with brand marketing is that brands are actually brand to more traditional brand marketing is becoming more like DR Marketing. And DR Advertisers are very interested in what brands are doing. And there is a blurring of the two that are occurring.”

You see e-commerce exploding in India

“what you are seeing in India is really two forms of really interesting growth. You are seeing an explosion of e-commerce, right. India is very much — they don’t really allow traditional foreign direct investment for big-box retailers. There is ton of small business activity. E-commerce, it’s almost like they skipped 10 to 15 years of what we did in terms of growing the retail business. They have already moved to mobile commerce.”

Facebook and Instagram are utilized differently. Instagram is a place for visual inspiration.

“Instagram and Facebook are very, very powerful combined. There are differences between how the two platforms are utilized. Instagram is a place for visual inspiration. About 50% of the people are following businesses. So there is definitely an interest but there is also a high percentage of people that follow people they don’t know and that is because they’re inspired by whatever they happen to be posting about.”

We took all the infrastructure we have built for Facebook and made it available on Instagram

“We took all of the infrastructure that we have built for Facebook and made it available on Instagram. And so now marketers can basically get the same level of targeting and measurement that they were used to on Facebook.”

Facebook 3Q15 Earnings Call Notes

1B people use Facebook every day

“1.55 billion people now use Facebook every month and more than 1 billion people use Facebook every day.”

Connecting everyone is a fundamental challenge of our time

“Connecting everyone is one of the fundamental challenges of our time and to achieve this, we need to continue innovating faster and investing for the long-term.”

There are 8 B daily video views on FB

“On average, there are now more than 8 billion daily video views on Facebook and more than 500 million people who are watching daily.”

WhatsApp reached 900m monthly active users

“Last quarter, WhatsApp reached 900 million monthly actives and continues to be on a path to reach 1 billion people and beyond. Messenger has over 700 million monthly actives, and we continue to focus on improving the core messaging experience.”

VR has the potential to be the next computing platform, but recognize that this is going to grow slowly

“Virtual reality has the potential to be the next computing platform that changes all of our lives. It’s important also to recognize that this is going to grow slowly, like computers and mobile phones when they first arrived. So we’re committed to Oculus and virtual reality for the long-term.”

Marketers come to FB because we have the best performing mobile ad products

“Marketers come to Facebook and Instagram because we have the best performing mobile ad products, and video is making them even better. ”

Added 1k employees in the quarter

“We ended Q3 with nearly 12,000 employees, up 44% compared to last year. We added over 1,000 employees to Facebook in the quarter and we are pleased with the continued strength in our recruiting efforts.”

Zuck comparing Oculus to Blackberry and Palm Treo in 2003

“I can start off talking about Oculus and virtual reality. So the first thing that I want to stress here is that these kind of new platforms take a long time to develop. So we’ve said often that we think that virtual reality and augmented reality could be the next big computing platform. But just to put that in perspective and compare it to the development of previous computing platforms like phones and computers, I think the first smartphones came out in 2003, and in the first year, I think BlackBerry and Palm Treo were the initial smartphones that came out. And I think they each sold in the hundreds of thousands of units. So just to kind of give a sense of the timeframe that we’re thinking about this and how we expect this to develop, that’s how we’re thinking about that.”

Gaming will be the most obvious market

“In terms of the actual content, first, we think gaming is going to be the most obvious market. There are around, I think, more than 200 million, almost 250 million people who have either an Xbox, a PlayStation or a Wii, and we think that that audience is going to the type of people who are going to be very excited about the type of experiences initially that you can have with virtual reality.’

Common ad infrastructure FB and Insta

“On Instagram, we think that with Facebook and Instagram, we now have the two most important mobile platforms out there. And what we bring to this is a common ad infrastructure.”

TV segments are changing to fit social media

“what we’re actually seeing is that a lot of the best or at least from my perspective, TV shows that we see folks like Jimmy Fallon breaking up their show into clips that they can now share to be consumed over social media and on the Internet in three-minute to five-minute or seven-minute segments which are more of what people want when browsing through News Feed.”

There are 1B indians who are not on the internet

“India is a unique country where there are 1.25 billion people, more than 1 billion of them are not on the Internet. So it is the country in the world that benefits the most from connectivity. ”

Ad load has helped drive growth

“over time ad load has been one of the factors driving year-over-year growth. It’s just worth noting that it is up significantly from where we were two years ago. Looking forward, we continue to feel like there are good opportunities to grow the business. I talked about the three factors that contributed to growth this quarter: ad demand, users and engagement and ad load. And we see all of those continuing to be factors for growth going forward.”

Premium content revenue sharing

“There’s a certain class of content which is only going to come on to Facebook if there’s a good way to compensate the content owners for that. And we’ve recently rolled out the business model for this, which is for premium content, we’ll give a revenue share on a portion of the views to the content owners. And we’ve got good feedback so far on that.”

What product you use depends on what you’re trying to do

“What product you use really depends upon what you’re trying to do. If you’re trying to tell a brand story, then you want to do a video ad. If you’re trying to sell a direct product, then you want to use DPA ads. And all of these products and all of the underlying targeting like custom audiences are designed to help people meet different objectives and we’re trying to be really clear on that.”

Facebook 2Q15 Earnings Call Notes

1.5B people using facebook now each month

“We’ve continued to make good progress in the growth of our community with 1.49 billion people now using Facebook each month and more than 1.3 billion people using Facebook on mobile. We’ve also continued to make gains in engagement. More than 968 million people worldwide now use Facebook daily, and 65% of our monthly actives are daily actives.”

People now spending 46 minutes per day on Facebook properties

“when it comes to time spent across Facebook, Messenger and Instagram, people are now spending more than 46 minutes per day on average, and that doesn’t include WhatsApp.”

43% y/y revenue growth

“This quarter, our total revenue is more than $4 billion for the first time, and advertising revenue grew by 43% year-over-year. ”

40m small businesses using pages on Facebook

“There are now more than 40 million small and medium-size businesses, using pages on Facebook. So we have a big opportunity to create value for communities all over the world, and Sheryl is going to talk more about this in a moment.”

We’re getting 1 of every 5 minutes spent on a smartphone

“We continue to get more than one out of every five minutes on smartphones in the U.S. and mobile usage is driving our growth globally as well. We believe we have the best performing mobile ad product in the market and video’s making it even better. With so many consumer videos being watched on Facebook, video ads are a natural part of the News Feed experience. For marketers, video has always been a compelling format. Now Facebook enables mass reach and cross device targeting and measurement abilities far superior to what other platforms offer. ”

Instagram, messenger and WhatsApp have a ton of users on their own

“We also saw strong growth in our next generation of services with Instagram, Messenger and WhatsApp now exceeding 300 million, 700 million and 800 million MAU respectively.”

Dollar had 300m impact on revenue

“The strengthening of the U.S. dollar has continued to have an unfavorable impact on our revenue. Had foreign exchange rates remained constant with Q2 2014 levels, our total revenue this quarter would have been approximately $330 million higher.”

Employees up 50% y/y

“We ended the quarter with 10,955 employees, up 52% compared to last year. With 873 additional employees, Q2 was one of our strongest quarters in terms of hiring, and the majority of the new employees were added in R&D.’

We expect y/y revenue growth rates to continue to decline

“Since the first quarter of 2014, we have seen year-over-year advertising revenue growth rates decline each subsequent quarter. We expect this trend to continue in Q3 and Q4 as we continue to grow off a much larger base and face currency headwinds due to the strong dollar. ”

$3B of stock comp expense, half of which related to WhatsApp

“We continue to expect stock-based compensation in 2015 to be in the range of $3 billion to $3.3 billion, approximately half of which is related to our prior acquisitions, most notably WhatsApp.”

Ramping CapEx v 2014

“we are ramping CapEx versus 2014. The guidance is $2.5 billion to $3 billion, and that’s up from $1.8 billion last year. We’ve got a lot of infrastructure investment that we’re making across data centers, servers, network. We are clearly investing for the growth of both Facebook at its core and then also the additional services that we’re bringing on.”

VR comes after video for ways that people want to share and consume thoughts and ideas

“there’s always a richer way that people want to share and consume thoughts and ideas and I think that immersive 3D content is the obvious next thing after video.”

In terms of engagement, news feed is continuing to do very well

“I think in terms of engagement the product is having, the biggest impact is News Feed continuing to do very well. So News Feed at the core is proving to be just a great experience for users. It’s getting better. We continue to invest in that. As people spend more time with News Feed, we get better about understanding what they like and getting the content that they care about in front of them. ”

The bet on Whats App is enabling people to have organic interactions with businesses

“the long term bet is that by enabling people to have good organic interactions with businesses, that will end up being a massive multiplier on the value of the monetization down the road when we work on that and really focus on that in a bigger way. So we’d ask for some patience on this to do this correctly, and the game plan will be more similar to what we did in Facebook with News Feed.”

I don’t believe this third person exists…

“Two out of three smartphone users check their phone as soon as they wake up in the morning.”

E-commerce is one of our top categories of advertisers

“So e-commerce is one of our top categories of advertisers, and we are already driving a lot of product sales through Facebook but importantly, our e-commerce initiatives are really about connecting consumers with marketers so that they can buy from companies. They’re not buying through us. We are testing a buy button in the new shop section on pages, but again, that buy button is letting people buy directly from their advertisers, not from us. It’s pretty early days. We’re excited by what we see in the e-commerce vertical and we’re going to continue to invest in growing that vertical as part of our ads business.”