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.”