01—Abstract
Summary
Summary of the 10-K filed February 3, 2017. Cited figures are marked; the original filing is the authoritative source.
Meta Platforms, Inc. (formerly Facebook, Inc.) reported strong financial performance for the fiscal year 2016, demonstrating significant revenue growth driven primarily by its advertising business.
The company showcased robust user growth across its platforms, including Facebook and Instagram, with a notable increase in daily and monthly active users. Investments in future growth areas like Oculus, Messenger, and WhatsApp are continuing, alongside significant research and development spending. The company also highlighted its substantial cash reserves and authorized a share repurchase program, indicating financial health and a commitment to returning value to shareholders.
However, the report also underscores inherent risks related to competition, regulatory scrutiny, data privacy, and reliance on mobile operating systems, which could impact future performance. The company's financial results for 2016 were characterized by a 54% year-over-year increase in revenue, reaching $27.6 billiona, with advertising revenue growing 57%. Net income also saw a substantial increase, more than doubling from the previous year to over $10 billion.
Despite considerable investments in R&D and infrastructure, the company maintained strong profitability. Meta Platforms also emphasized its ongoing expansion into new technologies like virtual reality and artificial intelligence, alongside its core social media and communication services, positioning itself for continued innovation and market leadership.
02—Key points
Key Highlights
- Revenue surged by 54% year-over-year to $27.6 billion in 2016, with advertising contributing 97% of this revenue.
- Monthly Active Users (MAU) reached 1.86 billion by the end of 2016, a 17% increase year-over-year.
- Daily Active Users (DAU) averaged 1.23 billion in December 2016, up 18% year-over-year, indicating strong user engagement.
- Net income grew substantially to $10.2 billion in 2016, from $3.7 billion in 2015.
- The company maintained a strong cash position, with cash, cash equivalents, and marketable securities totaling $29.4 billion as of December 31, 2016.
- Meta Platforms announced a $6 billion share repurchase program, signaling confidence in its financial standing and commitment to shareholder returns.
- Significant investments in Research & Development ($5.9 billion) and infrastructure underscore the company's focus on innovation and future growth, particularly in areas like VR and AI.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Meta Platforms, Inc. kept $0.37.
- Revenue$27.64B100.0%
- Cost of revenue−$3.79B13.7%
- Gross profit$23.85B86.3%
- Operating costs−$11.42B41.3%
- Operating income$12.43B45.0%
- Interest, other & tax−$2.21B8.0%
- Net income$10.22B37.0%
Where FY2016 revenue went
$27.64B- Net income: $10.22B, 37% of revenue
- R&D: $5.92B, 21% of revenue
- Other operating costs: $5.50B, 20% of revenue
- Cost of revenue: $3.79B, 14% of revenue
- Interest, other & tax: $2.21B, 8.0% of revenue
Kept 37% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 3, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $27.64B$17.93B | +54.2% |
| Cost of Revenue | $3.79B$2.87B | +32.2% |
| Gross Profit | $23.85B$15.06B | +58.3% |
| R&D Expenses | $5.92B$4.82B | +22.9% |
| Operating Expenses | $15.21B$11.70B | +30.0% |
| Operating Income | $12.43B$6.22B | +99.6% |
| Interest Expense | $10.00M$23.00M | −56.5% |
| Net Income | $10.22B$3.69B | +177.0% |
| EPS (Basic) | $3.56$1.31 | +171.8% |
| EPS (Diluted) | $3.49$1.29 | +170.5% |
| Shares Outstanding (Basic) | 2.86B2.80B | +2.1% |
| Shares Outstanding (Diluted) | 2.92B2.85B | +2.5% |
05—Questions
Frequently Asked Questions
What was Meta Platforms' (Facebook's) primary source of revenue in 2016?
In 2016, Meta Platforms generated substantially all of its revenue from advertising, which accounted for approximately 97% of its total revenue.
How did user growth trend for Facebook and its related platforms in 2016?
The company experienced strong user growth in 2016. Monthly Active Users (MAUs) reached 1.86 billion, a 17% year-over-year increase, and Daily Active Users (DAUs) averaged 1.23 billion, an 18% year-over-year increase.
What are the main risks identified by Meta Platforms in its 2016 10-K filing?
Key risks identified include failure to retain and engage users, dependence on advertising revenue, competition from other companies, reliance on mobile operating systems, potential for unfavorable media coverage, security breaches, evolving government regulations (especially concerning privacy and data protection), and potential adverse impacts from acquisitions. The company also highlighted risks associated with its dual-class stock structure and the control of its CEO.
What were Meta Platforms' major investments and future growth priorities as outlined in the filing?
The company continued to invest in its core Facebook app and platform, as well as in growing ecosystems around Messenger, Instagram, and WhatsApp. Long-term technology initiatives such as virtual reality (Oculus) and artificial intelligence were also key investment areas. Meta Platforms anticipated significant overall year-over-year expense growth in 2017 due to these investments, including hiring engineering talent and expanding data center capacity.
06—Continue