10-KPeriod: FY2018

Meta Platforms, Inc. Annual Report, Year Ended Dec 31, 2018

Filed January 31, 2019For Securities:META

Summary

Meta Platforms, Inc. (formerly Facebook, Inc.) filed its 10-K for the fiscal year ended December 30, 2018, highlighting robust revenue growth driven primarily by its advertising business. The company reported significant year-over-year increases in revenue and net income, underscoring the continued strength of its core platforms like Facebook and Instagram. Key investments are being directed towards expanding data center capacity, enhancing infrastructure, and pursuing long-term technology initiatives in areas such as AI and augmented/virtual reality. Despite strong financial performance, the company faces numerous risks and challenges. These include intense competition across social media and advertising, increasing regulatory scrutiny concerning data privacy and content, and the potential for user engagement shifts. The report also emphasizes the company's ongoing investments in safety and security measures. Investors should note the company's dual-class share structure which concentrates voting power, and the potential impact of legal and regulatory challenges on future operations and financial results.

Financial Highlights

51 data points
Beta

Revenue

$55.84B

83.2% Gross Margin

Net Income

$22.11B

39.6% Net Margin

EPS (Diluted)

$7.57

Total Assets

$97.33B

Cash & Equivalents

$10.12B

Free Cash Flow

$15.36B

Financial Statements
Beta
Revenue$55.84B
Cost of Revenue$9.36B
Gross Profit$46.48B
R&D Expenses$10.27B
Operating Expenses$30.93B
Operating Income$24.91B
Interest Expense$9.00M
Net Income$22.11B
EPS (Basic)$7.65
EPS (Diluted)$7.57
Shares Outstanding (Basic)2.89B
Shares Outstanding (Diluted)2.92B

Key Highlights

  • 1Revenue increased by 37% to $55.84 billion in 2018, driven by a 38% rise in advertising revenue.
  • 2Net income grew by 39% to $22.11 billion, with diluted EPS of $7.57.
  • 3Daily Active Users (DAUs) and Monthly Active Users (MAUs) grew by 9% year-over-year, reaching 1.52 billion and 2.32 billion respectively in December 2018.
  • 4Mobile advertising revenue represented approximately 92% of total advertising revenue.
  • 5The company significantly increased its capital expenditures, investing $13.92 billion in property and equipment.
  • 6Meta Platforms' headcount grew by 42% to 35,587 employees by the end of 2018.
  • 7Significant risks identified include intense competition, increasing regulatory scrutiny (especially around data privacy), and potential impacts of new technologies or platform changes on user engagement and advertising effectiveness.

Frequently Asked Questions

Meta Platforms generates substantially all of its revenue from advertising. Marketers pay to display ads on its platforms like Facebook and Instagram, with revenue primarily driven by the number of ads delivered and the average price per ad.

The company's key growth drivers are its user base and their engagement, coupled with the effectiveness of its advertising products. Investments are focused on expanding data center capacity and infrastructure, growing its family of apps (Instagram, Messenger, WhatsApp), and long-term initiatives like AI and augmented/virtual reality.

The company identifies several key risks, including intense competition, the potential for user base or engagement decline, dependence on mobile operating systems and third-party platforms, regulatory scrutiny regarding privacy, data protection, and content, potential security breaches, and the need to maintain and enhance its brands. The concentration of voting power with the CEO is also noted as a factor.

The filing mentions that GDPR, which took effect in May 2018, imposed new operational requirements for processing personal data in Europe and carries significant penalties for non-compliance. Meta implemented measures to comply, including service changes for minors and new user consent processes, which could affect operations and user engagement.