01—Abstract
Summary
Summary of the 10-K filed January 30, 2020. Cited figures are marked; the original filing is the authoritative source.
Meta Platforms, Inc. (formerly Facebook, Inc.) filed its 2019 10-K on January 29, 2020, detailing a year of significant growth and substantial investments.
The company reported robust revenue growth of 27% to $70.7 billiona, primarily driven by its advertising business across Facebook and Instagram. User growth remained strong across its Family of services, with daily active people (DAP) increasing by 11% year-over-year to 2.26 billion and monthly active people (MAP) reaching 2.89 billion. However, the filing also highlights significant legal and regulatory challenges.
A substantial $5 billionb settlement with the FTC for privacy violations was a major event, alongside ongoing antitrust investigations and scrutiny over data privacy practices. These factors contributed to a notable increase in general and administrative expenses. Despite these headwinds, Meta continued its aggressive investment in research and development and infrastructure, indicating a continued focus on long-term growth and innovation in areas such as augmented and virtual reality.
02—Key points
Key Highlights
- Revenue grew 27% year-over-year to $70.7 billion, driven by a 27% increase in advertising revenue.
- Facebook Daily Active Users (DAUs) increased 9% to 1.66 billion, and Monthly Active Users (MAUs) grew 8% to 2.50 billion.
- Family Daily Active People (DAP) increased 11% to 2.26 billion, and Family Monthly Active People (MAP) grew 9% to 2.89 billion.
- The company recorded a $5 billion settlement with the FTC related to privacy issues.
- Research and development expenses increased by 32% to $13.6 billion, reflecting ongoing investment in new technologies and products.
- Capital expenditures were substantial, totaling $15.65 billion, primarily for data centers, servers, and infrastructure.
- The company faces significant ongoing government investigations and regulatory scrutiny concerning privacy, data usage, and competition.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Meta Platforms, Inc. kept $0.26.
- Revenue$70.70B100.0%
- Cost of revenue−$12.77B18.1%
- Gross profit$57.93B81.9%
- Operating costs−$33.94B48.0%
- Operating income$23.99B33.9%
- Interest, other & tax−$5.50B7.8%
- Net income$18.48B26.1%
Where FY2019 revenue went
$70.70B- Other operating costs: $20.34B, 29% of revenue
- Net income: $18.48B, 26% of revenue
- R&D: $13.60B, 19% of revenue
- Cost of revenue: $12.77B, 18% of revenue
- Interest, other & tax: $5.50B, 7.8% of revenue
Kept 26% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed January 30, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $70.70B$55.84B | +26.6% |
| Cost of Revenue | $12.77B$9.36B | +36.5% |
| Gross Profit | $57.93B$46.48B | +24.6% |
| R&D Expenses | $13.60B$10.27B | +32.4% |
| Operating Expenses | $46.71B$30.93B | +51.0% |
| Operating Income | $23.99B$24.91B | −3.7% |
| Interest Expense | $20.00M$9.00M | +122.2% |
| Net Income | $18.48B$22.11B | −16.4% |
| EPS (Basic) | $6.48$7.65 | −15.3% |
| EPS (Diluted) | $6.43$7.57 | −15.1% |
| Shares Outstanding (Basic) | 2.85B2.89B | −1.2% |
| Shares Outstanding (Diluted) | 2.88B2.92B | −1.5% |
05—Questions
Frequently Asked Questions
What was Meta's (Facebook's) primary source of revenue in 2019?
The company generated substantially all of its revenue from advertising. Advertising revenue for 2019 was $69.66 billion, representing the vast majority of its total revenue.
What were the key user growth metrics for Meta in 2019?
Meta reported strong user growth across its platforms. Facebook DAUs increased by 9% year-over-year to 1.66 billion, and MAUs grew by 8% to 2.50 billion. Across its 'Family' of products (Facebook, Instagram, Messenger, WhatsApp), DAP increased 11% to 2.26 billion, and MAP grew 9% to 2.89 billion.
What were the major expenses incurred by Meta in 2019?
The company's primary expenses included cost of revenue ($12.77 billion), research and development ($13.60 billion), marketing and sales ($9.88 billion), and general and administrative costs ($10.47 billion). A significant portion of the general and administrative expenses was due to a $5 billion FTC settlement.
What are the main risks highlighted in the 10-K filing for investors?
Key risks include intense competition, the potential for user growth and engagement to decline, reliance on advertising revenue, significant regulatory and legal challenges (including privacy concerns and government investigations), and the substantial investments in new technologies that may not yield expected returns. The company also noted the potential for its stock price to be volatile.
06—Continue