01—Abstract
Summary
Summary of the 10-K filed January 28, 2021. Cited figures are marked; the original filing is the authoritative source.
Meta Platforms, Inc. (META) demonstrated significant revenue growth in 2020, reporting $85.97 billiona, a 22% increase year-over-year, primarily driven by its advertising business.
The company continues to expand its user base across Facebook and its family of apps (Instagram, Messenger, WhatsApp), with family daily active people (DAP) reaching 2.60 billion and monthly active people (MAP) at 3.30 billion. Despite strong revenue and user growth, Meta faces substantial risks and challenges, including intense competition, increasing regulatory scrutiny globally, particularly concerning data privacy and antitrust matters, and potential impacts from changes in mobile operating system policies. The company is also making significant investments in new technologies, such as virtual and augmented reality, which are impacting operating margins.
Investors should note the company's continued investment in infrastructure and headcount to support growth. While the company generated robust operating income and net income, it is also navigating a complex regulatory landscape, with ongoing investigations and potential for significant fines or changes to business practices.
The company's reliance on advertising revenue, coupled with evolving data privacy laws and platform changes from major mobile OS providers, presents ongoing challenges to future revenue growth. The significant capital expenditures for data centers and infrastructure highlight the company's commitment to scaling its operations.
02—Key points
Key Highlights
- Revenue reached $85.97 billion in 2020, a 22% increase year-over-year, driven by a 21% increase in advertising revenue.
- Facebook daily active users (DAUs) averaged 1.84 billion in December 2020 (up 11% YoY), and family daily active people (DAP) reached 2.60 billion (up 15% YoY).
- The company reported net income of $29.15 billion, with diluted earnings per share of $10.09.
- Capital expenditures were substantial at $15.72 billion, reflecting ongoing investment in data centers, infrastructure, and facilities.
- Meta Platforms is subject to significant regulatory scrutiny globally, including antitrust investigations and data privacy regulations (e.g., GDPR, CCPA), which pose material risks.
- Competition remains intense from companies like Google, Apple, Amazon, and ByteDance, impacting user engagement and market share.
- The company faces challenges related to data signal availability for ad targeting and measurement due to changes by third-party mobile operating systems and browsers.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Meta Platforms, Inc. kept $0.34.
- Revenue$85.97B100.0%
- Cost of revenue−$16.69B19.4%
- Gross profit$69.27B80.6%
- Operating costs−$36.60B42.6%
- Operating income$32.67B38.0%
- Interest, other & tax−$3.52B4.1%
- Net income$29.15B33.9%
Where FY2020 revenue went
$85.97B- Net income: $29.15B, 34% of revenue
- R&D: $18.45B, 21% of revenue
- Other operating costs: $18.16B, 21% of revenue
- Cost of revenue: $16.69B, 19% of revenue
- Interest, other & tax: $3.52B, 4.1% of revenue
Kept 34% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed January 28, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $85.97B$70.70B | +21.6% |
| Cost of Revenue | $16.69B$12.77B | +30.7% |
| Gross Profit | $69.27B$57.93B | +19.6% |
| R&D Expenses | $18.45B$13.60B | +35.6% |
| Operating Expenses | $53.29B$46.71B | +14.1% |
| Operating Income | $32.67B$23.99B | +36.2% |
| Net Income | $29.15B$18.48B | +57.7% |
| EPS (Basic) | $10.22$6.48 | +57.7% |
| EPS (Diluted) | $10.09$6.43 | +56.9% |
| Shares Outstanding (Basic) | 2.85B2.85B | −0.1% |
| Shares Outstanding (Diluted) | 2.89B2.88B | +0.4% |
05—Questions
Frequently Asked Questions
What is Meta's primary source of revenue and how is it performing?
Meta's primary source of revenue is advertising, which accounted for the vast majority of its $85.97 billion in total revenue for 2020. Advertising revenue saw a 21% increase year-over-year, driven by a 34% increase in the number of ads delivered, although the average price per ad decreased by 10% due to factors including the COVID-19 pandemic's impact on demand and an increasing proportion of ads in lower-monetizing formats like Stories.
What are the key risks and challenges facing Meta Platforms?
Meta faces several significant risks, including intense competition from tech giants and emerging platforms, evolving and complex global regulations related to data privacy, content moderation, and antitrust laws (with ongoing investigations and potential for substantial fines), and changes in policies by mobile operating system providers (like Apple and Google) that can impact ad targeting and measurement capabilities. Additionally, the company is investing heavily in new technologies like VR/AR, which carry inherent risks of not achieving expected returns and impacting profitability in the near term.
How is Meta investing its capital, and what are the implications for future growth?
Meta Platforms made significant capital expenditures in 2020, totaling $15.72 billion, primarily for expanding its data center capacity, servers, network infrastructure, and office facilities to support user growth and new product development. The company also plans to continue hiring extensively, particularly in technical roles. These substantial investments are crucial for maintaining and scaling its services, supporting new initiatives like Reality Labs, and are expected to drive continued expense growth.
What is Meta's stance on dividends and share repurchases?
Meta Platforms currently does not pay cash dividends and does not expect to do so in the foreseeable future, intending to reinvest earnings to finance operations and expansion. The company has an ongoing share repurchase program; in 2020, it repurchased $6.30 billion of its Class A common stock, and an additional $25 billion was authorized in January 2021.
06—Continue