10-QPeriod: Q2 FY2012

Meta Platforms, Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 31, 2012For Securities:META

Summary

Meta Platforms, Inc. (META) reported its second quarter 2012 results on July 31, 2012. The company experienced significant revenue growth, driven by a 32% increase in advertising revenue year-over-year. However, this growth was overshadowed by a substantial increase in costs and expenses, primarily due to a one-time recognition of share-based compensation expense related to the IPO. This resulted in a net loss of $157 million for the quarter, a stark contrast to the net income of $240 million in the prior year's second quarter. Despite the quarterly loss, the company's balance sheet remained robust, with cash and cash equivalents and marketable securities totaling $10.2 billion. The company also highlighted strong user growth, with 955 million monthly active users (MAUs), up 29% year-over-year, and a significant increase in mobile MAUs. The proposed acquisition of Instagram for approximately $1 billion in cash and stock was also announced, signaling strategic expansion into mobile photo sharing.

Financial Highlights

49 data points
Beta

Revenue

$1.18B

69.0% Gross Margin

Net Income

-$157.00M

-13.3% Net Margin

EPS (Diluted)

$-0.08

Total Assets

$14.93B

Cash & Equivalents

$2.10B

Free Cash Flow

-$173.00M

Financial Statements
Beta
Revenue$1.18B
Cost of Revenue$367.00M
Gross Profit$817.00M
R&D Expenses$705.00M
Operating Expenses$1.93B
Operating Income-$743.00M
Interest Expense$10.00M
Net Income-$157.00M
EPS (Basic)$-0.08
EPS (Diluted)$-0.08
Shares Outstanding (Basic)1.88B
Shares Outstanding (Diluted)1.88B

Key Highlights

  • 1Revenue increased by 32% to $1.184 billion in Q2 2012 compared to Q2 2011.
  • 2A net loss of $157 million was reported for Q2 2012, compared to a net income of $240 million in Q2 2011, largely due to significant share-based compensation expenses recognized post-IPO.
  • 3Monthly Active Users (MAUs) grew to 955 million as of June 30, 2012, a 29% increase year-over-year.
  • 4Mobile MAUs increased by 67% to 543 million as of June 30, 2012, indicating a strong shift towards mobile usage.
  • 5The company announced its intention to acquire Instagram for approximately $300 million in cash and 22,999,412 shares of its common stock.
  • 6Cash and cash equivalents and marketable securities stood at $10.2 billion as of June 30, 2012, providing significant liquidity.
  • 7The company incurred substantial share-based compensation expenses ($1.106 billion in Q2 2012), largely driven by the IPO triggering vesting of pre-2011 RSUs.

Frequently Asked Questions

The primary driver of Meta Platforms' revenue growth in Q2 2012 was advertising revenue, which increased by 28% year-over-year. This was supported by an increase in the number of ads delivered and, to a lesser extent, an increase in the average price per ad.

Meta Platforms reported a net loss of $157 million in Q2 2012 primarily due to a significant increase in costs and expenses. A substantial portion of this increase was driven by the recognition of $1.106 billion in share-based compensation expense, largely related to restricted stock units (RSUs) that vested upon the company's initial public offering (IPO) in May 2012.

Meta Platforms continues to show strong user growth, with 955 million monthly active users (MAUs) as of June 30, 2012, a 29% increase year-over-year. A particularly notable trend is the rapid growth in mobile usage, with mobile MAUs increasing by 67% to 543 million. This increasing reliance on mobile devices presents both opportunities and challenges for monetization, as ad delivery and revenue per user are generally lower on mobile platforms compared to desktop.

Meta Platforms maintained a strong liquidity position with $10.2 billion in cash and cash equivalents and marketable securities as of June 30, 2012. The company anticipates that its available funds and cash flow from operations will be sufficient for its foreseeable operational needs. The company also has access to significant credit facilities for general corporate purposes and to fund potential tax withholding obligations related to RSU settlements.