10-QPeriod: Q3 FY2015

Meta Platforms, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 5, 2015For Securities:META

Summary

Meta Platforms, Inc. (formerly Facebook, Inc.) reported robust financial performance for the third quarter and first nine months of 2015, demonstrating strong revenue growth driven primarily by its advertising business. The company saw a significant increase in total revenue, up 41% year-over-year for the quarter, fueled by a 45% surge in advertising revenue. This growth was predominantly attributed to the increasing adoption of mobile advertising, which represented approximately 78% of total advertising revenue in Q3 2015. User engagement also remained strong, with daily and monthly active users growing by 17% and 14% year-over-year, respectively, largely driven by mobile usage. Despite increasing investments in research and development, marketing, and general administrative expenses, the company maintained healthy profitability, with net income increasing year-over-year. Meta Platforms continued to strategically invest in future growth areas, including next-generation services like Instagram, WhatsApp, and Messenger, as well as long-term innovation projects such as Internet.org and Oculus. While these investments are expected to drive significant expense growth, the company's strong cash generation and substantial cash and marketable securities balance provide a solid foundation for continued investment and operational needs. The company maintains a strong balance sheet with a considerable increase in cash and marketable securities, underscoring its financial stability and capacity for future endeavors.

Financial Highlights

48 data points
Beta

Revenue

$4.50B

84.0% Gross Margin

Net Income

$896.00M

19.9% Net Margin

EPS (Diluted)

$0.31

Total Assets

$46.47B

Cash & Equivalents

$4.31B

Free Cash Flow

$1.41B

Financial Statements
Beta
Revenue$4.50B
Cost of Revenue$720.00M
Gross Profit$3.78B
R&D Expenses$1.27B
Operating Expenses$3.04B
Operating Income$1.46B
Net Income$896.00M
EPS (Basic)$0.32
EPS (Diluted)$0.31
Shares Outstanding (Basic)2.81B
Shares Outstanding (Diluted)2.86B

Key Highlights

  • 1Total revenue for the third quarter of 2015 reached $4.50 billion, a 41% increase year-over-year, primarily driven by a 45% surge in advertising revenue.
  • 2Mobile advertising revenue represented approximately 78% of total advertising revenue in Q3 2015, highlighting the company's successful shift to mobile monetization.
  • 3Daily Active Users (DAUs) grew by 17% year-over-year to 1.01 billion in September 2015, with mobile DAUs increasing by 27%, demonstrating continued user engagement and growth.
  • 4Monthly Active Users (MAUs) reached 1.55 billion as of September 30, 2015, a 14% increase year-over-year, with mobile MAUs showing a 23% increase.
  • 5Research and development expenses significantly increased by 109% year-over-year in Q3 2015 to $1.27 billion, reflecting substantial investment in future products and services.
  • 6The company held $15.83 billion in cash and cash equivalents and marketable securities as of September 30, 2015, indicating strong liquidity.
  • 7Net income for the third quarter was $896 million, an increase from $806 million in the prior year's quarter, with diluted EPS at $0.31.

Frequently Asked Questions

The primary driver of Meta Platforms' revenue growth in Q3 2015 was its advertising business, which saw a 45% increase year-over-year. This growth was largely fueled by the increasing adoption and effectiveness of mobile advertising, which constituted approximately 78% of the total advertising revenue for the quarter.

Meta Platforms is investing in three key priorities: enhancing its core products and services, developing next-generation services like Instagram, WhatsApp, and Messenger, and pursuing long-term innovation efforts such as Internet.org and Oculus. This is reflected in the significant increase in research and development expenses.

As of September 30, 2015, Meta Platforms had a strong liquidity position with $15.83 billion in cash and cash equivalents and marketable securities. This balance increased by $4.64 billion from the end of the previous year, primarily due to cash generated from operations and excess tax benefits from share-based award activity.

The company is involved in ongoing legal proceedings, including class action lawsuits related to its IPO and other product-related claims. While Meta Platforms believes these lawsuits are without merit and intends to defend them vigorously, it acknowledges that the outcome of litigation is uncertain and could potentially have a material adverse effect on its financial results if resolved unfavorably. The risk factors section also details ongoing industry-specific risks such as competition, data privacy, and regulatory scrutiny.