10-QPeriod: Q1 FY2016

Meta Platforms, Inc. Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 28, 2016For Securities:META

Summary

Meta Platforms, Inc. (META) reported a strong first quarter for 2016, with significant year-over-year growth across key financial and user metrics. Revenue surged by 52% to $5.38 billion, primarily driven by a 57% increase in advertising revenue. This growth was fueled by strong demand for mobile ads, increased marketer engagement, and improved ad relevance and performance. Profitability also saw a substantial improvement, with net income jumping to $1.51 billion from $512 million in the prior year's quarter, resulting in diluted EPS of $0.52. The company continued its strategic investments in core products like Facebook, Instagram, Messenger, and WhatsApp, as well as long-term initiatives such as virtual reality and artificial intelligence. Despite increased investments, operational efficiency improved, with costs and expenses growing at a slower pace than revenue, leading to a significant expansion in operating income and net income margins.

Financial Highlights

48 data points
Beta

Revenue

$5.38B

84.4% Gross Margin

Net Income

$1.74B

32.3% Net Margin

EPS (Diluted)

$0.60

Total Assets

$52.26B

Cash & Equivalents

$6.46B

Free Cash Flow

$2.35B

Financial Statements
Beta
Revenue$5.38B
Cost of Revenue$838.00M
Gross Profit$4.54B
R&D Expenses$1.34B
Operating Expenses$3.37B
Operating Income$2.01B
Net Income$1.74B
EPS (Basic)$0.61
EPS (Diluted)$0.60
Shares Outstanding (Basic)2.84B
Shares Outstanding (Diluted)2.90B

Key Highlights

  • 1Revenue increased by 52% year-over-year to $5.38 billion, driven by a 57% surge in advertising revenue.
  • 2Net income grew significantly to $1.51 billion, up from $512 million in the same period last year.
  • 3Diluted Earnings Per Share (EPS) reached $0.52, a substantial increase from $0.18 in Q1 2015.
  • 4Daily Active Users (DAUs) grew 16% year-over-year to 1.09 billion, with mobile DAUs up 24% to 989 million.
  • 5Monthly Active Users (MAUs) increased 15% year-over-year to 1.65 billion, with mobile MAUs up 21% to 1.51 billion.
  • 6Capital expenditures were $1.13 billion, indicating continued investment in infrastructure and growth.
  • 7Cash and cash equivalents plus marketable securities stood at a strong $20.62 billion, reflecting healthy liquidity.

Frequently Asked Questions

Revenue growth was primarily driven by advertising, which increased 57% year-over-year. This was largely due to a rise in revenue from ads shown in the mobile News Feed, an increase in the number of active marketers, and improvements in ad relevance and performance. Mobile advertising revenue represented approximately 82% of total advertising revenue in the quarter.

While total costs and expenses increased by 29% year-over-year to $3.37 billion, this growth was outpaced by revenue growth of 52%. This indicates improved operating leverage, with key expense categories like Cost of Revenue, Research and Development, and Marketing and Sales growing at rates below overall revenue growth. Consequently, income from operations more than doubled to $2.01 billion, and the net income margin expanded significantly from 14% to 28%.

Meta Platforms continues to invest strategically in its core ecosystem (Facebook app and platform), growth of its other products (Messenger, Instagram, WhatsApp, video), and long-term technology initiatives like virtual reality and artificial intelligence. The company expects these investments, coupled with its global scale, to drive significant expense growth compared to 2015, but these investments are geared towards long-term mission fulfillment and future monetization.

The company is clearly capitalizing on the mobile shift. Daily and Monthly Active Users on mobile devices showed stronger growth rates (24% and 21% respectively) compared to overall user growth (16% and 15%). Desktop usage is noted to be declining and the company anticipates this trend will continue, aligning its focus and advertising products with mobile engagement.