10-QPeriod: Q2 FY2016

Meta Platforms, Inc. Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 28, 2016For Securities:META

Summary

Meta Platforms, Inc. (META) reported strong financial results for the second quarter and first six months of 2016, demonstrating significant year-over-year growth in revenue and net income. Revenue surged by 59% in Q2 and 56% in the first half, primarily driven by a robust increase in advertising revenue, which now represents a significant majority (84% in Q2) of total revenue, largely from mobile advertising. The company continues to expand its user base, with Daily Active Users (DAUs) up 17% and Monthly Active Users (MAUs) up 15% year-over-year, driven by mobile usage. Despite substantial investments in long-term initiatives like virtual reality and artificial intelligence, along with ongoing operational expenses, Meta demonstrated strong profitability with a net income of $2.06 billion in Q2 and a healthy income from operations. The company also maintained a strong liquidity position with over $23 billion in cash and marketable securities.

Financial Highlights

48 data points
Beta

Revenue

$6.44B

85.8% Gross Margin

Net Income

$2.28B

35.5% Net Margin

EPS (Diluted)

$0.78

Total Assets

$55.97B

Cash & Equivalents

$5.11B

Free Cash Flow

$2.67B

Financial Statements
Beta
Revenue$6.44B
Cost of Revenue$917.00M
Gross Profit$5.52B
R&D Expenses$1.47B
Operating Expenses$3.70B
Operating Income$2.73B
Net Income$2.28B
EPS (Basic)$0.80
EPS (Diluted)$0.78
Shares Outstanding (Basic)2.86B
Shares Outstanding (Diluted)2.92B

Key Highlights

  • 1Revenue for the second quarter of 2016 increased by 59% year-over-year to $6.44 billion, with advertising revenue growing by 63% to $6.24 billion.
  • 2Mobile advertising revenue accounted for approximately 84% of total advertising revenue in Q2 2016, up from 76% in the prior year, highlighting the company's successful shift to mobile monetization.
  • 3Daily Active Users (DAUs) grew 17% year-over-year to 1.13 billion, and Monthly Active Users (MAUs) increased 15% to 1.71 billion as of June 30, 2016.
  • 4Net income rose significantly to $2.06 billion ($0.71 per diluted share) in Q2 2016, compared to $719 million ($0.25 per diluted share) in Q2 2015.
  • 5Research and development expenses increased by 25% year-over-year, reflecting continued investment in new products and technologies, while marketing and sales expenses grew by 44%.
  • 6The company ended the quarter with a strong cash and marketable securities position of $23.29 billion, providing ample liquidity for operations and future investments.
  • 7A proposal for a new Class C non-voting capital stock was approved by stockholders, intended to be distributed as a stock dividend, which will impact the stock structure going forward.

Frequently Asked Questions

Meta's revenue for the second quarter of 2016 increased by a substantial 59% year-over-year, reaching $6.44 billion. This growth was primarily driven by advertising revenue, which climbed 63% to $6.24 billion.

The primary driver of advertising revenue growth is the continued shift towards mobile advertising. In the second quarter of 2016, mobile advertising represented approximately 84% of total advertising revenue, up from 76% in the same period of 2015. This increase is attributed to higher demand for ad inventory, growth in mobile user engagement, and an increase in the number and frequency of ads shown in News Feed.

Meta is investing in its core Facebook app, growing its ecosystem around products like Messenger and Instagram, and pursuing long-term technology initiatives like virtual reality and artificial intelligence. This investment is reflected in increased expenses, with Research and Development growing 25% and Marketing and Sales growing 44% year-over-year for Q2 2016. Despite these investments, the company maintained strong profitability.

Meta ended the second quarter of 2016 with $23.29 billion in cash and marketable securities, an increase from the prior quarter, primarily due to strong operating cash flow and excess tax benefits from share-based awards. The company believes its available funds and operational cash flow are sufficient to meet its needs for the foreseeable future.