10-QPeriod: Q3 FY2016

Meta Platforms, Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 3, 2016For Securities:META

Summary

Meta Platforms, Inc. (META) reported a strong third quarter for 2016, demonstrating robust revenue growth driven primarily by its advertising business. Revenue increased by 56% year-over-year to $7.01 billion, with advertising revenue up 59%. This growth was fueled by increasing demand for mobile advertising, higher ad prices, and a greater number of ads delivered. Profitability also saw significant improvement, with net income jumping to $2.38 billion from $896 million in the prior year's comparable period. This substantial increase in net income reflects the company's ability to scale its revenue faster than its costs, leading to an expanded operating margin. The company continues to invest heavily in long-term growth initiatives, including its core Facebook app, as well as emerging areas like Messenger, Instagram, WhatsApp, video, virtual reality, and artificial intelligence. Despite these investments, the company maintains a strong liquidity position with over $26 billion in cash and marketable securities.

Financial Highlights

48 data points
Beta

Revenue

$7.01B

85.9% Gross Margin

Net Income

$2.63B

37.5% Net Margin

EPS (Diluted)

$0.90

Total Assets

$60.01B

Cash & Equivalents

$6.04B

Free Cash Flow

$2.94B

Financial Statements
Beta
Revenue$7.01B
Cost of Revenue$987.00M
Gross Profit$6.02B
R&D Expenses$1.54B
Operating Expenses$3.89B
Operating Income$3.12B
Net Income$2.63B
EPS (Basic)$0.91
EPS (Diluted)$0.90
Shares Outstanding (Basic)2.87B
Shares Outstanding (Diluted)2.93B

Key Highlights

  • 1Revenue soared by 56% year-over-year to $7.01 billion, driven by a 59% increase in advertising revenue.
  • 2Net income surged to $2.38 billion, a significant increase from $896 million in Q3 2015, indicating strong operational leverage.
  • 3Daily Active Users (DAUs) grew 17% year-over-year to 1.18 billion, with mobile DAUs up 22% to 1.09 billion, highlighting continued user engagement, especially on mobile.
  • 4Monthly Active Users (MAUs) reached 1.79 billion, a 16% increase year-over-year, with mobile MAUs up 20% to 1.66 billion.
  • 5Mobile advertising revenue represented approximately 84% of total advertising revenue, underscoring the strategic shift and success in mobile monetization.
  • 6Capital expenditures for the nine months ended September 30, 2016, were $3.22 billion, reflecting continued investment in infrastructure and data centers.
  • 7The company ended the quarter with a substantial cash and marketable securities balance of $26.14 billion, providing ample liquidity for future investments and operations.

Frequently Asked Questions

The primary driver of Meta's revenue growth is its advertising business, which saw a 59% increase year-over-year in Q3 2016. This growth is largely attributable to the increasing demand for mobile advertising, a rise in the number of marketers using its platforms, and improvements in ad relevance and effectiveness.

While Meta is investing significantly in R&D, marketing, and infrastructure to support growth and long-term initiatives, its operating expenses are growing at a slower pace than revenue. This is evident in the expanded income from operations and net income, indicating efficient scaling and operational leverage.

Meta continues to invest in its core Facebook app and platform, alongside growth in adjacent products like Messenger, Instagram, and WhatsApp. The company is also making substantial long-term investments in areas like video, virtual reality, and artificial intelligence, aiming to further its mission of connecting the world and drive future monetization opportunities.

Meta Platforms maintains a very strong liquidity position, with cash and cash equivalents and marketable securities totaling $26.14 billion as of September 30, 2016. This provides significant financial flexibility for ongoing operations, strategic investments, and potential acquisitions.