10-QPeriod: Q1 FY2017

Meta Platforms, Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:META

Summary

Meta Platforms, Inc. (META) reported strong first-quarter 2017 financial results, demonstrating significant year-over-year growth. Revenue surged by 49% to $8.03 billion, primarily driven by a 51% increase in advertising revenue. Daily Active Users (DAUs) grew 18% to 1.28 billion, and Monthly Active Users (MAUs) increased 17% to 1.94 billion, highlighting continued user engagement and platform expansion. The company maintained healthy profitability with net income reaching $3.06 billion, leading to diluted EPS of $1.04. Despite substantial investments in research and development and infrastructure, operating income grew significantly, reflecting efficient scaling. Meta Platforms ended the quarter with a robust cash position of $32.31 billion in cash and marketable securities, underscoring its strong financial health and capacity for future investments and strategic initiatives.

Financial Highlights

48 data points
Beta

Revenue

$8.03B

85.6% Gross Margin

Net Income

$3.06B

38.1% Net Margin

EPS (Diluted)

$1.04

Total Assets

$68.71B

Cash & Equivalents

$7.10B

Free Cash Flow

$3.79B

Financial Statements
Beta
Revenue$8.03B
Cost of Revenue$1.16B
Gross Profit$6.87B
R&D Expenses$1.83B
Operating Expenses$4.71B
Operating Income$3.33B
Net Income$3.06B
EPS (Basic)$1.06
EPS (Diluted)$1.04
Shares Outstanding (Basic)2.89B
Shares Outstanding (Diluted)2.94B

Key Highlights

  • 1Revenue increased by 49% year-over-year to $8.03 billion, primarily driven by a 51% increase in advertising revenue.
  • 2Daily Active Users (DAUs) reached 1.28 billion, an 18% increase year-over-year.
  • 3Monthly Active Users (MAUs) grew to 1.94 billion, a 17% increase year-over-year.
  • 4Net income was $3.06 billion, with diluted Earnings Per Share (EPS) of $1.04.
  • 5Total costs and expenses increased by 39% to $4.71 billion, with significant investments in R&D (up 37%) and infrastructure.
  • 6The company maintained a strong liquidity position, with $32.31 billion in cash and marketable securities as of March 31, 2017.
  • 7Capital expenditures were $1.27 billion for the quarter, reflecting ongoing investments in infrastructure.

Frequently Asked Questions

The primary driver of Meta's revenue growth is advertising. In Q1 2017, advertising revenue increased by 51% year-over-year and represented approximately 98% of total revenue.

While revenue is growing robustly, Meta is also investing heavily in research and development (up 37%) and infrastructure to support its growth. Cost of revenue increased by 38% and R&D expenses by 37%. However, as a percentage of revenue, total costs and expenses decreased from 63% in Q1 2016 to 59% in Q1 2017, indicating operational leverage and efficient scaling.

Meta anticipates that user growth will continue to be concentrated in regions with lower Average Revenue Per User (ARPU), such as Asia-Pacific and Rest of World. This trend suggests that while worldwide ARPU may continue to increase, it might do so at a slower rate than ARPU in specific regions, or potentially even decrease if regional ARPU increases are outpaced by growth in lower ARPU regions.

Yes, Meta is involved in several legal proceedings. Notably, there are ongoing securities class action lawsuits related to its IPO, and lawsuits concerning the proposed Class C stock reclassification. Additionally, the IRS has issued a notice of deficiency for transfer pricing related to foreign subsidiaries, potentially leading to a significant tax liability of $3 billion to $5 billion. While Meta believes these lawsuits are without merit and is vigorously defending them, and has accrued for certain tax liabilities, the outcomes are uncertain and could materially affect financial results if unfavorable.