10-QPeriod: Q3 FY2019

Meta Platforms, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 31, 2019For Securities:META

Summary

Meta Platforms, Inc. (META) reported strong financial performance for the third quarter and the first nine months of 2019. Revenue continued its robust growth, driven primarily by advertising, with a significant portion originating from mobile devices. Despite increased investments in infrastructure, R&D, and headcount to support growth and long-term initiatives, the company maintained healthy operating margins. The company's balance sheet shows substantial growth in assets, notably in cash and cash equivalents and marketable securities. However, this period also saw a significant increase in liabilities, largely due to a $5.0 billion FTC settlement provision. Investors should note the company's ongoing investments in its core platforms (Facebook, Instagram), expanding ecosystems (Messenger, WhatsApp), and future technologies (AI, AR/VR), which are expected to drive continued expense growth. While the company generated strong operating cash flow, it also continued its share repurchase program and significant capital expenditures.

Financial Highlights

49 data points
Beta

Revenue

$17.65B

82.1% Gross Margin

Net Income

$6.09B

34.5% Net Margin

EPS (Diluted)

$2.12

Total Assets

$124.42B

Cash & Equivalents

$16.08B

Free Cash Flow

$5.78B

Financial Statements
Beta
Revenue$17.65B
Cost of Revenue$3.15B
Gross Profit$14.50B
R&D Expenses$3.55B
Operating Expenses$10.47B
Operating Income$7.18B
Net Income$6.09B
EPS (Basic)$2.13
EPS (Diluted)$2.12
Shares Outstanding (Basic)2.85B
Shares Outstanding (Diluted)2.87B

Key Highlights

  • 1Revenue increased by 29% year-over-year to $17.65 billion in Q3 2019, driven by a 28% increase in advertising revenue.
  • 2Net income rose by 19% year-over-year to $6.09 billion in Q3 2019, with diluted EPS of $2.12.
  • 3Daily Active Users (DAUs) grew 9% year-over-year to 1.62 billion, and Monthly Active Users (MAUs) grew 8% year-over-year to 2.45 billion.
  • 4Total costs and expenses increased by 31% year-over-year to $10.47 billion in Q3 2019, largely due to investments in data centers, infrastructure, R&D, and headcount.
  • 5The company recorded a $5.0 billion legal accrual for an FTC settlement, significantly impacting General and Administrative expenses for the nine-month period.
  • 6Cash and cash equivalents and marketable securities stood at $52.27 billion as of September 30, 2019, reflecting strong operational cash generation.
  • 7Capital expenditures for the nine-month period totaled $11.0 billion, primarily for data centers, servers, and network infrastructure.

Frequently Asked Questions

The primary driver of Meta's revenue growth was its advertising business. Advertising revenue increased by 28% year-over-year in Q3 2019, contributing the vast majority of the total revenue increase.

Meta recorded a $5.0 billion legal accrual for an FTC settlement in the first six months of 2019. This significantly increased 'General and administrative' expenses for the nine-month period, impacting overall profitability, although the company continued to generate strong operating income.

Meta anticipates continued investment in its core ecosystems (Facebook, Instagram), expanding ecosystems (Messenger, WhatsApp), and long-term technology initiatives (AI, AR/VR). The company expects total costs and expenses to be approximately $46 billion to $48 billion for 2019 and $54 billion to $59 billion in 2020, driven by infrastructure expansion, headcount growth, and investments in privacy, safety, and new technologies.

Meta maintains a strong liquidity position, with $52.27 billion in cash and cash equivalents and marketable securities as of September 30, 2019. The company generated substantial cash from operations, while also continuing its share repurchase program and making significant capital expenditures for infrastructure development.