10-QPeriod: Q1 FY2020

Meta Platforms, Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 30, 2020For Securities:META

Summary

Meta Platforms, Inc. (META) reported strong financial performance for the first quarter ended March 31, 2020, despite the emerging COVID-19 pandemic. Revenue increased by 18% year-over-year to $17.74 billion, driven by robust advertising revenue growth. Net income more than doubled to $4.90 billion, resulting in diluted earnings per share of $1.71. The company also saw significant growth in its user base, with daily active users (DAUs) reaching 1.73 billion and monthly active users (MAUs) at 2.60 billion. While the company experienced a slowdown in advertising demand and pricing towards the end of the quarter due to COVID-19, early April trends showed signs of stabilization. Meta emphasized its continued investment in key priorities such as privacy, safety, and building new experiences. The company maintained a strong liquidity position with $60.29 billion in cash and cash equivalents and marketable securities. Significant legal settlements, including a $5.0 billion FTC penalty and a $550 million biometric privacy settlement, were noted and largely provided for.

Financial Highlights

49 data points
Beta

Revenue

$17.74B

80.5% Gross Margin

Net Income

$4.90B

27.6% Net Margin

EPS (Diluted)

$1.71

Total Assets

$138.37B

Cash & Equivalents

$23.62B

Free Cash Flow

$7.44B

Financial Statements
Beta
Revenue$17.74B
Cost of Revenue$3.46B
Gross Profit$14.28B
R&D Expenses$4.01B
Operating Expenses$11.84B
Operating Income$5.89B
Net Income$4.90B
EPS (Basic)$1.72
EPS (Diluted)$1.71
Shares Outstanding (Basic)2.85B
Shares Outstanding (Diluted)2.87B

Key Highlights

  • 1Total revenue increased 18% year-over-year to $17.74 billion in Q1 2020.
  • 2Net income more than doubled year-over-year to $4.90 billion, with diluted EPS of $1.71.
  • 3Facebook daily active users (DAUs) grew 11% to 1.73 billion, and monthly active users (MAUs) grew 10% to 2.60 billion.
  • 4Family Daily Active People (DAP) increased 12% year-over-year, and Family Monthly Active People (MAP) increased 11%.
  • 5Advertising revenue, the primary revenue driver, grew 17% year-over-year.
  • 6The company reported $60.29 billion in cash and cash equivalents and marketable securities, indicating strong liquidity.
  • 7Significant legal accruals were noted, including a $5.0 billion FTC settlement and a $550 million biometric privacy settlement.

Frequently Asked Questions

The COVID-19 pandemic began impacting Meta towards the end of the first quarter of 2020. While user engagement increased due to stay-at-home measures, the company observed a significant reduction in advertising demand and pricing in the final three weeks of March. However, early April trends indicated a stabilization in advertising revenue.

Meta anticipates that the pandemic and related economic slowdown may materially and adversely impact advertising demand and pricing throughout 2020 or longer. The company is unable to predict the duration or degree of this impact with certainty but noted signs of stabilization in early April. They also plan to continue investing in business priorities, which will drive expense growth.

Total costs and expenses were $11.84 billion. Key expense categories included cost of revenue ($3.46 billion), research and development ($4.02 billion), marketing and sales ($2.79 billion), and general and administrative ($1.58 billion). Research and development expenses saw a significant 40% increase year-over-year, driven by headcount growth in engineering.

Meta is involved in various legal proceedings. Notably, the company entered into a settlement with the FTC requiring a $5.0 billion penalty, which was reflected in accrued expenses and paid in April 2020. Additionally, a settlement in principle was reached for a biometric privacy class action lawsuit, requiring a $550 million payment, also reflected in accrued expenses.