Meta Platforms — Oct 30, 2024 release

Meta Reports Third Quarter 2024 Results MENLO PARK, Calif. – October 30, 2024 – Meta Platforms, Inc. (Nasdaq: META) today reported financial results for the quarter ended September 30, 2024. "We had a good quarter driven by AI progress across our apps and business," said Mark Zuckerberg, Meta founder and CEO. "We also have strong momentum with Meta AI, Llama adoption, and AI-powered glasses." Third Quarter 2024 Financial Highlights Three Months Ended September 30,  % Change In millions, except percentages and per share amounts 2024 2023 Revenue $ 40,589  $ 34,146  19  % Costs and expenses 23,239  20,398  14  % Income from operations $ 17,350  $ 13,748  26  % Operating margin 43  % 40  % Provision for income taxes $ 2,134  $ 2,437  (12) % Effective tax rate 12  % 17  % Net income $ 15,688  $ 11,583  35  % Diluted earnings per share (EPS) $ 6.03  $ 4.39  37  % Third Quarter 2024 Operational and Other Financial Highlights • Family daily active people (DAP) – DAP was 3.29 billion on average for September 2024, an increase of 5% year-over-year. • Ad impressions – Ad impressions delivered across our Family of Apps increased by 7% year-over-year. • Average price per ad – Average price per ad increased by 11% year-over-year. • Revenue – Total revenue was $40.59 billion, an increase of 19% year-over-year. Revenue on a constant currency basis would have increased 20% year-over-year. • Costs and expenses – Total costs and expenses were $23.24 billion, an increase of 14% year-over-year. • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $9.20 billion. • Capital return program – Share repurchases were $8.86 billion of our Class A common stock and total dividend and dividend equivalent payments were $1.26 billion . • Cash, cash equivalents, and marketable securities – Cash, cash equivalents, and marketable securities were $70.90 billion as of September 30, 2024. Free cash flow was $15.52 billion. • Long-term debt – Long-term debt was $28.82 billion as of September 30, 2024. • Headcount – Headcount was 72,404 as of September 30, 2024, an increase of 9% year-over-year. 1 CFO Outlook Commentary We expect fourth quarter 2024 total revenue to be in the range of $45-48 billion. Our guidance assumes foreign currency is approximately neutral to year-over-year total revenue growth, based on current exchange rates. We expect full-year 2024 total expenses to be in the range of $96-98 billion, updated from our prior range of $96-99 billion. For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and investments to further scale our ecosystem. We anticipate our full-year 2024 capital expenditures will be in the range of $38-40 billion, updated from our prior range of $37-40 billion. We continue to expect significant capital expenditures growth in 2025. Given this, along with the back-end weighted nature of our 2024 capital expenditures, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet. Absent any changes to our tax landscape, we expect our fourth quarter 2024 tax rate to be in the low-teens. In addition, we continue to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and our financial results. 2 Webcast and Conference Call Information Meta will host a conference call to discuss the results at 2:00 p.m. PT / 5:00 p.m. ET today. The live webcast of Meta's earnings conference call can be accessed at the Meta Investor Relations website at investor.fb.com, along with the earnings press release, financial tables, and slide presentation. Following the call, a replay will be available at the same website. Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website. Disclosure Information Meta uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page (facebook.com/zuck), Instagram account (instagram.com/zuck) and Threads profile (threads.net/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. About Meta Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram, and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology. Contacts Investors: Kenneth Dorell investor@meta.com / investor.fb.com Press: Ryan Moore press@meta.com / about.fb.com/news/ 3 Forward-Looking Statements This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of macroeconomic conditions on our business and financial results, including as a result of geopolitical events; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; changes to the content or application of third-party policies that impact our advertising practices; risks associated with new products and changes to existing products as well as other new business initiatives, including our artificial intelligence initiatives and metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content and advertising review and enforcement efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy, legislative, and regulatory concerns or developments; risks associated with acquisitions; security breaches; our ability to manage our scale and geographically-dispersed operations; and market conditions or other factors affecting the payment of dividends. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on August 1, 2024, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024. In addition, please note that the date of this press release is October 30, 2024, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events. For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in our most recent quarterly or annual report filed with the SEC. Non-GAAP Financial Measures To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect, and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. Our non-GAAP financial measures are adjusted for the following items: Foreign exchange effect on revenue . We translated revenue for the three and nine months ended September 30, 2024 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance. Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment, net of proceeds and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures. For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release. 4 META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue $ 40,589  $ 34,146  $ 116,116  $ 94,791  Costs and expenses:   Cost of revenue 7,375  6,210  21,322  18,264  Research and development 11,177  9,241  31,693  27,966  Marketing and sales 2,822  2,877  8,107  9,075  General and administrative 1,865  2,070  8,978  9,119  Total costs and expenses 23,239  20,398  70,100  64,424  Income from operations 17,350  13,748  46,016  30,367  Interest and other income, net 472  272  1,095  254  Income before provision for income taxes 17,822  14,020  47,111  30,621  Provision for income taxes 2,134  2,437  5,589  5,540  Net income $ 15,688  $ 11,583  $ 41,522  $ 25,081  Earnings per share: Basic $ 6.20  $ 4.50  $ 16.37  $ 9.73  Diluted $ 6.03  $ 4.39  $ 15.88  $ 9.56  Weighted-average shares used to compute earnings per share: Basic 2,529  2,576  2,536  2,577  Diluted 2,600  2,641  2,615  2,623  5 META PLATFORMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) September 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 43,852  $ 41,862  Marketable securities 27,048  23,541  Accounts receivable, net 14,700  16,169  Prepaid expenses and other current assets 5,467  3,793  Total current assets 91,067  85,365  Non-marketable equity securities 6,071  6,141  Property and equipment, net 112,162  96,587  Operating lease right-of-use assets 14,812  13,294  Goodwill 20,654  20,654  Other assets 11,642  7,582  Total assets $ 256,408  $ 229,623  Liabilities and stockholders' equity Current liabilities: Accounts payable $ 7,656  $ 4,849  Operating lease liabilities, current 2,016  1,623  Accrued expenses and other current liabilities 23,658  25,488  Total current liabilities 33,330  31,960  Operating lease liabilities, non-current 18,208  17,226  Long-term debt 28,823  18,385  Long-term income taxes 9,171  7,514  Other liabilities 2,347  1,370  Total liabilities 91,879  76,455  Commitments and contingencies Stockholders' equity: Common stock and additional paid-in capital 80,749  73,253  Accumulated other comprehensive loss (1,192) (2,155) Retained earnings 84,972  82,070  Total stockholders' equity 164,529  153,168  Total liabilities and stockholders' equity $ 256,408  $ 229,623  6 META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Cash flows from operating activities Net income $ 15,688  $ 11,583  $ 41,522  $ 25,081  Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,027  2,858  11,038  8,006  Share-based compensation 4,250  3,492  12,428  10,603  Deferred income taxes (1,308) 3,049  (3,406) 1,292  Impairment charges for facilities consolidation, net 8  340  288  1,342  Other (11) 75  (82) 278  Changes in assets and liabilities: Accounts receivable 143  (678) 1,493  444  Prepaid expenses and other current assets (184) (907) (168) (141) Other assets (29) (36) (70) 31  Accounts payable 667  611  (195) (543) Accrued expenses and other current liabilities 572  87  (1,199) 5,355  Other liabilities 901  (72) 1,691  (39) Net cash provided by operating activities 24,724  20,402  63,340  51,709  Cash flows from investing activities Purchases of property and equipment, net (8,258) (6,496) (22,831) (19,453) Purchases of marketable debt securities (4,468) (1,008) (14,644) (1,810) Sales and maturities of marketable debt securities 4,114  1,475  11,972  3,825  Acquisitions of businesses and intangible assets (132) (38) (261) (565) Other investing activities 124  (10) 112  (20) Net cash used in investing activities (8,620) (6,077) (25,652) (18,023) Cash flows from financing activities Taxes paid related to net share settlement of equity awards (3,544) (2,087) (9,913) (4,789) Repurchases of Class A common stock (8,818) (3,570) (30,125) (13,832) Payments for dividends and dividend equivalents (1,263) —  (3,802) —  Proceeds from issuance of long-term debt, net 10,432  —  10,432  8,455  Principal payments on finance leases (944) (267) (1,558) (751) Other financing activities (234) 49  (350) (182) Net cash used in financing activities (4,371) (5,875) (35,316) (11,099) Effect of exchange rate changes on cash, cash equivalents, and restricted cash 368  (354) (72) (283) Net increase in cash, cash equivalents, and restricted cash 12,101  8,096  2,300  22,304  Cash, cash equivalents, and restricted cash at beginning of the period 33,026  29,804  42,827  15,596  Cash, cash equivalents, and restricted cash at end of the period $ 45,127  $ 37,900  $ 45,127  $ 37,900  Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets Cash and cash equivalents $ 43,852  $ 36,890  $ 43,852  $ 36,890  Restricted cash, included in prepaid expenses and other current assets 90  152  90  152  Restricted cash, included in other assets 1,185  858  1,185  858  Total cash, cash equivalents, and restricted cash $ 45,127  $ 37,900  $ 45,127  $ 37,900  7 META PLATFORMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Supplemental cash flow data Cash paid for income taxes, net $ 1,767  $ 509  $ 8,326  $ 2,016  Cash paid for interest, net of amounts capitalized $ 111  $ 120  $ 356  $ 302  Non-cash investing and financing activities: Property and equipment in accounts payable and accrued expenses and other current liabilities $ 7,217  $ 4,506  $ 7,217  $ 4,506  Acquisition of businesses and intangible assets in accrued expenses and other current liabilities and other liabilities $ 186  $ 182  $ 186  $ 182  Repurchases of Class A common stock in accrued expenses and other current liabilities $ —  $ 122  $ —  $ 122  8 Segment Results We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our virtual, augmented, and mixed reality related consumer hardware, software, and content. The following table presents our segment information of revenue and income (loss) from operations: Segment Information (In millions) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue: Advertising $ 39,885  $ 33,643  $ 113,850  $ 93,242  Other revenue 434  293  1,203  724  Family of Apps 40,319  33,936  115,053  93,966  Reality Labs 270  210  1,063  825  Total revenue $ 40,589  $ 34,146  $ 116,116  $ 94,791  Income (loss) from operations: Family of Apps $ 21,778  $ 17,490  $ 58,778  $ 41,841  Reality Labs (4,428) (3,742) (12,762) (11,474) Total income from operations $ 17,350  $ 13,748  $ 46,016  $ 30,367       9 Reconciliation of GAAP to Non-GAAP Results (In millions, except percentages) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 GAAP revenue $ 40,589  $ 34,146  $ 116,116  $ 94,791  Foreign exchange effect on 2024 revenue using 2023 rates 544  809  Revenue excluding foreign exchange effect $ 41,133  $ 116,925  GAAP revenue year-over-year change % 19  % 22  % Revenue excluding foreign exchange effect year-over-year change % 20  % 23  % GAAP advertising revenue $ 39,885  $ 33,643  $ 113,850  $ 93,242  Foreign exchange effect on 2024 advertising revenue using 2023 rates 538  799  Advertising revenue excluding foreign exchange effect $ 40,423  $ 114,649  GAAP advertising revenue year-over-year change % 19  % 22  % Advertising revenue excluding foreign exchange effect year-over-year change % 20  % 23  % Net cash provided by operating activities $ 24,724  $ 20,402  $ 63,340  $ 51,709  Purchases of property and equipment, net (8,258) (6,496) (22,831) (19,453) Principal payments on finance leases (944) (267) (1,558) (751) Free cash flow $ 15,522  $ 13,639  $ 38,951  $ 31,505  10