2019年第三季度Facebook财报.pdf

1 Facebook, Inc. (FB) Third Quarter 2019 Earnings Conference Call October 30th, 2019 Operator Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would conference operator today. At this time, I would like to welcome everyone to the Facebook Third Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star then the number one on your telephone keypad. This call will be recorded. Thank you very much. Ms. Deborah Crawford, Facebooks Vice President of Investor Relations, you may begin. Deborah Crawford, VP, Investor Relations Thank you. Good afternoon and welcome to Facebooks second third quarter 2019 earnings conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO; Sheryl Sandberg, COO; and Dave Wehner, CFO. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forwardlooking statements. Actual results may differ materially from those contemplated by these forwardlooking statements. Factors that could cause these results to differ materially are set forth in todays press release, and in our quarterly report on form 10Q filed with the SEC. Any forwardlooking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. During this call we may present both GAAP and nonGAAP financial measures. A reconciliation of GAAP to nonGAAP measures is included in todays earnings press release. The press release and an accompanying investor presentation are available on our website at investor.fb. And now, Id like to turn the call over to Mark. Mark Zuckerberg, CEO Thanks Deborah, and thank you all for joining us today. Before we get started, I want to talk about the announcement we just shared that Sue Desmond-Hellmann is leaving our board to focus on her health and other commitments. Sue has been a wonderful and thoughtful voice on our board for six years, and Im deeply, personally grateful for everything she has done for this company. This was a good quarter for our community and our business. There are now around 2.8 billion people using Facebook, Instagram, WhatsApp or Messenger each month, and around 2.2 billion people using at least one of our services daily. The Facebook app had a particularly strong quarter, including in the US and Canada. We also recently released that we estimate that more than 140 million businesses, mostly 2 small businesses, are using our services each month to grow, create jobs and become social hubs in their communities. This has been a busy quarter on a lot of fronts. Weve launched a number of exciting new products, like Facebook Dating in the US, which is doing quite well, Threads for Instagram, a camera-first experience to share with your close friends, Facebook News, our dedicated product for news that weve built in partnership with news publishers, and we introduced Horizon, a new social experience for VR. We also released hand-tracking technology for Oculus and Oculus Link so your Quest is basically now a Rift too. Were making progress building out the private social platform across WhatsApp, Messenger and Instagram Direct. And we have multiple exciting initiatives around commerce and payments that are moving forward, from Marketplace to Instagram Shopping to payments in WhatsApp and continuing our discussions on Libra. This has also been a busy quarter on the policy and social issues front. We formally entered into a settlement with the FTC to make structural changes and build a rigorous privacy program that will set a new standard for our industry. Were about a year out now from the 2020 elections and we just announced that the systems weve built are now so advanced that weve proactively identified and removed multiple foreign interference campaigns coming from Russia and Iran. And weve found ourselves in the middle of the debate about what political speech is acceptable in the upcoming campaigns. But today I want to focus on talking about principles. Because from a business perspective, it might be easier for us to choose a different path than the one that were taking. So I want to make sure everyone is clear about what we stand for, and why were making some of the decisions that were making. I gave a speech a couple weeks ago about the importance of standing for voice and free expression. I believe strongly - and I believe history supports - that free expression has been important for driving progress and building more inclusive societies around the world, that at times of social tension there has often been an urge to pull back on free expression, and that we will be best served over the long term by resisting this urge and defending free expression. Today is certainly a historical moment of social tension, and I view an important role of our company as defending free expression. Now this has never been absolute and of course we take our responsibility to prevent harm very seriously too. I think we invest more in getting harmful content off our services than any other company in the world. Those who follow us closely know that we have more than 35,000 people working on safety and security, and that our budget for this work is billions of dollars a year - more than the whole revenue of our company at the time of our IPO earlier in this decade. And were going to keep investing more here. But while we work hard to remove content that can cause real danger, I think we also need to be careful about adopting more and more rules that restrict the ways that people can speak and what they can say. Right now, the content debate is about political ads. Should we block political ads with false statements? Should we block all political ads? Google, YouTube and most internet platforms run these same ads, most cable networks run these same ads, and of course national broadcasters are required by law to run them by FCC regulations. I think there are good reasons for this. In a democracy, I dont think its right 3 for private companies to censor politicians or the news. And although Ive considered whether we should not carry these ads in the past and Ill continue to do so, on balance so far Ive thought we should continue. Ads can be an important part of voice - especially for candidates and advocacy groups that the media might not otherwise cover so they can get their message into debates. And its hard to define where to draw the line. Would we really want to block ads for important political issues like climate change or womens empowerment? Instead, I believe the better approach is to work to increase transparency. Ads on Facebook are already more transparent than anywhere else. We have a political ads archive so anyone can scrutinize every ad thats run - you can see every message, who saw it, how much was spent and thats something that no TV or print media does. Since this is an earnings call, I want to talk about the business impact of all this. Some people accuse us of allowing this speech because they think all we care about is making money. Thats wrong. I can assure you, from a business perspective, the controversy this creates far outweighs the very small percent of our business that these political ads make up. We estimate these ads from politicians will be less than 0.5% of our revenue next year. Thats not why were doing this. To put this in perspective, the FTC fine that these same critics said wouldnt be enough to change our incentives was more than 10x bigger than this. The reality is we believe deeply that political speech is important, and thats what is driving us. Other people say this policy is a part of a broader pattern of us building a system that incentivizes inflammatory content to fuel our business. Again, to the contrary, I think weve done more than any of the other major internet platforms to try to build positive incentives into our systems. We dont let any of our News Feed or Instagram Feed teams set goals around increasing time spent on our services. We rank feeds to encourage meaningful social interactions - helping people connect with friends, family and their communities. We have real people come in and tell us what content they saw that was most meaningful to them and sparked valuable discussions, and then we build systems to try to surface that kind of content. Weve taken many steps over the years to fight clickbait and polarization, and now were even testing removing like counts in Instagram and Facebook. We do this because we know that if we help people have meaningful interactions, theyll find our services more valuable and thats the key to building something sustainable and growing over time. Last year, you probably remember that we made a series of changes that emphasized friends and family and reduced time spent on our services. One change removed 50 million hours of viral video watching a day. We did this knowing it would mean people spend less time on our apps - which is not what you do if youre just prioritizing engagement over everything else. I take getting the incentives right very seriously and were willing to make huge sacrifices in the short term to do what we think is right and will be better over time. Finally, some people say this is just all a cynical political calculation and that were acting in a way we dont believe because were trying to appease conservatives. Thats wrong too. We face a lot of criticism from both progressives and conservatives. Frankly, if our goal were trying to make either side happy, then were not doing a very good job because Im pretty sure everyone is frustrated with us. Our values on voice and free expression are not partisan. But unfortunately, in our current environment, a lot of people look at every decision through the lens of whether its going to help or hurt the candidate they want in winning their next election. 4 A lot of people have told us: youve got to pick a side, or else both sides are going to cause problems for you. Sadly, from a practical perspective, they may be right. But we cant make decisions that way. So over the next year of campaigns, were going to be at the center of the debate anytime theres content or policies on any of our services that people believe could advantage or disadvantage their side. This may lead to more investigations, and the candidates are going to criticize us. I expect that this is going to be a very tough year. We try to do what we think is right, but were not going to get everything right. This is complex stuff and anyone who says the answers are simple hasnt thought long enough about all the nuances and downstream challenges. I get that some people are going to disagree with our decisions. I get that some people are going to think our decisions may have a negative impact on things they really care about. But I dont think anyone can say were not doing what we believe, or that we havent thought hard about these issues. I could be wrong, but my experience running this company so far has been that if we do what we believe is right, even when its unpopular for years at a time - then eventually it has worked out best for our community and for our business too. Theres a lot at stake here. We are at a cross-roads not only in our own country, but in the future of the global internet as well. China is building its own internet and media ecosystem thats focused on very different values. And as these systems compete, this question of which nations values will determine what speech is allowed for decades to come really puts into perspective the issues that we face today. Because while we may disagree on exactly where to draw the line on specific issues, we at least can disagree. Thats what free expression is about. Voice and expression have been important for progress throughout history. Theyve been important in the fight for democracy worldwide. I believe that voice and free expression are an important part of the path forward today, and thats why our company will continue standing for these principles. As always, I am grateful for all of your support in everything we do - and thats especially true today. In addition to these challenges, there are a lot of great things going on that Im incredibly proud of and excited about, and Im glad that our community and business trends continue heading in a good direction. Im happy to talk about any of these things in the Q&A, and now heres Sheryl to talk more about our business. Sheryl Sandberg, COO Thanks Mark, and hi everyone. It was a strong quarter for our business. Ad revenue grew 28% year over year, and we saw strong performance in all regions and on both Facebook and Instagram. Mobile ad revenue was $16.4 billion, contributing approximately 94% of total ad revenue. We know we have a very important responsibility to keep people safe and continue innovating to help businesses of all sizes grow. Were working hard to demonstrate our commitment to the billions of people and 140 million businesses who use our platforms every month. I want to start by talking about some of the protections were putting in place to keep people safe. 5 As Mark said, the 2020 US elections are only a year away. Were continuing to invest in people and technology so that we can disrupt networks of bad actors, find and remove bad content, and stop fake accounts before people see them. We are also making political advertising on Facebook more transparent than anywhere else. In 2018, we started requiring ads about social issues, elections or politics to get authorized before running and this quarter we strengthened those requirements to ask for even more information. Helping people understand who is trying to influence their vote without becoming arbiters of political truth ourselves is critical to empowering people and keeping them safe. Were also holding ourselves to a higher standard when it comes to protecting people from discrimination on Facebook. Earlier this year, we reached an important settlement with the National Fair Housing Alliance, the ACLU, the Communication Workers of America and others to restrict targeting options for housing, employment and credit ads. Now, advertisers in these areas are required to use a new buying process and by the end of the year, people will be able to view all current housing ads in the United States. While these changes could have a small negative impact on our business in the short term, we believe they are the right thing to do for people and our business over the long term. At the same time, we are continuing to innovate to grow our business and help advertisers grow theirs. We do this by improving our a