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Participants
Deborah Crawford Vice President-Investor Relations
Mark Zuckerberg Founder, Chairman and Chief Executive Officer
Sheryl Sandberg Chief Operating Officer
Dave Wehner Chief Financial Officer
Brian Nowak Morgan Stanley
Eric Sheridan UBS
Ross Sandler Barclays
Doug Anmuth JPMorgan
Lloyd Walmsley Deutsche Bank
Heather Bellini Goldman Sachs
Justin Post Bank of America Merrill Lynch
Mark May Citi
Mark Mahaney RBC
Michael Nathanson Moffett Nathanson
Ben Schachter Macquarie
Colin Sebastian Baird
Brent Thill Jefferies
Call transcript
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Operator

Good afternoon. My name is Mike and I will be your conference operator today. At this time I would like to welcome everyone to the Facebook Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] This call will be recorded. much. very you Thank

Facebook’s of Crawford, may Relations, begin. Vice Deborah Investor President you Ms.

Deborah Crawford

afternoon Facebook’s welcome earnings you. and Thank Good to conference second call. XXXX quarter

Zuckerberg, and Joining Sheryl today to our are me discuss Sandberg, Wehner, Dave Mark COO; CFO. results CEO;

differ statements. like statements press these materially form Before on take are release, to by information from new make materially remarks will SEC. statements report to those today and events. this as our results Actual on future in statements. forward‐looking to include our we contemplated that or I forward‐looking these in undertake you Factors as we results assumptions XX‐Q forth Any opportunity cause a quarterly on we today’s started, result today that based the filed get obligation to that would and could remind with of may are of this set these call no differ forward‐looking update

financial GAAP release and During this in investor.fb.com. our press at press The call investor non‐GAAP is release. measures to today’s we reconciliation both website earnings included an may and GAAP non‐GAAP of are measures. on available presentation present accompanying A

turn over the like Mark. to And I’d now, to call

Mark Zuckerberg

an you joining all Deborah, Thanks thank and for today. important This us. for was quarter

Our of least X.X and community more at X.X each are billion and than WhatsApp, use there business Messenger services than continue one month, each to people day. people more Instagram, now grow, and or using Facebook, our billion who

stand priorities talk with the focus that and priorities reached recent qualitatively about want first we for settlement our experiences, to on I major building but the on today, our what I’m a We new concerns. transparently. the continue over news progress to business, we first FTC our social privacy focus the two going to for more the making four year, on building issues, communicating

products how amount our we we’ve company. require but we’re run and some build fine, in to line this tools building this, a increase to in the resources even auditing pay our a This controls part making ways work of privacy As Sarbanes our at significant how major more bringing companies controls engineering data. agreed our the financial with importantly, more changes process It in services of also with review for we significantly to accountability will our public will $X billion investing by Oxley. use

have committee certify our Board an meeting our have our oversee to have of privacy and And an of we audit auditor that quarterly program We’ll new commitments. FTC. financial board the that overseeing to we’re just that will privacy privacy our privacy independent to as this a committee new work now also will controls, report committee all will with we and our

the to set on role We’ll be We’re in our expect most Chief asking to standard Product, leaders managing our Officer more experienced our product monitoring take industry. these for a in one of Together, we through who privacy platform. access reporting program. also developers new data rigorous and changes Privacy will for me of our

us. with We privacy we services to billions to all expect also we take as trust and we’re this and going to continue and to will us I of build they on and integrity, day do with our develop every new products, for we it’s the is forward. us up It’s vision services we to doing as ship strong moving future that provide, and we requirements protections more provide, identify build central shift build and longer I as gives this major the work issues services clear going right, been It’s to this just systems. to take we’re and expect the going fix now of But our important settlement getting the for are to systems. our time networking. especially critical communicate it to Privacy into safety we’re a best about. as is that goal get to social this This it even have been always properly, care that while our has people people that running.

I’ve making Now, portability, to and from facing governments content, the the progress top I will rules. In internet and get issues continue our right I turning put with clear decisions democratic including social social place, would industry to advocated harmful more. frustration so we robust priorities, our our privacy, it’s process. a making setting believe company on priority believe don’t these Either data or private grow. into elections, be without issues internet, many to all the major also will companies for on is areas, sustainable benefit expect that the regulations

for I where about self-regulation. harmful perhaps an talking in This process is discuss process content. the policymakers This U.S., standards President an a spent governments I with quarter with area I industry this by could believe be in effective how public and Macron to Europe, time Europe in led could framework elected met and a there democratically work. for

we making publish governments people waiting I services. the transparency would believe the accountable increase of for systems us harmful content, quarterly, speech need do But on hate our and Those these as content companies year, This at many are we’re regulation it. released calls. on for that next bullying hold enumerate After with independent reports prevalence better, cadence should dealing going violence. to oversight. same where transparency third report, areas to which not earnings companies and harmful the still release can progress and including like help categories reports the more design shows so just We graphic better we’re of harassment. their to these we’re

the with on expression month. lot that a oversight input people freedom are public a systems gotten forward transparent we’ve creating can our can world, in it’s been working content. We’ve appeal we which work, trust. with this and decisions and that moving experts could that and report for around that important how for also of believe independent plans We’re of decisions, I on an board we’re people on last the published

We oversight the expect form this by year. this board end to of

to transparency We new heavily also coordinated inauthentic and in behavior, more fact-checking including tools, ads stop advanced elections protecting to more – invest efforts continue partnerships.

that said Our President interference continually the that’s continue are former much and elections elections the our recent adversaries elections stay we were are getting ahead. commitments these the efforts as I EU testimony to our but the After that elections, and we on to EU sophisticated, in EU fight efforts the that approach U.S. the the Parliament, make met EU sure recent efforts more show made online. the thanks We’ll India to XXXX in my building Parliament election that to of we cleaner working.

I to also There there’s a our discuss particularly new qualitatively to Next, here discuss know are second few community. terms I’m want priority delivering – experiences lot but a in excited policy, about. our I of for that efforts

vision first the interoperable messaging. with future our – The privacy-focused starting networking of secure, social for is private, and

on over foundation We’re have the very focused and delivering we Messenger on with next the five years, WhatsApp. this building

messaging and making it the platform rewriting towards encryption we’re and secure With together of explore example, and end-to-end working in make world, foundation, reduced social fastest scratch of to bringing for permanence, default a your the platform the one major Messenger, from most we’re all app the social ephemeral private place. center how become With the experience, for different that your by to from your could all apps starting we’re into stories conversations.

all like how things to a videos ways for something building video chat, can shows communicate of together. This more co-watch the that the more to like growing interact in we quickly a we as way want become ability also privately which is We’re platform future. basic

the the Business, performance, of WhatsApp more customers. small matters that most growing entrepreneurs the the tools incredibly ways living can main Status already businesses private a focused new have on messaging use already with way privacy businesses use want strong number ephemeral that popular also WhatsApp to catalogs which of product as for platforms their momentum WhatsApp, small like you’d building interact presence world, using that all product there. we building of This in millions stories we’re see is room. the this and or With we’re and continue has for to in especially web With interacting good WhatsApp digital free. around don’t world like out

to than product other I’m excited we for spaces, what have across the to opportunity, is on their we and use of best is deliver better next from for both area to one is project Marketplace our companies we ways help Once payments. about, These These in recently. very the qualitatively platforms, are Libra new payments XX the networks people can created do areas to connected and product our our one biggest and business. and experiences connects efforts to huge they today that the Instagram announced through to Facebook exists with and which several efforts major have that social commerce that we to that apps This those of experience important are Shopping can have how questions commerce. them create important networks

sell network millions also your real Marketplace improve gives a people creators, and a favorite will with sustain a shopping to way and Marketplace and creators while a Shopping the of their of buy and of using people way giving Instagram build new Hundreds are community. browsing brands powerful in trusted already Facebook monthly. from experience business identities. emerging to goods

asynchronously We’re messaging businesses rather businesses WhatsApp engage having interact people Business, to if possible. and over like people because also through for building messaging call ways like with to would don’t

excited payments this important long we particularly the of Payments be about. of for most the can part at that is private easier, make When look kinds I’m interactions term. I may the

India, enable send test same to well. send able on businesses make countries transactions payments payments as account to on Facebook. can and a on money future, to easily new opportunities In money and in businesses. people friends send to to up close to as on other continuing the will you WhatsApp, as we’ll We’re in are for use WhatsApp launching Being Instagram, open shop photo or the

we cryptocurrency. access there’s from form Libra, organizations use will but Association. our called help announced new or across might powered of with and but plan access create believe member, services association more an The I month we blockchain that safe, empower billions currency other to to lot businesses Libra working be the by which world, will Facebook XX will like be broadly, Last a a currency The be well-regulated More to excluded to people around were other services. The tools. we stable, services, independent this technology. goal of banking support opportunity is Libra WhatsApp financial Association any with a who the to

the their of possibilities of these lot and all the of paper to and specifically We open, be work association we to in get out with both concerns launch. in with a that to Libra and Libra other important to Facebook a will questions plan before to concept with address address white are the outlining policymakers help right. worked committed association release prospective There here, ready working we’re this to members so could the regulators their advance

third future and computing platforms area what better focused where highlight than want a is to The exists of we’re delivering augmented reality. qualitatively the experience I today virtual product on in

quarter, This freedom as and no has Quest, can as reviews them. full them It headset of wires our first Oculus shipped fast with we’re gotten we selling make and we great all-in-one movement.

in Rift, now and $XXX the to superior from PC, have be going ahead state forward. more original still few a Quest, which years, that many going deliver a over we’ve art importantly, but products the innovation which we There’s and $XXX using to future build of week a AR VR develop an lot important week, this this we to the be $XXXX is after all more even milestone. on to ecosystem There’s people going and next of few the is to experience required ways. keep we’ve and to that and we’re an tethered years, costs buying the now the In and cost a of, dream in, More delivered work improved content. of platform experience

actually reality presence better wired so to The another traditional qualitatively will another The there they as a people. we’re platforms with how feeling is of to interactions in and important deliver social deliver than the place. you’re virtual of interact or and computing that reason augmented is person that feeling presence experience –

at term. be technology So longer scale, long even the make all the will has deliver continue one believe that expected use if the this important to we of most taken contributions than it to we way over this I we to

issues lot social we on That’s our and update the of face progress a my quarter building a a experiences. this have more ahead. work product made and on We’ve major new lot

to about and that perform is Our minute. in talk going business continues a Sheryl well, to more

was also path expectations and foundation just and on. forward of have but of sets clear clearer terms important quarter from build regulators, this we But a product because in gives not to now guidance an which a us business, terms – in

As thanks this on being now us, always, for here’s with Sheryl. journey and

Sheryl Sandberg

everyone. was and our year-over-year Mobile saw It XX% ad billion, and business. hi total approximately Ad $XX.X on grew regions and of Mark, we revenue strong Facebook for across Thanks quarter and contributing strong was Instagram. a growth all both ad revenue XX% revenue.

this of we work but community once security while and that discussing, investments business. do in As and quarter still grow a hard our we lot we’re our both. making significant can know of shows safety, ahead to been we’ve us, We privacy again continuing have

through to operation up get threats an are elections May to an we European all decisions take. experts world, in ahead together and In to us. lead of smarter Dublin test important earning We We actions created bring quickly. committed develop our around back we’re the elections were in can the make technology. for the we The Parliament and doing trust center to

third with closely worked also including We fact-checking XX EU, across parties the organizations.

investments As can committed starting and we pay to bad these doing remain we are everything shared, to Mark off stop actors. to

who focused ads These end paid we At issues, our on June, show also or transparency of are social transparency. We increasing politics. available the globally tools elections tools for about influence defend ad, they much for better people who spent, vote trying and help ad. us saw abuse. other interference to Helping understand the who’s foreign their how will an against made and

to for to the it’s continue to platform, business make because We’re the good our long-term. over our it’s investments thing do to protect going right and

advertisers Consumers we adopt are. people, We are helped enough new business technologies it’s that available. same growing to new helping know and shift often now and advantage businesses and helping advertisers reach the mobile make them eventually by theirs. helping are our the where We time, competitive formats these they video we on first to At Stories, shift make our focused grow messaging. not to is

ads. make for easy We by it this our advertisers products ad to need ones more also value We people by effective do and deliver and launching for improving to create advertisers. existing new to

We to sizes. businesses companies free is goals largest playing previously access. our the only field businesses that of One for could the all level tools of give small

questions During take customized creating National suggestions Ads and budget. targeting creative Week up we Business a in May, six Advertisers options, Small with Automated ads. marketing a introduced effective to of a get few the recommended guesswork plan answer and to out

memberships. to used health new their eye-catching campaign. fitness already We Australia, have. targeted a they in nearly quickly to women to Fitness, doubled tools Fernwood also result, in clubs new SMBs launched interested chain and create images conversions mobile-first editing with help a of women’s video a as these build tools video They

focused to value make over often to us feedback improving can small We improvements them. adjustments point better our also basis on These get our about for advertisers how allow from products. time. tools we We’re create to existing more serve businesses ad

example, book. we surfaces. used out didn’t a a This format ago then, revenue. X.X% different and ad-related we For needs who online, increase to Ads Ads in Dynamic times the recently nearly verticals adapted ad-related Dynamic bookings of increase rolled and Airlines and contributed flights to format at four but travelers, with in looked connect our to first years have Frontier X.X the since

browsed in they’ve people variation show latest – our launched already or Stories Dynamic retailer’s we app. on a Ads for ads website Instagram – quarter, products This which

feed ads. making incremental constantly improvements Facebook We’re to

how a past, ads refresh improved we In we these beginning the the pre-selected the people session. quarter, see. ads were This at quickly of feed

more are Now, their advertisers. the engagement feed. return get investment ads relevant people and are This scrolling improves a delivers ads, through refreshed while better means which people on for

discover brands to ways In with our addition we’re in to and engage shop platforms. tools, for new investing our improving ad on people products,

discover more discovery on accounts than videos XX% every to interests. use Explore related – their On photos month Instagram of and to

in started learning a Instagram. will on rolling Ads Explore place we in out already a their new are time This about products. new to give This where businesses and audiences reach they chance spending quarter

people Content brands in On Old with love. for connect easier Branded audiences engagement, reaching with influencers we Ads Creators’ making Jack these Sephora in Last the Brands new the are we’re businesses posts they Box and which ads. to as feed it ads. launched allow and Navy, month, Instagram, like to promote

Soon we’ll can Stories. do in expand the that option same this so advertisers

ways people on On apps. shopping, building for to shop new directly our we’re

and beta days run. closed this to on easy app. about this on feature Creators products but This our shop posts. to for continuing enables without Instagram over of long early an tag launched that the in It’s leaving shopping gives new favorite we’re Checkout their from Creators we quarter way We’re their the a people Instagram, excited

to valuable grateful the want grow can close improve saying products, our how feedback day, around world. I our they I partners their us on that them Every am give to by help how we businesses. to so

to our and teams, issues growth the the grateful social work the want the I tireless who for our progress Facebook commitment. on am thank teams’ are drive major also I that making and company. internet facing and

here’s and Dave. everyone, Thanks

Dave Wehner

and good Sheryl afternoon, everyone. Thanks,

up million billion Philippines. X% community our India, monthly active X.XX with compared compared year, year. in MAUs of grew XXX last Indonesia users led and or XX% users June. reached growth billion, active approximately represents metrics. begin Let’s daily to Facebook X.XX This the that’s to in X% by last the

basis our of metrics, on of were and terms average, used more X.X we than daily on continue at estimate more billion June basis. monthly and people our than people apps Family active X.X a on that one grow in to In a least billion

unless basis. a basis have to $XX.X are on remained comparisons would XXXX, noted. quarter second constant now of otherwise was QX higher. been foreign currency on up with constant the XX% billion, the Had exchange million or XX% rates total All revenue approximately financials. year-over-year $XXX a revenue total Turning

up basis. $XX.X or revenue QX on currency total XX% ad XX% was a constant billion,

slowly regional ad grew followed revenue at growth, of and XX%, and was of currency terms were both XX%. America by XX% In grew headwinds. Asia-Pacific by more Europe World Rest North and impacted strongest at

last price per ad price ads XX%. average Feed. quarter, average number increased Stories and on at News Payments ad Facebook Rift and and primarily primarily Oculus decline was ongoing the of towards new across and growth an driven Stories, the lower rates. notably ad Similar QX, reflects decreased Other Fees that Instagram was shift The In services was year-over-year X% year-over-year This impression Feed, mix served Instagram impressions our by driven geographies $XXX to million, ads per XX%. & of S. monetize by sales revenue growth Quest products, up in

an Turning XX,XXX expense $XX.X in percentage up expense were $X $X expenses. additional with QX rate growth with expenses Absent charge, total now lower. this employees, settlement with have points ended billion includes XX%. would XX%. billion full-time been to our Total Federal approximately Commission. the We This accrued billion, XX our connection Trade up

XX% percentage higher. Operating accrual, income margin operating representing approximately a $X.X points XX the was been have margin. Absent billion FTC operating would

this treatment to decision quarter a compensation the Court a income to and expected opinion accrual $X.X the addressing the the was share-based which Our certain tax case. reflect tax of and prior Circuit Circuit higher that changed of In was Ninth treatment reversed IRS case, billion. Ninth rate resulted our court Altera in versus tax due in Tax tax the We the one-time of FTC ruling QX a charge treatment XX% than expenses.

of per investments and impact facilities, FTC billion, our accrual $X.X and QX, by A expenditures and Class generated network in approximately have cash of the office Capital billion servers, in income approximately data higher. Net the In $X.X back driven we been common billion $X.X ruling, free billion $X.XX We was $XX.X investments. the $X.XX approximately EPS centers, infrastructure. quarter our Absent in were ended $X.X would billion stock. flow and bought the with or Altera share. cash

executed and Facebook that the the outlook. app favor revenue product with Turning wins, We QX with trend and of our optimizations now the deceleration. particularly a in well combat of in fell to helped number overall

constant However, sequentially decelerate continue revenue to rates will currency forward. growth expect our we that going

XXXX, deceleration headwinds We driven partially also quarter the into by fourth related expect pronounced more in and targeting ad and uncertainties.

We XX XXXX XXXX compared XXXX. XX% we $X to to billion anticipate first The half XX% the approximately to anticipated quarter. expense outlook percentage now expenses unchanged recorded accruals from expense to recorded full-year last Absent XXXX this the Turning FTC in in is settlement of outlook. the accrual, expense to in essentially of QX; growth. the $XB represents our grow we related points

oversight, FTC process our operational obligations, that reiterate our involves require compliance and These expansion stringent and of including technical comprehensive efforts our compliance privacy with agreement to requirements will implementing of the substantial personnel, with a want certify infrastructure. regularly program, a I management in to the and privacy board processes, and reporting directors’ program. investments significant

efforts difficult, will product our and addition, time-consuming, processes some In development costly. these make of existing more

expenditures capital billion $XX $XX estimate XXXX from our prior lowering are our to $XX billion. billion, down outlook to to of We billion $XX

driven capital expenditures our in data Our centers primarily servers. continued and investment by are

for to We the XX%. expect approximately rate tax remaining quarters be of our XXXX

good for summary, another quarter In QX Facebook. was

while significant in further investments the of and make community our security. we business privacy, with growth to pleased continue We’re and safety

up operator, open let’s call questions. that, the With for

Operator

question Instructions] of line comes Your Stanley. the Brian Nowak from first [Operator Morgan from

Brian Nowak

could have mentioned us monetization and a I Thanks you optimization think you for first as about on product some the on Facebook wondering redesign. question. the I the two, engagement my as tell was taking if win. from more little one impact Dave, I app. the bit core well

engagement what in and you targeting us core you guess, Thanks. a big And more and bit that XQ about talk seeing are of So, headwinds in monetization. ad little a some on to the you the can foresee app, then I XXXX? now on weight

Dave Wehner

it’s Dave. Brian, Sure,

broadly for I app, Facebook the Facebook. say paints on the think the I just DAU picture trend

developing markets stability markets. We’re developed seeing growth and in in the the

on we’re Facebook, and levels we’re with on Facebook app. see engagement performance solid overall the the so, seeing continuing that And we’re to pleased

solid So, perspective. from been half the has first I that think

And then targeting question the the was second headwinds. ad related on

think of three components. in So, really we those

impacts regulatory The GDPR things and is rolling like those be other how will first as and out you globally. about think

second the platform also focus can that of and operating is a more privacy to product our operating systems systems and on as as have targeting. it we changes the and on And on privacy then and measurements that is changes the The more put relates a from impact third front center. own

really, those headwinds issues it’s of So the think later that are get creating we we going are three XXXX. that in compounding and to impact into as us, year the

Operator

question from comes from Sheridan next Your Eric UBS.

Eric Sheridan

Maybe three taking attracted broader your bigger, they’re on of video much video how the on on so by? think the side the as how investments margins? then Second evolving terms how advertising consumption the years? for opportunities see you present video, topic content. should Thanks how the five Thanks And what a be question. in that’s third, all consume impact that platforms that mechanism How investing a informing versus on growth users going in you would next for might of about everyone we to video and might and video guys. do forward over

Sheryl Sandberg

a think buffered now, can your technological share even four back easily take They change, video consume important. they if been They can’t I on can about really really a of video. on phone. And take phone. lot video, followed has videos very do. video, So, you people you think what you It’s can think pretty years, video a can

of a It’s of we’re interest probably consumer worth we’re along a also And seeing bunch video lot – very lot that our a products. products. mentioning is within seeing so of

So, we’re content. also the different we original into and And we certainly feed Watch people video video place, at specific where stories put have have in places. can looking and

the or to is think about content, Facebook of do of think itself. how that’s up also we on which watch is content. user-generated, people true other content put second Most of the your video I part question, the video

in watch We more have dedicated investments a made place video. some there creating to

by for the way growing hits we’ve has, we Talk really a we’re investing and ,sorry I flywheel is from people some Tom Facebook people the of them effort – that and the nice your on community, engagement shows. numbers best biggest provided have loss, best and those way. while Facebook, Time I engaging social that not vision over actually of So, content a not mean in content the the costs, starring out still do pretty a in the creating been really and with lot Time covering because in along shows laid pretty Table in to are should great the the into shows Mark all also we’ve we strategy anyone some a pleased, these those starts going we’re do carry and this to had think that, for Tom is video Red of it’s and of seeing And but

loved. because it’s firm asset long When marketers you think pretty obviously about video ads, are have exciting, a video ads

seconds, had the the main into the reveal some it sorry, where Facebook your ad ad-on stop first perform on just put kind XX usually sometimes and product best watch. end, or three about training to builds more at you point talk the TV it to gets very creative, and them We want first Facebook, take seconds, is slowly to a the mobile stopping to quickly. or of ad attention that put is of challenges in best the your mobile or the market them video actually story, product TV much the captures you we’ve gets put The one way. because on don’t I’m is them think ads I same can’t the they – as

now right I of think the good news we have here is XX% video over now revenue. that on Facebook is mobile first video

but in ads differently, to a an So Instagram Nielsen’s and edition Stories and had ad nearly study a News the reach McDonalds. limited in we Facebook it need example, understanding showed real long seeing to mobile and versus to pretty then that XX% called share range go, Facebook a on McDonalds Mac and shows launch in TV. the do growth I’ll incremental results. recall video They they good Big people lift app still Feed we’ve XX.X% UK. a used got are way

So, video and that really companies on think a well, it that done can large platform. when I on impact our is small have shows big

Dave Wehner

about I And I’d already the asked expenses. providing you into then is on factored we’re margin just Eric, impact. that the video guidance think say content that budget

Operator

next Barclays. Ross Sandler from comes Your from question

Ross Sandler

can to guys, comment. go Hey, just we the deceleration back

So, the color driven gave, you growth just you Feed. appreciate Instagram at time, Stories, that and Feed the in the But we then by said Instagram XQ Facebook impression Dave. was same

are continue what those those see these kind Is if on that specifically slowing lot. in might from like you Thanks a to additional surface in to Facebook, slow any so see changes? send And core do of likely in the down is of color and XQ the XXXX? some we’re the current that drivers down future,

Dave Wehner

mean you across remember Ross, Facebook impression we’re Sure. Feed. I growth Stories, seeing Instagram good Feed Instagram and if

good seeing we’re those. across So, impression growth of all

impressions growth at like seeing Stories faster are coming rates that on geographies We lower from coming then and monetize in from also News things Feed. Facebook

through growth in way point. a growth seeing lower flowing prior year. Then, driven So though even good that impression growth the at that’s price impression the we’re it’s was

we to XXXX. QX, look deceleration, So be QX. we When as remainder that’s in good out similar into get how specifically had we’re contributing product to some we to wins into of going of the the

QX in We also strong quarter. a performance that optimizations several product had contributed that

to have going that compare on basis. we’re So, a tougher

is to kind currency trend you I as that we So, reversal deceleration of a expect not but of expect into that, remainder QX revenue return we of broadly, constant growth get to the the revenue just mark think XXXX. deceleration

Operator

Doug from from Your JPMorgan. next question comes Anmuth

Doug Anmuth

Thanks question. Dave. one taking Mark for for and One for the

of all timeframe higher so growth just Thanks. demands then the your expense talked First of of next the expense view Dave in rolling far around you moderate opposition about talked that where the for Mark, terms past, about And how at received that it currency. you’ve the the about are about privacy. XXXX, how you second, could out Can more growth just, in about thinking Because you talk year? you Libra? impact you’ve think as changed

Mark Zuckerberg

Sure.

that get and and and these social that. our important like approach are face sensitive that the important some and So, on around similar Libra to content issues regulation really of encryption We things on spaces. we

So, few If just and approach to open the is would now, product our a on right. probably these own. values that the to from in have. have very we eventual should about on all dialog try a up our fronts to have an ideas the release service Facebook approach ago has to of this, outline tried years showed And think a been

do it We’ve what this with long is experts way out we’re best that’s address to Libra. takes and figure different forward the opened and planning a constituents and to regulators about of, period questions then certainly to what move however, and

to area going worked XX questions. and So, of heavily be to publish of the lot regulated a were the idea members that and the there the we white put is there very important association paper with a this expecting other out to

work through have to that. going to We’re

the So, process I think we’re currently in of that. doing

We and trying to are a safe and provide stable product. well-regulated

and always here. been we’ll it strategy continue the to engage that’s So

Dave Wehner

growth. And then Doug, on you were about impacts asking the expense

do compliance efforts the privacy outlook. processes, XXXX and expense We’re not the people then guidance, specifically and the But and factored investments infrastructure outlook. require obviously those expense operating XXXX significant into are technical giving on

I’d it’s impacts to is privacy. the reallocation a that also you of around of One resources point

impact So development that an as well. overall will product have on our

in factor just something terms the that’s impact just I’d of that both business, the to the purely in not expense side. So overall

Operator

from next from Deutsche Lloyd Your question comes Walmsley Bank.

Lloyd Walmsley

can. Thanks. Two if I

OpEx, of talk and QX And QX then limited hurdles of like step test you the count it to early us despite some what checkout meaningful broadly? First, learnings just head on you to that fairly up from Instagram saw about scaling key are growth. to the of fairly more from looked secondly, can a kind

those if wondering quarter? bit would to in a that explain diverging anything that you are just why So, might little point there there’s

Sheryl Sandberg

talk about checkouts. I’ll

early in, So on than earlier a lot stage call talk this things, about we checkout is this is that.

are but for working excited Facebook is very in as closed be. I pretty On as said, is feedback. small, We – which we’re beta by with a with about small brands, obviously, something their XX could small brands, there the

quickly. this scale to rush a in not We’re

consumer on make get experience want focused right. we to and this always really we We’re the sure

help more tools in think even commerce apps do and pay our a need little our we’re services products, on are It products across kind the which in it so have that of trying business more, way that products, If the the to lot grow consumer great. I out looking ad people we’re think engagement checkout going makes are have obviously a the for is is, quarter-after-quarter. our robust good and and close We larger also helping directly If in to data better. check we valuable. can obviously and going loop of and we the loop some closes that’s the more and shopping measurement, what forward. the picture terms felt consumer of makes and they ads buy products us a help board, about experience our to we people can the on of

we’re doing the lot excited efforts across a these board. about So, for

All than view. and point stages are a itself primarily this of view closing in of and and the their in loop a monetization early point think consumer about of we of more them from

Dave Wehner

cost that asking versus then couple the other profile accrual up settlement about the as was been well the we’ve SEC really big through the the in flow-through and And was in you A of that’s flow from if things build revenue seeing in the the you CapEx to side FTC settlement. that And G&A were that Lloyd, including the starting in of then expenses step-up XX% of and of you’re that’s cost the legal impacted line, QX at I’d depreciation to cost obviously that business. point some cycle QX, the by look as QX. on the for

a higher had the you in some expenses of as result quarter G&A that. were So, that

Operator

comes from Goldman Heather next Sachs. from Bellini Your question

Heather Bellini

the that traditional Sherlyn it maybe about they beta you that two it just could way wondering versus maybe was the are stats to feedback checkout. conversion thank how this so have talking and were brands much. from the them the if one for far up so the helped Great, what that helped are I if watch maybe how they doing like share follow some I’m to Instagram. closed related brands has wanted in comments, you just selling been on on has

to much, So, the little Ross’ I back to but the in kind you’ve there you mean given that comment anything and decel. could low-single of more digit past, deceleration just related you mid-single have or Dave, you’ve bit digit referencing. us then share a specificity, too you’re not said if

if back wondering the there Just here provide for XXXX at high is you’re any when Thank other in you. half this could painting color level? a you us

Sheryl Sandberg

at the really check it in with for experience, XX just it’s We Yes. take just shopping outs on friction a learnings. hear but definitely us early. the and really to real in that that’s decreases small small product, beta, brands too any

iterating now. the them for on experience with working product are We

Dave Wehner

with Heather revenue And would in guiding sequentially due we’re quantitative we deceleration, the on specific that point. again, this that simply expect see in us being giving currency a on to currency constant not more on pronounced that comp QX, we deceleration for would guidance at QX tougher constant the that basis

Operator

Post Your next question Bank comes America from Merrill from Justin of Lynch.

Justin Post

thank you. Great,

could settlement, regulatory Europe, ad you it with in versus Mark, if started. good Is status it’s about GDPR meaningful regulators. there company regions? been if and other with since give revenue the you. us but I And extent and regulators the you new could to high that? implementation. difference news you about a just environment can. level Thank in you making hard Dave, the wonder then, Europe has tell really to and guess guess the both here the in on your outside, from been I really how the So talk rates what’s feel going growth investigation on progress Has FTC

Mark Zuckerberg

Sure.

talk can I regulatory So, picture about overall. the

of election to we a a harmful on to issues years, lot few major content last reducing everything social from the Over number focused preventing interference protecting privacy.

each can that portability. is responsibility I think perform we really lot we the we and something, on do a them. day, I data values a when that talking Now, But like that the we civil make that work we’re still sure trade-offs our and between and mean, mature, between have systems of free to there end And things that. moving expression going discourse that be these, certainly and on well are of I’m important about are on have hate to content there all at

versus the are and Those On norms academic innovation at system important and to want making competition think there we more be democratic best that with level, of we’re about are it helpful. some you’re really of be can, a that hard you going you we research how to questions portable and the data what for in how would but setting questions like some always you down process are are things much privacy, to that define terms having those enable locking that. for do

So, that And regulatory I the for will issues major we the that grow. in a that about. broader be industry, believe place with my frustration that there in get concern needs just think, framework of I to put each place, to doesn’t if talked then is continue

framework a advocate each area will so in to they our and in help And different we’re come part to trying good for forms. do regulatory

in areas, around, might self-regulation others on protections with because So there of United expect structural be and passed in settlement; laws like speech. with having and the imposed on FTC amendment like here rules States. the – it other will speech might content strong we’ll what some first us a some I’d the, be That’s be places, working and regulators is in

So are important is we’re through we on overall, this focused progress making on I them. working and very it. issues do the think addressing

We’re, much now. elections I in place a think, in stronger

to Our problem, mature, global problem, are this making lot content as just of just systems think not each American progress. more work And more said a global getting these But are there’s we a do not in one. those. of I is are

important too. as the and continents with So other Europe is well working folks across

Dave Wehner

Hey Dave. Justin, it’s

results comments. Overall, growth my implementation. well. did is said, of America and that part As factor lapping QX we Europe had the I with reacceleration in that we is APAC. had slowly currencies of than And noted in That North quarter QX. in pleased see GDPR growing as versus we’re a delta Europe more and of a strong in

America slowly So, I seeing kind overall growing it’s what we’re APAC. a pleased think Europe, more North around we’re than of still little with and but more

Operator

May Citi. from from Your next question comes Mark

Mark May

my taking questions. for Thanks

line QX expense you of rate revenue with in in the expected And you improvement expense First, on growth be lately. more said nice the will growth seen we’ve XXXX growth. call, in the

status that as Have Just comfortable you curious or in plans specifically, you. terms what still ads something here of to then status? to plans tested are and you it that test? Thank And is your WhatsApp feel secondly any WhatsApp have if on WhatsApp with? relates

Dave Wehner

Yes. Mark. Thanks,

So in terms expense of, overall in terms of outlook. our

accrual. XXXX. current that margins aside to the does we’ll see year $X this Even down Our billion if suggests for FTC versus you outlook were XXXX come set

for or specific remain providing beyond. the priorities XXXX not guidance We’re The investment same.

the areas investment the continue infrastructure, and video addition innovation, In security today key in to will priorities product we safety and over run. content and core long that privacy outlined like invest to

providing any we’re more specific guidance at So this not point on XXXX.

Sheryl Sandberg

Status ads On available. not are WhatsApp

on part eventually We’re of minute WhatsApp very take on to on think talk focused data about because experience. for WhatsApp pretty to applies now. the with general, will the ads it’s I to Facebook use depending I a story our right ability that’s across But Stories important going in platform probably consumer that

of mobile we ad of worked, people But having to with same one move would I move is lessons you certainly the transition as we do Stories. it learned if businesses businesses our because sure ads, quickly. for Stories made are I mobile the important advertisers right Stories we is Usually Instagram were things the learned. we the have think we’re doing the before they available ads having make are to quickly the So make to helping Messenger, people before place understood format the saw sure now move across businesses easy that move more more and Facebook, we they people it to measurement most think we and of and also one we and successes were seeing

think convert us innovations like I that format and for example, Feed that best deliver they product placements, advertisers. into the million gotten they ads get do automatic is a results. Stories So And it’s placements wherever three have ads automatic to what their

the across Messenger. properties and than we Instagram Facebook, rather So three have available

us Stories the format, online place need rather just new every where and anywhere take have format, already figure are through tools ads, you a like they doing to what we people our out and the force converted we through being sales into say both move and to sell create formats. at new these to So into our to you able placement than need advertiser helps go Feed

case a on have inventory of we a of this. It’s lot also

so a And being the adopter, there an early real benefit now very to is pricing is attractive. right

same us And monetize thing, rate over the don’t opportunity right so we think the advertisers mix shift Stories big I’ll now time. the that and say as at is is for to Stories one News more which Feed.

very optimistic on the the consumer are We’re over long and about the experience. always as growth prudent careful we but run,

Operator

Your next question comes from RBC. Mark Mahaney from

Mark Mahaney

wanted but regulatory from last I of year. and are Thank launched to that? know I countries, delay are you’ve markets. traction, you India the in gain said, like WhatsApp had other in pacing time and maybe Thanks. or launch lessons a going other tell it but that it you about on their push and technical and back in I payments about you with beta it to tell functionality that hurdles know India, causing that I is just consumer are is maybe but long the nothing, particular WhatsApp launched what Could what a really any said WhatsApp you’re if you. about monetization tell a there you the that take ability to and awareness embedded that about it you does to that payments does – what factors product WhatsApp in that for focus just just of is takes you talk in the the

Mark Zuckerberg

send license right, regulatory available feedback money to in someone would point test even went of roll part someone Even we as need widely and for limited product test be else. to useful, they an out that you to India at a to a the – a question better expected expect that very to than would. be this in can So know for positive. was it’s test, to it order approval a we the to it mean I had initial

to this to meaningfully valuable can user confident roll when out So, we I’m quite that broadly the be experience. it’s going

of countries year. percentage large use also other this a We’re beyond number a people have within to the the to India, hope rolled next of out who working WhatsApp in and

on So these goal, all issues talk that’s we’re the have forward pushing of should about more soon. to and

Operator

Nathanson comes question next Moffett from from Michael Nathanson. Your

Michael Nathanson

Sheryl one Thanks. have Dave two, Mark. and for for I one and

time is you the a advertising user in answer So on development you or noted take Mark community WhatsApp embracing then, regional develop growth see by I fiat to Instagram. Do currency the for it approval And to either to how while products Sheryl can Crypto know region. and title of building and community Stories the maybe a if product. but other and time guess arguably on a rollout or for a for in wallet going to a you it’s build meaning I long to get takes this currency you bit the Europe about the a takes for while Dave, Crypto wallet non-crypto the about the acceleration. And wallet talk another does Facebook approval.

So become you? does non-crypto currency fiat opportunity for an

Dave Wehner

from guess Dave. really detail is really it’s an Michael, about region. perspective we’re Stories. not providing I today on Instagram I say Stories impression Hey, growth would

we’ve Instagram got of maps globally. it good So where adoption

we’ll so Facebook as certainly places Facebook been Facebook growth the as map more good that’s well U.S., see. strong, Stories, have And reasons where to opportunity is good with the will we’re on to to So including continue Instagram seeing we where and is in work stronger.

good growth I Instagram. think we’re seeing on So,

to that think it’s make base. progress smaller will to on I growth continue off and impression hope growth, to we’re continue a seeing continue where then but and Facebook drive we

Mark Zuckerberg

mean, short payments, And yes. is, answer the I on

fiat it We’re Marketplace there’s in a making Instagram and and currencies or shared very things. well one or those that so be system can Shopping whether credentials payment focused on payments in across service, WhatsApp as pay shared in your with you when all it’s

So investment. a a certainly for area – big that’s

more several Overall created up the these in years, the creating the and get people lot apps out one last that that of of I and product now products that each for communities next from help the mean we is some areas some the on we’re of way we’ve exciting in over going have a and whole several and there of is opportunity these networks the more side I they’ve around the the networks commerce going doing around to are see to think be to is development especially of areas map and most of now economic their wire be value side, and groups of people and payments, it we years. opportunities helped on social kind projects.

around from I Instagram, that know Shopping consumer-to-consumer things that Libra is to buying most recently, doing the existing which emerging people has used with more of and the goods brands to bring Facebook landscape, selling to newer which marketplace, the down things a which about across it’s business, people and businesses more and approaches currencies payments one gotten connecting and connect is world. can creators hopefully to is and and payment the trying is just of cost payments some the attention helping set like help then going one small do of also that WhatsApp paying but really everything

just this for years. the all about biggest excited focused the of We’re very in on it’s – one everything we’re the and next areas several that area

Operator

Macquarie. comes next Ben Schachter from Your from question

Ben Schachter

on on and Facebook, few XQ, you was selling give on Mark that an focused an goods the can a if I buying that? longer in had you now wondering you specifically mentioned on impact GDPR times term update just then there. And business.

services on timing Thanks. also a marketplace house of Just monetizing about example versus how how goods a can think painter widget. wondering can evolve? the selling And recommending for you you of if comment talk versus you might

Mark Zuckerberg

know, to can about then want Yes, the if Dave And I GDPR I don’t end. you impact. talk

Dave Wehner

Yes, Ben.

in in the we GDPR that of see earlier, terms see we that in in a lapped have an did having of kind address just Europe we do initial So, I reacceleration implementation that as of growth impact GDPR. Europe,

see continue whole lot slower a growing of but bit color overall, promising, to So to the we there. regions. of rest provide But additional not just that’s than the a Europe

Mark Zuckerberg

some of here. Facebook. focus already talked Yes. Marketplace, that is last less jobs I do focus jobs where I definitely pretty to going lot the our on about what of and a to, areas is a status through meaningful business don’t find people know And jobs don’t including you we public want in are

to possible both not on be So in to it’s in to we’re and And in listings this but business something model in going around and meaningful. with but probably I’m attempt advertising. going not order Marketplace to the for valuable which that charging providing will should general as and And to experience things Instagram the as promote course businesses the what site transactions the is for be complete more shopping And payments focused doing Facebook to thing make improve overall of ad prices the up. on. that affordably is user primary approach and we’re and go tools should make the

a Someone have just helped paper, me million jobs. people find which piece a we says handed of that

is stat. the there So

Operator

from Sebastian Your next question comes from Colin Baird.

Colin Sebastian

couple me. Great, A thanks. from

are shorter what versus perspective privacy the we wonder Thank milestones that’s along sense app vision. timeline how update get I focused perhaps the five-year higher you. better for outlook guess, the five-year First the a the way that’s Mark, if period? groups in for and key on any And profile for off, any and impacting then the on the I Facebook why a engagements.

Mark Zuckerberg

those. both Yes, take could I of

address people our the because this performance engagement emphasize area Dave be Facebook over of just first So the just our is of help important can the year, friends in expected rolling is this the believe you this is to helping think increasing in social product. I have we point may compared app well people started part overall half connected family, didn’t of we we and – overperformance communities next to that’s and most that that after app going of problem to in strength earlier, since That of had that the connect period. over part out meaningful going the strong after an FX, and what with case Facebook but helping a with value we mentioned I in think

in optimistic well generally forward about and So question? the we’re that. was communities of it���s going – of very going What second that’s drivers particular one overall is the

Dave Wehner

five-year. The

Mark Zuckerberg

okay. Right,

So on the that’s on vision. privacy

on to next to architecture client Messenger need end-to-end the to be to of networks we Right lot a so have about we oriented and rewrite the server the getting that Instagram is year be the work right. to for on So just do establishing, and more encrypted. two

and services the to be We that are widely want major and infrastructure to people that any these private platforms reliable on to is interoperability, on the platform foundation most it build working the and that think to so able built will the most available We’re choose out that’s technical services. are secure there, successful use the make most a fastest of between that big messaging of pretty projects. These we on.

this things up and that. something pay for business are experiences things building the them consumer business the what that’s is a organic our up we that do need for Then to product step, this experience, deliver create to that then ecosystem we’re which where that meaningful WhatsApp we business ramp having multiyear playbook first journey are just business, really last and we with like doing then we as but within is only able on the

not you’ll before do years. not But you’re on along see is progress biggest really to months milestones way, of this that or six going to months. it’s business, number that’s be certainly that So XX the every our that going driver I see the a think of

Deborah Crawford

Operator, last for one have we question. Great. time

Operator

comes Jefferies. from question from last Thill Brent Your

Brent Thill

Thanks, Dave.

your us of quarter. that in your comp tougher hard just in time QX. easiest a currency reconcile having the think accelerated you It are comp growth lot was and the constant I a

color. is that any putting you that you’re that, just, lead there change or other guess, contracts any the in I visibility terms of together the to So

questions, in that of understand decel? such conviction just is strong a you to think number I there have trying why

Dave Wehner

Brent. Hey,

contracted the of terms have don’t in outlook. we So Remember, revenue.

from auction working an constantly perspective. are We

on our how and that are and make. that demand into different So forecasts based we see supply playing product different optimizations the we launches

quarter characteristics QX. there’s lot expect see in that the constant it’s and of we into a revenue that supply to how depend So ultimately about on granularity we when thinking and that given do goes will we demand successful progress that that we we’ll see than to when lapping some had more going think decel And to that’s QX get going to particularly optimizations a be in and QX we in deceleration. that to we’re currency we contribute QX in going of

the reason the am. So guidance that’s I’m characterizing way I the

Deborah Crawford

and you us appreciate We with Thank joining your today. look for to time speaking Great. we forward you again.

Operator

this and concludes us. conference joining today’s Ladies gentlemen, for call. Thank you

may now lines. disconnect You your