Recap - 12

Recap #12

1 minutes reading time
8 Feb 2023

Look back at selected quotes of the most noteworthy earnings calls from last week, January 30-February 3, with collected and timestamped quotes from Apple, Amazon, Alphabet, Meta, Evolution, and Snap. Enjoy.


Q1 2023 Y/Y Δ
Revenue -5%
*iPhone -8%
*Mac -29%
*iPad +30%
*Wearables, Home & Acc. -8%
*Services +6%
EBIT -13%
*marg 31% (33%)
EPS -10%

-> Three factors that impacted revenue: As a result of a challenging environment, our revenue was down 5% year-over-year. But I'm proud of the way we have navigated circumstances, seen and unforeseen, over the past several years, and I remain incredibly confident in our team and our mission and in the work we do every day. Let me discuss the 3 factors that impacted our revenue performance during the quarter. The first was foreign exchange headwinds, which had a nearly 800 basis point impact. On a constant currency basis, we grew year-over-year and would have grown in the vast majority of the markets we track. The second factor, which we described in a November 6 update was COVID-19-related challenges, which significantly impacted the supply of iPhone 14 Pro and iPhone 14 Pro Max and lasted through most of December. Because of these constraints, we had significantly less iPhone 14 Pro and iPhone 14 Pro Max supply than we planned, causing ship times to extend far beyond what we had anticipated. As we always have every step of the way throughout the pandemic, we continued to prioritize people and worked with our suppliers to ensure the health and safety of every worker. Production is now back where we want it to be. The third factor was a challenging macroeconomic environment as the world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the enduring impacts of the pandemic. – 00:01:41. Timothy Cook, CEO & Director

-> iPad shows prominent strength: During the quarter, iPad revenue grew 30% to a total of $9.4 billion. The very strong growth was due in part to a favorable compare to the December quarter a year ago when we experienced significant supply constraints. Customers continue to praise our new lineup for its versatility, whether it's the new iPad Pro now powered by the M2 or the newly designed iPad 10th Generation with its stunning liquid retina display and beautiful colors. – 00:04:59. Timothy Cook, CEO & Director

-> Over 2 billion active devices and 935 million paid subscriptions: We are very excited to announce that we've achieved a truly incredible milestone. Thanks to our deep commitment to innovation, incredible customer loyalty and satisfaction, and a large number of switchers, we now have more than 2 billion active devices as part of our growing installed base, double what it was just 7 years ago. This is an incredible testament to our products and services and the strength of our ecosystem. We set an all-time revenue record of $20.8 billion in services, which was better than what we had expected. We achieved double-digit revenue growth from App Store subscriptions and set all-time revenue records across a number of categories, including cloud and payment services. All told, Apple now has more than 935 million paid subscriptions. Apple has also just begun a historic 10-year partnership with Major League Soccer. Just yesterday, we launched MLS Season Pass, which will give fans in more than 100 countries access to every live MLS regular season game as well as the playoffs and MLS Cup, all with no blackouts. And while we're providing more content to sports fans than ever before, Apple TV+ continues to showcase powerful characters and moving storytelling. – 00:09:46. Timothy Cook, CEO & Director

-> Three factors that impacted the result: A number of factors had a significant impact on our results. First, we faced a very difficult foreign exchange environment, which affected our performance by nearly 800 basis points. In other words, we grew revenue on a constant currency basis. And in fact, we did so in the vast majority of markets. Second, the macroeconomic environment this past quarter was markedly more challenging than 12 months ago. Third, we experienced significant supply shortages for iPhone 14 Pro and iPhone 14 Pro Max in November and through December. On the other hand, we had the positive impact of the 14th week in the quarter that Tejas just mentioned at the beginning of the call. Products revenue was $96.4 billion, down 8% from last year due to the factors I just called out. At the same time, however, our installed base of active devices grew double digits and achieved all-time records in each geographic segment and in each major product category. We're proud to now have over 2 billion active devices in our installed base. – 00:14:49. Luca Maestri, CFO & Senior VP

-> Buybacks and cash position: Let me now turn to our capital return program and our cash position. We returned over $25 billion to shareholders during the December quarter as our business continues to generate very strong cash flow. This included $3.8 billion in dividends and equivalents and $19 billion through open market repurchases of 133 million Apple shares. We ended the quarter with $165 billion in cash and marketable securities. We repaid $1.4 billion in maturing debt and decreased commercial paper by $8.2 billion, leaving us with total debt of $111 billion. As a result, net cash was $54 billion at the end of the quarter, and we maintain our goal of becoming net cash-neutral over time. – 00:23:34. Luca Maestri, CFO & Senior VP

-> Record in each geography and major product category for installed devices: The installed base is now over 2 billion active devices, as you mentioned. And we set records across each geographic segment and major product category. And so it was a broad-based change. Two -- I'll correct one thing you said, it's up over 150 million year-over-year. The last report we reported to be over 1.85. And so it's 150 million, which we're very proud of. We also saw strong double-digit in several of the emerging markets, which is very important to us. For example, India and Brazil as just two examples. So very, very strong. And obviously, it bodes well for the future. – 00:34:18. Timothy Cook, CEO & Director

-> Apple Pay and organic growth through installed devices: The other aspect that is very important for us is to continue constantly to improve the reach and the quality of our services. And I give the example of Apple Pay, which it's a great example because we started off primarily in the United States. Now we've taken it to 70 markets, millions of merchants. And so obviously, payment services are -- continue to set new highs all the time for us. And then as you've seen over the last few years, we also launched new services over time, and that obviously contributes to the growth. We're very excited. And when we look at the behavior of our installed base, we think it's very promising for the continued growth of our Services business. – 00:42:36. Luca Maestri, CFO & Senior VP

-> Huge opportunities in India: Looking at the business in India, we set a quarterly revenue record and grew very strong double digits year-over-year. And so we feel very good about how we performed, and that was -- that's despite the headwinds that we've talked about. Taking a step back, India is a hugely exciting market for us and is a major focus. We brought the online store there in 2020. We will soon bring Apple retail there. So we're putting a lot of emphasis on the market. There's been a lot done from a financing options and trade-ins to make products more affordable and give people more options to buy. And so there's a lot going on there. We are, in essence, taking what we learned in China years ago and how we scale to China and bringing that to bear. And I don't have the exact market shares in front of me, but I think you would see that from a market share point of view that we grew around the world last quarter despite -- on iPhone despite the challenges that we've had on the supply side. And I wouldn't expect to have a difference in those two markets. – 00:44:10. Timothy Cook, CEO & Director


Q4 2022 Y/Y Δ
Revenues +1%
*Google Search & other -2%
*YouTube ads -8%
*Google Network -9%
*Google Cloud +32%
*Other Bets +25%
EBIT -17%
*marg 24% (29%)
EPS -31%

-> Advertisers are pulling back: It's clear that after a period of significant acceleration in digital spending during the pandemic, the macroeconomic climate has become more challenging. We continue to have an extraordinary business and provide immensely valuable services for people and our partners. For example, during the World Cup Final on December 18, Google Search saw its highest query per second volume of all time. And beyond our advertising business, we have strong momentum in Cloud, YouTube subscriptions and hardware. However, our revenues this quarter were impacted by pullbacks in advertiser spend and the impact of foreign exchange. – 00:01:36 Sundar Pichai, CEO

-> Gmail and Docs will have large language models implemented: Second, we'll provide new tools and APIs for developers, creators, and partners. This will empower them to innovate and build their own applications and discover new possibilities with AI on top of our language, multimodal, and other AI models. Third, our AI is a powerful enabler for businesses and organizations of all sizes and we have much more to come here. There's a few flavors of this. Google Cloud is making our technological leadership in AI available to customers via our Cloud AI platform, including infrastructure and tools for developers and data scientists like Vertex AI. We also offer specific AI solutions for sectors like manufacturing, life sciences and retail and will continue to roll out more. Workspace users benefit from AI-powered features like Smart Canvas for collaboration and Smart Compose for creation. And we are working to bring large language models to Gmail and Docs. We'll also make available other helpful generative capabilities from coding to design and more. – 00:05:03. Sundar Pichai, CEO

-> Sharpened focus on costs: The second thing I wanted to discuss is our sharpened focus. We are committed to investing responsibly with great discipline and defining areas where we can operate more cost-effectively. We are focused on methodically building financially sustainable, vibrant growing businesses across Alphabet. For example, we are working to improve the economics and hardware as we focus more intently on the Pixel line and our overall cost structure there. Cloud remains very focused on its path to profitability. – 00:06:50. Sundar Pichai, CEO

-> Product ideas/projects are being carefully reviewed: There are several dimensions already underway, including prioritization of our product investments across Google and Other Bets. It also includes a careful focus on our hiring needs, reflecting these priorities, as well as efficiencies in our technical infrastructure and productivity improvements from our AI tools. As part of this, we did a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company and we announced a reduction in our workforce. – 00:08:19. Sundar Pichai, CEO

-> YouTube Shorts now average 50+ billion daily views: Just this week, we started bringing revenue sharing to YouTube Shorts, which is now averaging over 50 billion daily views, up from the 30 billion I announced on the Q1 2022 call. This will reward creators and help improve the Shorts experience for everyone. Our subscription business continues to grow, with YouTube Music and Premium surpassing 80 million subscribers, including trials. Together with YouTube Primetime channel subscriptions and YouTube TV, we have good momentum here. – 00:08:55. Sundar Pichai, CEO

-> Both retail and travel advertising are strong: In Search and Other, revenues grew moderately year-over-year, excluding the impact of FX, reflecting an increase in retail and travel, offset partially by a decline in finance. At the same time, we saw further pullback in spend by some advertisers in Search in Q4 versus Q3. In YouTube and Network, the year-over-year revenue declines were due to a broadening of pullbacks in advertiser spend in the fourth quarter. – 00:13:52. Philipp Schindler, Chief Business Officer

-> Language understanding and generative AI: Already, breakthroughs in everything from natural language understanding to generative AI are fueling our ability to deliver results that drive meaningful performance for advertisers and are useful to users. Take smart bidding, which uses AI to predict future ad conversions and their value, helping businesses stay agile and responsive to rapid shifts in demand. In 2022, AI advances boosted bidding performance, allowing us to move advertiser outcomes down the funnel to drive better ROI and use budgets more efficiently. In search query matching, large language models like MUM matched advertiser office to user quarries. This understanding of human intent of language, combined with advances in bidding prediction, are why business can see an average of 35% more conversions when they upgrade exact match keywords to broad match in campaigns that use a target CPA. – 00:15:27. Philipp Schindler, Chief Business Officer

-> Over the last three years, Alphabet has returned $200+ billion to creators: Since our earliest days, our revenue share models have been structured around ROI for our partners from Play developers and online publishers to YouTube creators, artists and media orgs around the world. Over the last three years, I'm proud to share that we've contributed more than $200 billion to these ecosystems. We remain as committed as ever to fueling the next generation of businesses, media companies and creativity on the web. – 00:21:10. Chief Business Officer

-> Reengineering cost base in three categories: We have a longer term effort underway to reengineer our cost base in three broad categories; first, using AI and automation to improve productivity across Alphabet for operational tasks, as well as the efficiency of our technical infrastructure; second, managing our spend with suppliers and vendors more effectively; third, optimizing how and where we work. – 00:30:48. Ruth Porat, CFO


Q4 2022 Y/Y Δ
Revenue +9%
*Online stores +2%
*Physical stores +6%
*Third-party sellers +24%
*Subscription services +17%
*Advertising +23%
*AWS +20%
EBIT -23%
*margin 1.8% (2.5)
Free Cash Flow -27%

-> Consumer spending trends: This past holiday season, customers came to Amazon for great deals, fast delivery and our widest-ever selection, bolstered by nearly 2 million third-party seller partners who sell on Amazon. Enterprise customers continued their multi-decade shift to the cloud while working closely with our AWS teams to thoughtfully identify opportunities to reduce costs and optimize their work. In our worldwide stores business, with the ongoing economic uncertainty, coupled with the continuation of inflationary pressures, customers remain cautious about their spending behavior. We saw them spend less on discretionary categories and shift to lower-priced items and value brands in categories like electronics. We also saw them continue to spend on everyday essentials, such as consumables, beauty and softlines. Our teams worked hard to offer low prices and secure millions of deals for customers in Q4, including our first-ever Prime Early Access Sale in October and the more traditional Thanksgiving to Cyber Monday holiday weekend. These global sales events outperformed our expectations as customers responded to millions of deals across our growing selection. – 00:04:03. Brian Olsavsky, CFO

-> Prime Video fueling Prime and the ecommerce flywheel: Along with competitive pricing, broad selection and faster delivery speed, we've seen Prime members respond to our expanding entertainment offerings. During the quarter, we completed our first season of The Lord of the Rings: The Rings of Power, the most watched Amazon original series in every region of the world, reaching over 100 million viewers and driving more Prime sign-ups worldwide during its launch window than any previous Prime Video content. We also finished our inaugural season as the exclusive home of Thursday Night Football, reaching the youngest median age audience of any NFL broadcast package since 2013 and increasing viewership by 11% from last year among hard-to-reach 18- to 34-year-olds. In aggregate, we invested approximately $7 billion in 2022 across Amazon Originals, live sports and licensed third-party video content included with Prime. That's up from about $5 billion in 2021. [...] We regularly evaluate the return on the spend and continue to be encouraged by what we see, as video has proven to be a strong driver of Prime member engagement and new Prime member acquisition. – 00:04:35 - Brian Olsavsky, CFO

-> Expects continued headwinds for AWS growth: This customer focus is in our DNA and informs how we think about our customer relationships and how we will partner with them for the long term. As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters. So far in the first month of the year, AWS year-over-year revenue growth is in the mid-teens. That said, stepping back, our new customer pipeline remains healthy and robust, and there are many customers continuing to put plans in place to migrate to the cloud and commit to AWS over the long term. Now let's shift to worldwide operating income. For the quarter, we reported $2.7 billion in operating income. The operating income was negatively impacted by 3 large items, which added approximately $2.7 billion of costs in the quarter. – 00:07:15. Brian Olsavsky, CFO

-> Bezos’ belief lives on, customer value = shareholder value: As our business has grown quickly over the last several years, particularly as we've built out our fulfillment and transportation network and claim amounts have seen industry-wide inflation, we've continued to evaluate and adjust this reserve for both asserted claims as well as our estimate for unasserted claims. We reported overall net income of $278 million in the fourth quarter. While we primarily focus our comments on operating income, I'd point out that this net income includes a pretax valuation loss of $2.3 billion included in nonoperating income from our common stock investment in Rivian Automotive. As we've noted in recent quarters, this activity is not related to Amazon's ongoing operations but rather the quarter-to-quarter fluctuations in Rivian's stock price. As we head into the new year, we remain heads-down focused on driving a better customer experience. We believe putting customers first is the only reliable way to create lasting value for our shareholders. – 00:11:04 - Brian Olsavsky, CFO

-> Reducing costs is Andy’s #1 priority: And being maniacally focused on the customer experiences, always going to be a top priority for us. At the same time, and this is true in North America as well as across the entire business, we're working really hard to streamline our costs and trying to do so at the same time that we don't give up on the long-term strategic investments that we believe can meaningfully change broad customer experiences and change Amazon over the long term. The #1 priority that I spent time on is reducing our cost to serve in our operations network. It's important to remember that over the last few years, we took a fulfillment center footprint that we've built over 25 years and doubled it in just a couple of years. And then we, at the same time, built out a transportation network for last mile roughly the size of UPS in a couple of years. And so when you do both of those things to meet the huge surge in demand, just to get that functional, it took everything we had. – 00:15:42. Andrew Jassy, President & CEO

-> Third-party sellers accounted for 59% of units sold: We work with hundreds of thousands in the U.S and millions overall in the world of selling partners. In this past quarter, 59% of the units sold were from our third-party selling partners, and we work very hard to provide unmatched selection. And that matters a lot to customers. I think pricing being sharp is always important. But particularly in this type of uncertain economy, where customers are very conscious about how much they're spending, having the millions of deals that we put together with our selling partners in the fourth quarter was an important part of the demand that you saw, and we'll continue to work really hard on being sharp on pricing. And then just the customer experience improvements that we're working all the time, whether it's adding Buy with Prime that allows Prime users to use their Prime benefits on other websites than just Amazon. – 00:18:35. Andrew Jassy, President & CEO

-> Points of weakness for AWS: Let me start with what we're seeing at the customer level. So as I've mentioned, it's across all industries. There are some points of weakness, things like financial services, like mortgage companies that do. As mortgage volumes down, some of their compute challenges or compute volumes are down. Lower trading in crypto. And things tied to advertising, as there's lower advertising spend, there's less analytics and compute on advertising spend as well. But by and large, what we're seeing is an interest and a priority by our customers to get their spend down as they enter an economic downturn. We're doing the same thing at Amazon, questioning our infrastructure expenses as well as everything else. And we -- there's things you can do. You can defer -- you can switch to lower-cost products. You can run calculations less frequently. There's just -- you can do different types of storage on your data. So there's ways to alter your cost and your bill in a short period of time. I think that's what we're seeing. – 00:28:49. Brian Olsavsky, CFO

-> AWS still outgrows Azure and Google Cloud: It's always a little bit hard to answer your question about what we see. But we, to our best estimations, when we look at the absolute dollar growth year-over-year, we still have significantly more absolute dollar growth than anybody else we see in this space. And I think some of that's a function of the fact that we just have a lot more capability by a large amount, with stronger security and operational performance and a larger partner ecosystem. So I think it's also useful to remember that 90% to 95% of the global IT spend remains on-premises. And that equation is going to shift and flip, I don't think on-premises will ever go away, but I really do believe in the next 10 to 15 years that most of it will be in the cloud if we continue to have the best customer experience, which we have to work really hard at an event which we're working to do. It means we have a lot of growth in front of us in the AWS business. – 00:32:45. Andrew Jassy, President & CEO

-> Why it's irresponsible not being a Prime member: If you step back and think about a lot of subscription programs, there are a number of them that are $14, $15 a month really for entertainment content, which is more than what Prime is today. If you think about the value of Prime, you get the entertainment content on the Prime Video side, the shipping benefit, the fast shipping benefit you can't find elsewhere, the music benefit, the Prime Gaming benefit, the photos benefit and you get the Buy with Prime capability to use your Prime subscription on websites beyond just Amazon and some of the grocery benefits that we provide, and RxPass like we just launched to get a number of medications people take regularly for $5 a month unlimited, that is remarkable value that you just don't find elsewhere. And we will continue to add things to Prime and continue to experiment with lots of different features and benefits. But it's still early days. And as we continue to make the service better and better and fully featured, we see people continuing to spend more at Amazon across our various businesses. So we're optimistic about it. – 00:36:06. Andrew Jassy, President & CEO


Q4 2022 Y/Y Δ
Revenue +36%
*N. America +66%
*Asia +50%
*Live +41%
*RNG +5%
*marg. 68.6% (68.9)
EBIT +36%
*marg. 61.4% (61.5)
Net Profit +30%
*marg. 54.8% (57.1)
EPS +31%

-> Live casino delivers but RNG underwhelms: Live casino delivered very satisfactory growth of over 41% in the quarter and for the full year. RNG revenue amounted to EUR 72.5 million, a growth of 15.3% in reported numbers. The growth in the quarter compared to the combined revenue of Evolution and Nolimit City for Q4 2021, the pro forma growth of RNG amounted to 5.1%. As earlier communicated, we have a target of double-digit organic growth in RNG. Moving forward into 2023, the path to our goal within RNG will not be linear, but we look forward to 2023. We will double the releases of our national brands, add new bonusing tools for slots and increase distribution for slots through OSS. – 00:05:47. Martin Carlesund, CEO

-> Growth > margins: It is, as always, important to state that the investments will continue to be high, and our main priority is to continue to grow. And as always, in a trade-off between growth and margin, we will always opt for growth. [...] Expanding our studio capacity means we need high recruitment pace. And in the quarter, we increased the number of Evolutioners with 1,100. The increase in staff in 2022 amounted to 3,600, adding to over 17,000 Evolutioners at the end of the period. Evolution is a truly global company. Our products can be played in most corners of the world, and our employees are a good mirror of that global reach. And at the end of the period, we had over 100 nationalities employed all over Evolution. We will continue to increase headcount during 2023, as we expand in our studios and we will continue to consider diversity as a strategic advantage and a key asset. It is accredited for Evolution's operational excellence. I'm very proud of all our employees and the work ethos they show in their daily work. – 00:06:40. Martin Carlesund, CEO

-> The Game Rounds Index up 70% y/y: There are still differences between games and, for example, since the hand of Blackjack takes longer time than a spin of a slot, each game round of Blackjack typically carries a higher bet. So, all game rounds are not equal in value. In short, the index values for game rounds from Live and RNG and others are weighted according to revenue contribution. This gives us a joint index that includes all games based on equal revenue contribution. The Game Round Index will over time give a better view of activity in our network. This index will not correlate exactly with the revenue each quarter. As you can see, in the chart, activity has remained high in the quarter, over 70% year-on-year growth for the second quarter in a row. One reason for the high growth in game rounds compared to the revenue is that we are adding many game rounds from new markets that typically have a smaller bet size. So activity increases more than revenue. Still, increased activity in the network is a very positive sign and will contribute to growth in the future. – 00:09:31. Martin Carlesund, CEO

-> North America, Asia, and LatAm as main growth drivers: It's a very good growth year-on-year in all geographical markets, and it's evident that the demand is truly global. Year-on-year growth in North America amounted to 66%, with the highest growth rate of all regions for the fourth quarter. For the full year, the growth amounted to 65% compared to last year. In Asia, we saw a continued strong growth of 50% year-on-year and a growth of 67% for the full year. We see good potential in both these markets and expect a continued high growth rate going forward. Europe as a whole, including UK and Nordics, showed a good growth of 7% quarter-on-quarter. European markets in general have a slower growth than North America and Asian markets due to both regulatory changes, as well as that they are more mature. It's worth noting that this table does not include pro forma figures of the growth year-on-year. So to some extent, it can be attributed to acquisitions. Other, including Latin America, Africa and remaining part of the world, shows a very good growth of 61% year-on-year. In this market segment, it is LatAm that is the main driver for growth. – 00:10:02 - Martin Carlesund, CEO

-> The Year(s) of the Product: One year ago, I said 2022 would be the year of the product and set a goal for ourselves to deliver 88 new games in 2022. It would mean a record number of releases from Evolution in one year. We did it. I'm very proud of all the people within Evolution Group that made it happen. In 2023, we will launch over 100 new games. I think it's fair to say it will be yet another year of the product. Among the new games in 2022, XXXtreme Lightning Roulette was an out of the gate success. MONOPOLY Big Baller is another mega hit. And I'm happy to report that the original MONOPOLY Live continued to see good increase in player numbers, even after the launch of Big Baller. The third exceptional game to point out is this live slot, Crazy Coin Flip, a truly unique game that combines slots and live show, entertainment and the game found a very large audience. – 00:11:34. Martin Carlesund, CEO

-> Martin on the Evolution culture: So, of course, 2023 is going to be our strongest product year ever. End-user entertainment and satisfaction is what will be the future, not only 2023 or 2024 or 2029. It's the ultimate goal for all of us trying to make a difference every day. We need to stay on our toes, breaking boundaries, create what others dream of and think it's impossible. We can never stop. We need to relentlessly continue to create Evolution's future. That's what all of us at Evolution is doing every day, trying to create what others dream of and that is called ambition, hunger and energy. That is why all of the soon 18,000 employees of Evolution should be proud. – 00:14:43. Martin Carlesund, CEO

-> 2023 margin guidance of 68-71%: For 2023, we expect to achieve a margin in the 68% to 71% range. I guess you can say that's a notch lower than the guidance for 2022, but given the uncertainty in the world, the pressure we see on costs right now, and the fact that we exit this year just over 68%. We think the larger interval does make sense. As we have said many times before and I will repeat now, we do prioritize growth over margins. So, this guidance is a way to share our expectations today rather than that it's a hard goal in and of itself. – 00:17:41. Jacob Kaplan, CFO

-> Growth in percentage terms will come down: During 2021, we also added the main part of the RNG business through acquisitions of NetEnt, Red Tiger and Big Time Gaming, which, as you can see here, gave an extra boost, both to revenue and EBITDA. So as we've talked about on the previous slide and earlier in the presentation, we have more work to do to achieve the future growth we want in RNG, but it's a highly profitable business but still has a very good fit in the group. Looking at revenue, we increased top line by almost EUR400 million or 36%, 2022. That revenue figure does include a mix of organic and acquired growth. But looking at live casino, revenue isolated, which is all organic, we had over EUR300 million in both '20 and '21, respectively, with growth rates around 50%. So, while we actually had even more revenue in 2022, the math works that the growth rate starts coming down a bit, as I mentioned on the previous slide. – 00:19:11. Jacob Kaplan, CFO

-> Competitors are now “even further behind” after years of slowing down: [His answer to a question on the competitive landscape] How it relates to the macroeconomic situation is, of course, there is less money going around to companies that are in need of money -- and that might affect. When it comes to the competition, I would say that it's been a couple of years now, and it's slowed down in my point of view. We have continued as before and even accelerated. So, my point of view is that we increased the gap to competition and they are now even further behind than they were before. But that's, of course, my view. – 00:33:04. Martin Carlesund, CEO

-> We charge far too little for our product: You break up a bit, but my -- if I little bit guess, you're asking if the gap to competition is the largest ever and if it affects the pricing position for us. And I will answer that, and I would say that in my belief, I think the gap to competition has never been wider. We are adding much more games. We're adding phenomenal games. And if you come to us, you will see something spectacular. And competition is more now than a couple of years back, actually only copying what we did. And to some extent maybe not even trying to do something of their own. So the gap is widening. The pricing is -- I think that we charge far too little for our product, I always say that, and we should charge much more. But I neither see that there should be price pressure. We deliver fundamental value. We add new games. We add new player -- we add new player groups to the operator. So, I think that it's fine. Neither I think that we should use our power to increase the price just, of course, we can. So that's -- we're in a partnership with our operators and should continue being that. – 00:51:22. Martin Carlesund, CEO

Meta Platforms

Q4 2022 Y/Y Δ
DAP +5%
MAP +4%
Ad impressions +23%
Price per ad -22%
Revenue -4%
EBIT -49%
*margin 20% (37)
Net income -55%
EPS -52%
Headcount +20%
Buybacks $6.9B
Cash $40.7B

-> Daily and monthly active users: 2022 is a challenging year, but I think we ended it having made good progress on our main priorities and setting ourselves up to deliver better results this year as long as we keep pushing on efficiency. And I said last quarter that I thought our product trends look better than most of the commentary out there suggests. And I think that’s even more the case now. We reached more than 3.7 billion people monthly across our Family of Apps. On Facebook, we now reached 2 billion daily actives and almost 3 billion monthly. The number of people daily using Facebook, Instagram and WhatsApp is the highest it’s ever been. – 00:01:39 Mark Zuckerberg, Founder & CEO

-> The year of efficiency: Now before getting into our product priorities, I want to discuss my management theme for 2023, which is the Year of Efficiency. We closed last year with some difficult layoffs and restructuring some teams. And when we did this, I said clearly that this was the beginning of our focus on efficiency and not the end. And since then, we have taken some additional steps, like working with our infrastructure team on how to deliver our roadmap while spending less on CapEx. Next, we are working on flattening our org structure and removing some layers of middle management to make decisions faster as well as deploying AI tools to help our engineers be more productive. As part of this, we are going to be more proactive about cutting projects that aren’t performing or may no longer be as crucial. But my main focus is on increasing the efficiency of how we execute our top priorities. So I think that there is going to be some more that we can do to improve our productivity, speed and cost structure. – 00:03:02. Mark Zuckerberg, Founder & CEO

-> Aggressively attacking TikTok's relevance algorithm with Reels: The two major technological waves driving our roadmap are AI today and over the longer term, the metaverse. So first, let’s talk about our AI discovery engine. Facebook and Instagram are shifting from being organized solely around people and accounts you follow to increasingly showing more relevant content recommended by our AI systems. And this covers every content format, which is something that makes our services unique. But we are especially focused on short-form video since Reels is growing so quickly. And I am really proud of our progress here. Reels plays across Facebook and Instagram have more than doubled over the last year, while the social component of people resharing Reels has grown even faster and has more than doubled on both apps in just the last 6 months. The next bottleneck that we are focused on to continue growing Reels is improving monetization efficiency or the revenue that’s generated per minute of Reels watched. Currently, the monetization efficiency of Reels is much less than Feed. So the more that Reels grows, even though it adds engagement to the system overall, it takes some time away from Feed and we actually lose money. But people want to see more Reels though. So the key to unlocking that is improving our monetization efficiencies that way we can show more Reels without losing increasing amounts of money. – 00:04:21. Mark Zuckerberg, Founder & CEO

-> The opportunity of Business Messaging: We continue to be excited about the monetization opportunity with Business Messaging, too. Facebook and Instagram are the first two pillars of our business. And in the next few years, we hope to bring Messaging Online as the next pillar. One way of doing this is click-to-message ads, which is now the $10 billion run rate. And paid messaging is the other piece of this. We are earlier here, but we continue to onboard more businesses to the WhatsApp Business Platform where they can answer customer questions and updates and sell directly in chat. So for example, Air France has started using WhatsApp to share boarding passes and other information, other flight information, in 22 countries and 4 languages. And businesses often tell us that more people open their messages and they get better results on WhatsApp than other channels. – 00:05:44. Mark Zuckerberg, Founder & CEO

-> Zuckerberg on generative AI: AI, it’s the foundation of our discovery engine and our ads business. And we also think that it’s going to enable many new products and additional transformations in our apps. Generative AI is an extremely exciting new area with so many different applications. And one of my goals for Meta is to build on our research to become a leader in generative AI in addition to our leading work in recommendation AI. – 00:06:30. Mark Zuckerberg, Founder & CEO

-> Setting the standard for the VR/MR industry: The last area that I want to talk about is the Metaverse. We shipped Quest Pro at the end of last year. I am really proud of it. It’s the first mainstream mixed reality device. I mean, we are setting the standard for the industry with our Meta Reality system. As always, the reason why we are focused on building these platforms is to deliver better social experiences, than what’s possible today on phones. And the value of MR is that you can experience the immersion and presence of VR while still being grounded in the physical world around you. We are already seeing developers build out some impressive new experiences like Nanome for 3D modeling, molecules and drug development; Arkio for architects and designers to create interiors; and of course, a lot of great games. The MR ecosystem is relatively new, but I think it’s going to grow a lot over the next few years. – 00:07:11. Mark Zuckerberg, Founder & CEO

-> Over 200 VR apps are now built on Meta’s devices: There are now over 200 apps on our VR devices that have made more than $1 million in revenue. We are also continuing to make progress with avatars. We just launched avatars on WhatsApp last quarter and more than 100 million people have already created avatars in the app. And of those, about 1 in 5 are using their avatar as their WhatsApp profile photo. I thought that, that was an interesting example of how the Family of Apps and Metaverse visions come together, because even though most of our Reality Labs investment is going towards future computing platforms, glasses, headsets and the software to run them. As the technology develops, most people are going to experience the Metaverse for the first time on phones and then start building up their digital identities across our apps. – 00:08:39 Mark Zuckerberg, Founder & CEO

-> Scale before monetization (regarding the metaverse): I mean the way I’ve always looked at – the second take the first part of this, is that for these consumer products, often building up and scaling the product use case is a somewhat different discipline than working on the monetization. So it’s such a kind of hard problem to build these new types of products that you want to give the teams as much clarity and as simple of goals as possible. So in the beginning, just saying, okay, just let’s make something that works for people. And then once we get to many hundreds of millions of people or billions of people using it, then we will focus on ramping up the monetization, which has been a formula that’s worked for us. That’s the general approach. Now with Reels, we do have a lot of people using it now. So I think at this point, the question is, is there any strategic advantage to letting it scale further than will be – than would be profitable to do? And I think at the scale that it’s at right now, it’s not clear that there is much strategic advantage. I mean there are certain flywheels, and you get certain more feedback or data points from a little bit more distribution. But at this point, we’re a pretty good scale. So I think for now, the right thing to do is to work on monetization efficiency. – 00:28:52. Mark Zuckerberg, Founder & CEO

-> Expects slower growth rate going forward: So, I mean on the efficiency point, I think we come to it from a few places. I mean one is just like the journey of the company. And for the first 18 years, I think we grew at 20%, 30% compound or a lot more every year, right. And then obviously, that changed very dramatically in 2022, where our revenue was negative for the growth for the first time in the company’s history. So, that was a pretty big step down. And we don’t anticipate that, that’s going to continue, but I also don’t think it’s going to necessarily go back to the way it was before. So, I do think this is a pretty rapid phase change there that I think just forced us to basically take a step back and say, okay, we can’t just treat everything like it’s hyper growth. There are going to be some areas that are going to be very rapidly growing or that are very kind of future investments that we want to make. But we also have a lot of things now that are – just kind of have a lot of people using them and support large amounts of business and that we think we should operate somewhat differently. – 00:54:53. Mark Zuckerberg, Founder & CEO

-> Rethinking the organizational structure: For example, focusing on AI tools to help improve engineer productivity, it’s not necessarily going to reduce costs. Although over the long-term, maybe it will make it so we can have fewer – we just hire less, right, and stay a smaller company for longer. But I do think things like reducing layers of management just make it so information flows better through the company and so you can make faster decisions. And I think, ultimately, that will help us not only make better products, but I think it will help us attract and retain the best people who want to work in a faster-moving environment. [...] And I do want to continue to emphasize the dual goals here of making the company a better technology company and increasing our profitability. They are both important, but I think it’s also really important to focus on the first one of just making it a better company because that way, even if we outperform our business goals this year, I just want to communicate, especially the people inside the company that we are going to stick with this, because I think it’s just going to make us a better company over the long-term. – 00:57:25. Mark Zuckerberg, Founder & CEO


Q4 2022 Y/Y Δ
DAU +17%
ARPU -15%
Revenue +0.1%
adj. EBITDA -29%
*marg 18% (25%)
FCF -51%
EPS -38%
SBC +51%

-> A challenging year: 2022 was a challenging year for our business as we continue to be impacted by macroeconomic headwinds, platform policy changes and increased competition. We've taken action to refocus our investments to support our 3 strategic priorities of growing our community and deepening their engagement with our products, accelerating and diversifying our revenue growth and investing in the future of augmented reality. We are focused on the most important inputs that we can control, delivering engaging experiences to Snapchatters and improving business outcomes for our advertising partners. – 00:01:31 - Evan Spiegel, Co-Founder & CEO

-> Partners are cautious with advertising spend: From our recent conversations with our partners, it seems like advertising demand hasn't really improved, but it hasn't gotten significantly worse either. I mean, obviously, the brand spend is significantly reduced like we saw in the quarter, but our direct response business continued to grow in Q4. And in general, it seems like our partners are just managing their spend very cautiously so that they can react quickly to any changes in the environment. I think as we look at Q1, the most significant impact thus far had really been the changes we're making to our ad platform. – 00:06:08. Evan Spiegel, Co-Founder & CEO

-> Time spent – overall and for Stories: And globally, overall time spent watching content on the platform continues to grow. But time spent watching friends' Stories does continue to be a headwind to total time spent. So if you think about our investments here and what we're doing to reaccelerate time spent with times -- with content, the most important thing is really increasing Spotlight viewership and engagement. We think we've got a lot of headroom here. – 00:14:02. Evan Spiegel, Co-Founder & CEO

-> Intense competition for short videos: I do think short video competition is going to continue to be very intense. Our community loves watching entertaining short videos. So what we're really trying to do here is just play to our strengths around our camera and messaging. We benefit from the enormous amount of video creation happening on our platform, over 5 billion snaps created every day, and this network of close friends who really enjoy sharing videos across our platform. So I think we'll continue to play our strengths there. It's part of what's contributing to the great growth we're seeing in Spotlight. – 00:15:14. Evan Spiegel, Co-Founder & CEO