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spk_0: good afternoon my name is friends and i will be your conference operator today at this time i would like to welcome everyone to the mets of fourth quarter and four year two thousand and twenty one earnings conference call our lines have been placed on you to prevent any background noise after the speakers remarks there will be a question and answer session if you would like to ask a question during that time please press the one and then the number four on your telephone keypad the call will be recorded thank you very much mister deborah crawford base look vice president of investor relations you may begin
spk_1: thank you good afternoon and welcome to met a fourth quarter and four year twenty twenty one earning conference call joining me today to discuss the results are mark zuckerberg ceo sheryl sandberg see and and they were interfere phone before we get started i would like to take this opportunity to remind you that are remarks to they will include for looking statement actual results may differ materially from the contemplated by these boys looking statements factors that could cause these results to differ materially are set forth in today's press release and in our quarterly report on former tenant you filed with the fcc any for looking statements that we make a call or based on assumptions as of today and we undertake no obligation to update the statement as a result of new information or future even during the called we may present a gap and non gaap for new for measure reconciliation of captain on get measures is included in today's earnings personally the press release and an accompanying investor presentation are available on our website and investor dot f b dot com and now i like to turn the call that mark
spk_2: i rode bikes for joining today this was a solid quarter for a product of business there's also important one for somebody in october we wrote that mehta i would be ordered a every waiter or vision for the metaverse it will be sure plenty of the conductor i said that this is not something that we're with you on our own the verse may be built by creators and developers ob interoperable that will touch many different parts of the a car in the months since it's been exciting to see lots of other companies showed her own plans for the metaverse and how their experiences and products might show up to ten i look forward to partnering with a lot of them as we want to bring that to live together the last year was about putting a stage of the ground but we will shatter the lift your to going to be like and today of those are discussed or seven a major lesson priorities for twenty three to the orioles community messaging cars as privacy a i and of course the metaverse an area that were putting a lot more towers and budget towards i a that i wouldn't really touch on herbs your for results which i know several days or even deeper i'm proud of the work that are team teacher i wish ship products are committed to to grow and businesses of all sizes turned out to hold them rich people but there are two things i want to call out of it are having an impact our business the first his competition a people have a lot of choices for how they want to spend your time and act like to talk don't growing very quickly and this is why our focus on a real is so important over the long term as works make sure that are ups are the best services out there for young adults which i spoke about our last call the southern area and related to this is the middle of a transition on our own services towards short for video was real does more activities shifts towards the medium we'll replace some sometimes and new to visit and other higher monetizing service don't as a result of both competition and the shift to short term short video the both our focus on serving young adults over optimized go overall and will continue to see some pressure on impression growth in the near term no confidence that meaning harder into these trends is the right short term trade off to meet in order to get long term but we made these types of transition for for with mobile and stories is where we took on headwinds in the near term to align with important traces of the long term and watch video has historically been forward on as we believe that overtime short video is going to much as more like food or store you don't like watch so i'm optimistic that will get to where we did to be with real to ultimately our continued success relies on building new products that people find valuable and into a you to them and it a competitive marketplace or we're focused on understand the area that we deliver on people and executing the strategy david fincher more on the path to our business in a minute but before you to that i want to discuss our best and prayers for twenty twenty two the first one is real now it's clear that short form video will be an increasing part of how people consume content were involved in a real is now our fastest growing concern format by far it's already the biggest contributor to engagement time to run and it has grown very quickly on facebook to it as we continue input into tools for readers renting for the people watching and his role of the product everywhere across the world we expect that this will continue growing quickly the looking ahead of where's that think it's simple video across instagram a building more great creative vision tools for creators and hoping more people discovery interact with role real the next investment priors is committed enough to do which is that shouting with groups of people do you have some to implement for the letter shirt community and interest or experience in your ignorance of the world was popular messaging platform is where people can have one on or and groups of friends family and colleagues as we see people increasingly want to share board thing with to messages that they were previously maybe posted a few so i think be the popularity that we're seeing without five slap in the workplace sort this corridor telegram of the fuck this friend to so were not to help people on what's that better organized or group chats and make it easier to find information put do their part of like parent groups or neighborhoods and world building community chest on facebook messenger real time conversations with those groups and computers go to college business messaging since it's an area where there's real moment of your oh we estimate that are more than one billion users are connecting with a business account across or messaging service with every week and we're partnering with company like numbers burst your mark to help people book a ride or another groceries delivered right from attack and it would do new tool to make by the online better for people to use your advantage for businesses and we believe that this can be important business for us to the years to come also making good progress on her brother commerce that we already have a lot of businesses reach new and existing customers with personalized bad as our covers tools are that extension of that is the a was way for people and businesses by themselves to our that our strategy years since introducing shops that you're a half ago has been to make it possible for people to make a purchase after discovering new brand or products without having to switch over to a browser or we intruder came in both ensure all share more our progress or including them a success is over the holidays next up is alan bennett with apple's i o s changes and a new regulations europe there is a clear trend were less data is available to deliver personalized but people still want to see rolled and ads and businesses still want to reach the right customers so we're rebuilding a lot of our as infrastructure as we can continue to grow and deliver high quality for smile that so the next to produce our discussed books on infrastructure the underpins the all of our products that the first one of privacy and we've been huge investments and strengthen our approach to privacy could be rebuilding our privacy programs on our privacy review process the we did updates to bring greater privacy or products including and and encrypted backups and disappeared messages on what's as evidence intern encrypted voice and video calling on messenger and over the next few years our focused on building out a major pride superstructure project that will include our privacy commitments at a deeper level of our technical foundation to make them more durable and make right the going faster in the symbolic environment
spk_3: the on a guy
spk_2: this is all the area will be routinely season stronger returns are in that sense over time with expected advances in a eyes a naval a lot of experience or talked about so far they enabled us to deliver better odds to be boys the was data that court you all are the security work does it mean for improved or relevance real overall cost of renting a general and to plays a big role in our pocket the commerce efforts artificial intelligence is also going to play a big role in or work to help the networks we just announced our ai research supercluster which we think be the world's fastest supercomputer ones that have complete later this year and this is due to enable new ai model that and learning from trillions of example and understand hundreds of languages who toby keith for the kinds of experiences that we're building
spk_4: looking ahead
spk_2: we're focused on food or still no computing power and transforming our ai to restructure to read bounces in foundational research is well as improvements to data center design networking storage and software no the last investment procedures the members we're focused on foundational hardware and software that are required to build and a first is embodied internet that naval better digital social experience of been anything that exists today a front our seeing real traction with quest to people have spent more than one billion dollars on for store content topic a virtual reality developers growing sustain their businesses are we had a strong holiday season and the opulence reach the top of the outdoor for the first time on christmas day of us working towards a release of a high end virtual reality headset later this year and we continue to make progress developing products now the rate which is our first fully augmented reality glasses as for software the horizon is court for better or isn't bombing us and our social a vr world building experience that we recently opened two people to be us and canada and we see that of number talented creators build world my this recording studio where producers call library or a relaxing space to meditate and is this year we plan to launch the first prize and upon mobile to to no bring early medical experience of more surfaces beyond that vr to woven the deepest and most immersive experiences are going to be a virtual reality you also been filled access is world from your facebook or instagram apps as well and and probably more overtime so this holiday wants to build even richer social experiences where you should connect with friends the members or whether they're during the artwork well it's a bookstore avatars which will become represent yourself and arrive medicine across other developers experiences in the that averse in december we rolled out our metaverse avatar that to take all your the developers on quest and rift and windows eight the our platform flooding developers brain matter avatars to their own yard
spk_5: we just announced update
spk_2: the what's your further customize your avatar to better express herself and we're introducing federal funding to started with an nfl partnership do to ensure on your favorite team you can use your avatar across quest facebook instagram and messenger and swimsuit wasn't another bridge tweeted our to social apps and three be immersive virtual reality experiences and we'll bunch of work and make the avatar that expressive and high fidelity diabetes beautiful represent us and about still present with one another but i am very excited for the advances that we're making their don't make a meaningful progress across all seven of these areas is going to improve the services to be offered today and will help power a more social intuitive it entertaining metaverse where people businesses the creators of cloth rise and it's fully ruins vision is still on a ways off and although the direction is clear or path ahead is is not yet perfect be defined but i am pleased with the momentum and the progress we've made so far and i'm confident that views are the right areas that sense for us to focus on going board twenty twenty two is with the first page of the next chapter for a company i'm grateful for all the talented team and matter and our partners for executing other some or work and of course for all of you who are on this journey with us and now you're a cheryl
spk_6: thanks mark and hi everyone a total of revenue into for with thirty two point six billion which is up twenty percent year over year
spk_7: the closer be here are some mark the first time our business generated more than one hundred million dollars in annual revenue
spk_6: i want to congratulate or team and thank our partners for helping us reach the mouse them perhaps twenty twenty one with a solid growth the continued and she'd for but there were a number of dynamic factors that created headwinds from the past quarter in addition to those markers marked described around competition and our ships to start from video we were laughing a period of strong demand and twenty twenty that benefited from gary congress and online commerce which has since fled do four of us all for the first holiday season after apple's iowa changes which had an impact on businesses of ah thousand especially small businesses who rely on digital advertising to ground this will continue to be a factor and twenty twenty two with also heard from advertisers about other macro trends that contributed to the when you for including global supply chain disruption labor shortages and inflationary pressures pressure a number of industry reports have pointed to people shopping earlier in the holiday season to avoid potential like finishes and shipping too late this is aligned with the behavior we saw from advertisers many of whom frontloaded their spend earlier than usual marx talk about seven areas of investment i'd like to talk about our progress in three of them as commerce and messaging
spk_8: first and
spk_6: like others in our industry we faced headwind as a result of apple violence changes as he described not quarter apple created to challenges for advertisers one is that the accuracy of our ads targeting decreased which increase the cost of driving outcome the other and that measuring those outcome became more difficult he challenges are complex than interrelated are working to try and improve thing for example by making progress in closing the under reporting gap for iowa conversion and by introducing tools like are aggregated event measurements solution to deliver better and sites for advertisers lisa efforts will help to mitigate some of the challenges we expect the overall targeting and measurement headwinds to the increase from apple changes and from regulatory changes in she one and throughout twenty twenty two on the shift a short term video i want to emphasize that while we're going through a transition for optimistic right now wheels monetize as at a lower rate than student story but we expect as to improve over time we made successful transition before the chef from web to mobile and another ship from feed the stories we have a playbook here experience we have for monetizing stories is directly applicable so we're not starting from scratch we think that over the long term the ship will be a success for us and our partners to
spk_9: second commerce
spk_6: we launched the number of neutral thank you for we release new features like ratings reviews and community replies to product question and significantly improved check out stability we brought shops to group and we started testing lab shopping for creators an early glimpse of the immersing shop and vs shopping experiences that will be possible in the metaverse
spk_1: a calmer strategy remains focused on three areas
spk_6: continuing to be the best place for advertisers to find customers and get from or why making it easier to sell on our platform and improving a customer experience we still have a lot of work to do compared to other mobile and web shopping experiences but we're seeing promising early fun it's great to see businesses and consumers using social and immersive shopping experiences a product tags dropped from my shopping a good example is the laundry a premium favour care and home cleaning brain from unilever that wanted to build awareness of a new line it developed the musician john mayer in november they launched exclusively on instagram for twenty four hours and hosted a lot of shopping event a conversation between john mayer and launches cofounder men visually avoid where people could buy the new products as they talked about them live the hour long event generated more than forty thousand dollars in sales
spk_1: over our work for you to the engagement we thought with our commerce towards over the holiday season and use you for as a promising milestone in a multiyear journey
spk_6: third isn't messaging a focuses on helping businesses and consumers connect our largest monday's asian effort is click for messaging and when you click on an ad in your facebook or instagram feed and it opens a chat with a business messenger instagram director what's that
spk_0: it's a great way for businesses to drive engagement and we've seen lots of demand from consumers to want to use a messaging apps for everyday services like utilities financial services education and travel
spk_6: into for we expanded the types of information people can choose to receive from businesses in the format and which they can interact are continuing to invest in neutral to make it easier for people to help and make purchases right from a chat more than one hundred and fifty million users globally now view of business catalog and must have each month a new features like selection somewhat that help businesses organize their products and make it straight forward for people to finding the by as we enter twenty twenty two our focus is where and has always been building products that help people connect businesses graham for making long term investment to evolve over business and continue to drive real value for a partners in the coming year will continue to invest in things that improve our performance for a client and short from video like real and in making the commerce experience better for consumers marketers on a platform as ever i'm grateful of our partners around the world and small it we learn from everyday and our team that matter the work so hard to help businesses to the holiday season and beyond
spk_10: here days
spk_11: thank you well and good afternoon everyone
spk_2: as we announced in october beginning of quarter be reporting revenue an operating in some do to seconds family that's and reality lads i would begin by discussing are consolidated results before moving to segments and and with our outlook all comparisons are a year over year basis unless otherwise noted we've learned solid results from the fourth quarter and the of from your for businesses for your twenty twenty one total revenue grew thirty seven percent clearly a hundred eighteen billion dollars do for a total revenue was thirty three point seven billion dollars up twenty percent or twenty one percent on a constant currency basis unlike the first three quarters and twenty twenty one the experience to currency headwind when you're for and had foreign exchange rates remain constant with you for last year total revenue would have been about three hundred and seven million dollars higher you for total expenses were twenty one point one billion dollars of thirty eight percent compared to last year in terms of the specific line out cost of revenue increased twenty two percent driven primarily by reality last hardware our core infrastructure investments and payments to partners are increased thirty five percent driven primarily by hiring support a family of apps and reality labs as we increase as well as increased reality lab are in the operating costs marketing and sales increased thirty four percent maybe driven by marching band is higher lastly dna increased the hundred and seven percent driven primarily by little related costs and related political we added for thirty seven hundred that new hires and queue for the majority of technical functions we ended the quarter with over seventy one thousand nine hundred for an employee of twenty three percent compared to last year fourth quarter operating income with twelve point six billion dollars representing a thirty seven percent operating margin our tax rate with making present net income and ten point three billion dollars for three dollars and sixty seven cents per share total expenditures including principal payments on finance places where five point five billion dollars to buy investment data centers servers network infrastructure in an office abilities we cash flow with point six billion dollars we repurchase nineteen point two billion dollars or pass a common stock in the fourth quarter and we ended the quarter with forty eight billion dollars in cash and marketable securities living now sworn statement results i'll begin with the family that segment do for a total thank you that's rubbish with thirty two point eight billion dollars or twenty percent to four family about the ad revenue with thirty two point six billion dollars up twenty percent or twenty one percent like constant currency basis but a user geography basis year over year abracadabra the strongest in asia pacific a thirty one percent rest of world europe and north america grew twenty percent twenty percent and fifteen percent respectively currency with modest had been in all international region in queue for the took total number of added pressure served across our services increase thirteen percent and the average price for an increased six percent impression growth is primarily driven by civic and rest the world well impressions in north america decline six percent year over year on a global basis impression group benefited from abu decreases news regret this was partially offset by engagement related had when as we pay increase competition for people's time and it shifted engagement with our ass video services like real switch off your ass than speed or stories today pricing growth was brought based across regions worldwide pricing growth slowed from the third quarter of the last stronger growth in the year ago period and paid currency that less frightening with often negatively impacted by advertisers saving challenges from macro economic factors and bedroom and targeting headlines tell me about other revenue with a hundred and fifty five billion dollars down the percent decline and payment revenue or from games we have about expenses were sixteen point nine billion dollars of thirty five percent higher legal related costs employee related expenses marketing and research marketing infrastructure related costs and payments partners family about the operating income for fifteen point nine million billion dollars representing a forty eight percent operating margin
spk_12: we estimate that approximately two point eight billion people use that be one of our family it out on a daily basis in december and that approximately three point six billion people used at least one on a monthly basis
spk_2: a the daily active users were one point nine three billion of five percent were eighty four million compared to last year the use represented approximately sixty six percent of the two point nine one billion monthly active users in december and they use grew by hundred and fifteen million or four percent compared to last year facebook user growth was impacted by a few headwinds in the fourth quarter in asia pacific erratic world we believe covered research says during prior period of war do for granted user growth in india with also limited by an increase in pay the price data packets pricing in addition to be factors we believe competitive services are negatively impacting read particularly with younger audiences within our reality last segment to for revenue with eight hundred and seventy seven million dollars of twenty two percent driven by strong quest to sales during the holiday season reality laughed expenses were four point two billion dollars a forty eight percent driven by employee related costs are in the operating expenses and cost a good so reality last operating loss with three point three billion dollars in the fourth quarter for the pointer twenty twenty one reality left operating loss with ten point two billion dollars
spk_11: turning out the outlook
spk_2: respect first quarter twenty twenty total revenue to be in the range of twenty seven twenty nine billion dollars which represents three percent to eleven percent year over year growth the inspectors your your graph in the first quarter to be impacted by has been to the impression and upright friends on the impression side effect continued had been from both increased competition for people time and a shifted engagement within our asteroid video services like real which mother has a lower rates and be and story on the pricing side effect roads be negative negatively impacted by give backers burst we will laugh at period in which apple pie less changes were not an effect and we have to state modestly increasing advert the a measurement had been from platform and regulatory changes becca we allowed to read a strong demand in the prior year and we're hearing from other times the macro economic challenges by contemplation and supply chain destruction are impacting advertising budgets by my based on current exchange rates respect foreign currency to be a headwind year we regret in addition as noted not previous calls we also continue to monitor developments regarding the viability of transatlantic data transfers and a potential impact on our european operations
spk_11: thirty now the extent outlook
spk_2: weeks that twenty twenty two total expenses to be in the race ninety ninety five billion dollars updated or prior outlook and ninety one ninety seven billion dollars or anticipated except grab is driven by investments in technical advice allen and infrastructure related costs we've expect twenty twenty two capital expenditures including principal payments on finance leases to be in the range and twenty nine thirty four billion dollars unchanged from my prior smith our plan capital expenditures are primarily driven by investment data centers servers network infrastructure in office abilities as we discussed previously it's ran for flap a significant increase in our i machine learning investments because put a number of areas across our family about well our reality less products and services may require more infrastructure past the the future the not require a staff of about the day and as a result are not a significant driver twenty five two apple expenditures
spk_11: of and attacks after any changes us tax laws we expect our two year twenty twenty two tax rates be similar to the for your twenty twenty one right
spk_2: definitely day we announced that are class a common stock will begin trading announced that under the cigarettes that no matter who the first thousand and twenty twenty the new figures in the lives of a rebranding from take up to meddle in closing twenty twenty one with a strong your business and an important year for the company as we a our corporate identity with our long term ambition to build the next generation of online social experiences were investing aggressively and twenty twenty two to support a product right now as we work to deliver new a good experiences from people and support businesses and creators who really and or services with that france but the not because the question
spk_0: we will now open the line for a question and answer session to ask a question press one followed by the number four on your touched on phone please pick up your headset before and your question to ensure clarity if you are streaming today's copies which your computer speakers and our first question is from the line of brian know like with of morgan stanley please glad
spk_13: thanks to my questions as to the first one on the of the real transition gave the talked about how you been other transition a the with mobile and stories that are new successfully navigate through is is there anything that that's unique are more challenging about the real transition that makes you think it could take potentially longer desert escape they'll the that products for this format as opposed to other formats in the past and the second one day when you start talk about the the headwinds around ad targeting and measurement becoming larger in the first quarter and twenty twenty two is there anything other than sort of year on year data cops there are you expecting other other or changes from a signal perspective and maybe help us understand any further changes expect to come on the signal loss perspective
spk_2: yeah thanks for i probably take both of us are yeah so one on on wheels and i think there's a lot of the the characteristic of real good makes it you don't quite similar to that transition that we've gotten three before the past we are focused on stories you don't we're really focused on consumer experience and and really getting short form video work effectively weinberg instagram and facebook and and we're already seeing that either you know that the biggest primer guys on instagram and it's primary quickly on paper so really encouraged by what we're seeing who who really focus on making the consumers right
spk_11: and over time we do think it's for at that will work in fact that we for advertising and be think experience the be for story will really lend itself well in the real former so your company's ability modified over time but right now there's no relatively few ads and story that started realising with you as a real today so it's definitely something different question bread month asian carp perspective is gonna is gonna be a headwind
spk_2: and on i was fourteen you know we we we thought the revenue impact with i was fourteen sorry i were to in general you queue for that was in line with our expectations and and similar to that you three had when but obviously we go into twenty twenty two were you laughing a period in which ah if you wanted you to those happens when i'm place and him if the year ago period so that stuff that makes for a top cop in the first half of the year and we believe the impact of iowa overall i had with our business is twenty twenty two is offshore of ten million dollars and pretty significant headwind for our business and you know we're seeing that impacts you don't is a number of articles ecommerce with an area where are we saw a medieval slow down and groping few for
spk_14: and similarly a we've seen other areas like getting to challenge but you know on ecommerce it's quite another sport the notable that google called now seems frank the that very thing or a call
spk_2: and so young given that we nobody commerce was want the most impacted particles from iowa
spk_11: restrictions it makes sense that those restrictions apply part of the explanation for the difference between what they were saying and what we were seeing
spk_15: and if you if you look at his job we believe those restrictions from apple or decided to wait it out browsers from the tracking pop
spk_2: apple requires for house
spk_11: and so you know what that means the search search and you don't could have access to borrow more third party data for measurement and optimization purposes and as a platform like ours
spk_16: so you know when it comes to evening data as you can think of it it the of this is is that it's not really apples to apples
spk_17: for us
spk_2: the and as a result you know we will be google search and business could have benefited relatives or services like our basic different set of restrictions from apple
spk_0: any you know didn't that apple computers six billion dollars a year from google search and the incentive clearly this for this policy discrepancy to continue
spk_18: our next question is from eric certain with a goldman sachs please go ahead thanks so much and maybe two questions of i can first following up on on brian's questions about real visit when we've gone through these transitions before you've talked a little bit about what you're seeing from an engagement standpoint about wheels and how levels of engagement compared to other forms of engagement from a consumer perspective on the property and what the differential my be in terms of loads or innings in terms of differential add pricing and how you think to to close that gap the really willing to able to give us on both engage with levels were pricing differential so we can think through what the transition scope might need to be and then cheryl on the last call i remember correctly you talked about
spk_2: out elements old as we move into que one in the first help some of the work around efforts that the team or were trying to implement would start to show some because he can you give us an update on where you stand internally on work arounds and broader advertiser community acceptance of some of the work workarounds on targeting and measurement as we move into the first half thank you trying to start with time with your first question on some overseeing on engaging jesus in short porn video all our version judge and you know a lot of what we're saying is that there is your people spending a lot a lot more time and image of my script up front that there's growing very quickly this is already the biggest contributor to engagement growth on instagram because one the base introduced them or same test positive injured on facebook to all already i'm going back to the last question wouldn't winning bidders crush of what you're doing factors your that well what would have similarities and differences church will be in the past the big similarity with that this is you're certainly not the first time you've gone through a major format evolution and you what these transitions to pull out and common from just hop mogul be tough to stories and to now the not a real fears in the beginning our our system and business or does to and for the to format two as the engagement to do things start to replace that some engagement of the open a creep the near term had when for for revenue but it it's not that part is is this point now is not that big of a concern for a of it makes them the stuff from iran north korea your terminal been long term are pretty optimistic about the fundamentalist i think it's actually a little bit different with real
spk_19: they will we see with story
spk_2: been in the past and with real i would say that the teams are executed quite well and approach is growing very very quickly the the somewhat unique here is that tick tock is to be as a competitor already and also continues to grow it quite a faster rate of obey
spk_20: the of a very large space
spk_2: adam oh that that you to the question of those up before around are we our own by those that for for around is breaking up in a big so that we it takes longer to get where we want on as it is that you were compelled to extremely quickly that's it we also have a competitor that is that is compelled to get a pretty quick route to a roll back the question real dogs of extreme engaging i think overall engagement will grow and a part of this
spk_11: as an arm and that's what we're optimistic about future but there's a lot of work to do here
spk_6: and then surely going to take the of the question of the mitigation from yeah so when we talked about mitigation with said there are two key challenges from the iowa changes targeting and measuring performance i'm targeting it's very much a multiyear development journey to rebuild our ads optimization system to drive performance while we're using less data and as part of the suffered more investing in automation to enable enable advertisers to leverage machine learning to find the right audience with last effort and reduce reliance on targeting the that's going to be a longer term effort on measurement the rick superiors with and measurement which were impacted as results apple pie less changes and i talked about this on a call last quarter as he referenced the first as the under reporting gap and happening here is that advertisers worried either not getting our allies are actually getting on this part he'd made real progress on that under reporting job his last quarter and we believe will continue to make more progress in the years ahead
spk_1: as you want to caution that it's easier for trusted with march campaigns and harder with small campaign which means that certain picked longer and it also means that apple's changes continue to hurt small businesses more
spk_6: the second area underneath the measurement challenge is really are really data delays a part of the i was changes we and many other abhorrent have formed we receive less granular conversion data on a daily basis and would advertise your shared with us
spk_0: that it makes real time decision making especially difficult the map for to really important during the holiday periods where people are often spending a lot and really monitoring their as and adjusting fans you know not even on a daily basis and often on an hourly basis and that was one of the challenges we face during the holiday quarter
spk_21: or next question is from just and posts with bank of america please go ahead great thank you are a couple mark or just got a big picture basis you do you're adding a lotta shorts porn video and maybe the content shifting from content from your friends to to general content what it what does that mean for facebook i'm sure you've thought about a lot of that but what what how do you think about the evolution of a facebook as a platform and and then for day
spk_2: as as you think about the measurement and targeting challenges when we get after september and october a should we be effectively lapping the the the issues or it is are the reason to think it it could actually get worse of in the second half disfigured about revenue growth kind of week's salary thank you i got it first on so perfect but i think you're coming from your friends i can be important part of experience and so disgusting stuff that you find with friends whether it's in a group or computers or other public content or real or door you are different types of like that but i think overall you're right for be the balance of her that people see him does shifting a little bit more towards what stop it didn't coming from their friends tom would you make got to their friends as bad but is it kind of shifting towards more public content or you the same time we're seeing this trend where are you can do as your your jj behavior on on a lot of stuff is just you know that pattern may be right with you but i'm in a lot of people now are are taking alone accounts and that they have previously shares in a field and sending it to friends over overtax you know whether it's one of want to or through group chat and this is one the reasons why pulled out community messaging as what a major priority for us if if you look at your all constellation of services a lot of beat person all sharing the just sort of shifting towards messaging and a lot of the outdoorsy infusions it is did basically the content consumption the and an open and a lot of just really highly engaging content that that formed the basis for conversations whether it's in charge or in college friends in a speed up
spk_12: that that some you have that type of creative work as a lot more overseeing across the that's why the that facebook or instagram
spk_2: but hey he just didn't stay on that on the second part of your question if it's really about sort of what's the landscape of had been look like as it relates to charging and measurement and there are i think what we're saying you can't do things got we got incremental has been coming from things like i was fifteen i wish to provide additional certain targeting a measurement has been for those that are far less significant than than the changes made with i was fourteen point five which really starting to have an impact or seriously amateurs as in the second half of last year so i think that laughing effects can be very pronounced in the first topic here are laughing periods that you know didn't have that impacts that will get you to the impact from from the laughing over consumed affects more had wins as a place to like iowa city and also ah you know further the regulatory had when they restrict the use of data for tiny purposes and reasons like europe so moved to be had i think we're working against as
spk_0: know the biggest laughing at that will be in the first half a year we didn't have the big island or team and when in the same period last year
spk_22: our next question is from a dog and met with the jp morgan is go ahead they thirteen a question mark you talk by score think about how real to become better integrated into both facebook and instagram to talk about where you are in that process and clearly we've seen some gestures there's more in the product pipelines and could that deeper integration potentially have even greater drag on revenue going forward and then they just curious
spk_2: if you're willing to comment on a reality web spend were were last number in twenty two i taught her first piece of the i think we're probably a little further along than just the beginning but i say we're closer to the beginning them the end of the trend on on unreal you know there's as a big flywheel here were more creators share more content and on because we have a mix of content is a thief i'm from all different types really at a show real to recommended we we feel like there's high quality content of shows as there's more high quality content to show more that there are certainly will be young a lot more difficult for him
spk_23: it is going to grow a lot on going forward we believe
spk_2: and i'm endangered been done on purpose platform so yeah and i think that we we probably will see it in that jazz for forecasting i think data software your you know the relative participation rate of real for the next i know for whatever the foreseeable future is ah lower than feed as as we can display some about the death but your time we think that there's a potential for a tremendous amount of overall engagement growth and we think that been a steady state over time we think that will shoot monetize closer to feed or stores you found other no longer form video so i'm saying we're optimistic about that the that he do we think it's definitely the right things will be interesting to push as hard as to grow real as quickly as possible and not hold on the brakes at all
spk_19: even though it may create some some near term
spk_2: just thought growth and we would have wanted that that's kind of us picture i see another on as if not i think that that's exactly right that's what it's kind of factors into the guys with providing specifically from to line up and then found on the fence outlet were not breaking out expenses by
spk_11: you'll by segments but i had private projects and color of your your fucking accelerating had tell read and twenty point you to be the biggest contributor other expense friends and that's largely intact and product role to support the a product priority the mark laid out we'll finish messaging commerce and privacy day i met worse than you know the
spk_0: a number of those investment priorities map to our family about a segment and we expect family about to continue to drive the majority of except suppress the twenty twenty two and those do expected that reality lab operating loss to increasingly nuclear twenty two and that's incorporated into our outlook
spk_24: our next question is from the line that mark mahaney with evercore i aside please go ahead
spk_25: mark mr mahaney or line is open sir one more time okay got it or i will ask two questions was first on e s t
spk_11: could you just thirty years in a series of steps that have been taken over do seeing the ability to do political targeting the introduction of the take breaks feature with an instagram maybe a few other things that in arguably have been put out there to kind of address some of the is concerns where do you think you are in terms of addressing some of those that and we've heard in the
spk_2: investment community and then i'm dave i think you mentioned this ten billion dollar headwind and i think that was related to somebody some of these policy change apple policy changes could you just give a little colors to how you came up with that number thanks a lot jamar done that on the head with were just estimating what we think is the overall impact on the cumulative iowa
spk_11: changes to our were twenty forty two or twenty twenty two revenue forecast in sell if you can aggregate to change that we're seeing across i that that that sort of the order of magnitude we can be precise on this is met you know we got ranges on the impact you are going to be think it said he has a substantial you know this is better
spk_0: edwin to work on our way through and and obviously we're working harder to mitigate the impact and continue to make as relevant and effective for ah for users i don't have anything specific going on
spk_26: on the chief from doesn't sell a product can't comment on that can be involved with you line on that our next question is from you said swallow with to us securities please go ahead great thing or two questions as well i'm marcie stated your goal of refocusing on growth on arm of younger audiences on the last earnings call and i think even signaled fact that he could mean may be less focus on other constituency i i know he may be an early by any color maybe to show or on growth on users and engagement by may be each group on groups and then
spk_2: probably not a question for you to i'm curious about one you think we can start seeing the kind of the machine of apps like instagram with a art vr and the and or up a brilliant her and or up really of these of these apps and that's something where were you think we're gonna see gradually evolve or something that gets kind of open only wants to my first sufficiently built up whatever that is thanks take the first time picture of what i'm fine fine on user reviews of the you don't i think you know what we said that you know overall user group is we're here we're certainly an impact and strong competition particularly his younger audiences so that's true and we're kind of that he that globally if you could you will be kind of the overall user growth landscape for the fourth quarter you know we're seeing you know any you and issue in him us and canada
spk_11: sort of your bounce around and that sort of expected dedicated get penetration and man you know if you look at the rest of the rest of world you will feel some some headwinds they're kind been a little bit too and were in areas like gum india what we thought data plan
spk_27: pricing increase be slower growth there so that's another kind of answers
spk_2: unique elements and of the quarter on that phone current and in terms of what are some aspects of the number showing up at again i talked about avatars and in my young my remarks at the beginning and and how to were we're making a few now increasingly of expressive and eventually and shows and demos run for a realistic avatars of yourself that you can shop and all the to pronounce them your avatar can shove cross facebook and instagram and to messengers as quite a few up found that further than i think i'll to committed before about our goal for twenty twenty two to make it to that arise and i worked not just in an immersive vr but onto the screams as well so he could potentially jump into those kind of world's from and facebook or instagram words are different out as well stuff
spk_0: oh you're seeing some of that stuff
spk_2: will it deserted there's to the they will come on over the course of the fear of course the ability to message across that was something that we've been working on her while you can or to do that across messenger and instagram and there's more there that on the more allowed over time as well so i think to get that you are going to see this stuff works in the say the family
spk_22: our next question is from john that blackledge with cowan please go ahead
spk_2: agreed thanks to questions may be first one for mark how's reveals differentiated vs take tock you tube shorts and other by short form video services and one for cheryl any further color and how sm bees are are changing at the end of a budget since i was changes and is it falling adoption of new at and be ah advertisers are on facebook you sure so i can sort of real of you're one of the things that i think we've seen defender are some fundamental format in social media like fields and stories and now i think this real short on video format that we didn't the context of a different network or community the same format will take on different characteristics to have different temple the kind of our discussions the might have it appeared on twitter or your interests are different from what you doing facebook or your or or instagram even given a relatively similar format starting to some degree even if it if the creator chooses to reach share there are constant across a number of different discussions with your friends across across the different services based on is there and the there's the social dynamic where were friends and different communities craziest as well so you'd be somewhat different real across facebook and instagram and it's a different set of rustic talk to google we think is that this is all very incredibly quickly so it's hard to know exactly where does is gonna settle in the end i'm but i input we just think the appetite that people have he didn't do business long term trend i commented on number of times where your time that they started running the company and the city of eighteen years this we did ah you know basically we've gone from ah your text been the primary way that people share and on and consume content online at the beginning of the early two thousand and two that we got the cameras are phones and your photos became the primary thing now that your mobile networks are are starting to get that doesn't really good the video is really become the primary thing and it is a lot more natural and engaging and this is partially by the way why i think that an even more immersive format around virtual reality and and and augmented reality is going to be v d kind of next step after video why we're so invested their but but definitely what was seen with short from videos is the next step
spk_0: from be kind of visual field that we have
spk_28: any amount of engagement and content the people to share and interact with and we're taking in the centre gets were friends of messaging are committee and mine or just having fun watching it themselves the some noise in degenerate was the that more spend a lot more time in this time
spk_6: the dad that will be the movie we see from from master so far nothing to reflect and it's that telegraph like kicked off the time so there's a lot more to go here we think we will as competitors across the industry but your as we speak with down between other formats to it'll feel different depending on the context in which is implemented and the content from from your friends
spk_1: our next question his family by mom sleep with arabia
spk_6: at all added
spk_7: and for the anthem be so it's a good question because you know as we said the i was changing definitely advertisers across the board but your much harder for smb the packers see me on the measurement gap which i talked about before we've made more progress at larger client and we have with that and be and it's also the case that
spk_0: hi that are more important for us and been you know and smb really needs to buy a very small targeted audience that they're looking for and a larger the business the more you're able to to personalize the ad last were definitely seen that this has more of an impact for smb it would you feel and
spk_29: the long run that we believe we have strong benefits for smb isn't using our as system we are going to continue to work on these measurement that can continue to make sure as and you can use that we're also working hard on has some be is adopting some of our commercial and some of our other solutions like business messaging and seeing seen some success there you are right
spk_22: that's just or mean the challenge
spk_29: and our next question is from my the one thing with you bs and can they go ahead thanks for taking the question or maybe one for mark and one for cheryl
spk_2: mark if we look at short form video you had you feel right now that the state of your content and your matching algorithm relative to where you wanted to be and do you have the content you need he getting in front of the right users or is or their lot of room to improve this and drive more engagement and then cheryl
spk_30: where exactly are you in terms of rebuilding the our product and what are the key things you need to see to to kind of roll out or already customers either need to the doctor do on their and to really start to see improvement to well as and and a return of that budget like is other certain features like cappy that you need to
spk_2: get adopted by their tools in the pipeline is it the other things that need to do on their and what when we need to seated said to to see that come back i think the real question so we you see a huge amount of potential ahead but you know i think sometimes when when we say that that there's more work with posters the beginning with that means that we still have a lot of tough fundamental questions turn it over much in order to make progress yet we're we're going with this product will see if there is very clear product market fit it is growing incredibly quickly yeah
spk_31: we we face a competitor and tick tock that that is lot bigger soon will take a wild compound and and catch up there but but fundamentally on do we think that there's that i just had a lot of potential for to continue growing so your questions we have the content of
spk_2: you know the flywheel south you know the better tools we can build for creators and the betterment of the they with not for them which tends to be an advantage that we out over a rather competitors is how effective our motivation and as systems are said you wanted it to the bigger just the mortal attract more creators that and it'll it'll kind of build on itself and we we think that where were you know a war
spk_32: we're signify will really kick started growing if you keep them from pounding of the race since growing out of this is going to grow extremely quick over the over the next year
spk_6: the medicine and potentially be on that but yeah i think that's kind of the best summary like and different where we are clear product market fed growing quickly long way to go to catch up to be that the biggest emitter know into space but and i think the pieces are in place in the focus of certainly there to disappoint her to relate to rather go after that is to that as as it's growing it is a bit for that you know coming quarters combat i did have some a lower rate which is perfect and the guidance as a detail by you don't get to this clearly the right strategy for us to push out of the what people want they baby enjoy the product we're going out and were to roll it out and as as as quickly as is that
spk_7: as well we
spk_6: and the question of what we need to see to rebuild and products and continue to grow return on and spend in the short run as a track that we're working on measurements were rolling out new ways to help businesses continue to measure campaign
spk_1: ah using apple as a ad network a pie and matters aggregated events measure many version mile and we have specific products that people can adopt that hopper over the longer term we need to develop privacy enhancing check to help minimize the amount of personal information we learn and we used more as
spk_0: aggregate use more anonymised data plus still allowing us to show relevant as an abstinence is as time but one thing i do want to point out is there are also a lot of things that small businesses and large businesses can do to take advantage of the many ads targeting and measurement towards the have to what we have seen a impact for me
spk_33: changes we also didn't start from a play for one hundred percent of our you know millions and millions of advertisers are using the tools that are available to while we continue to get those that were all the way on the adoption curve to you know learn and adapt these changes there are also advertisers not know that aren't giving even the basic things yet that way we can continue to work on and improve their performance we still believe there's a lot of performance improvement less than the system print operator we have time for one last question very good the our last question will be from the line of raw center with barclays please go ahead officers who is a man
spk_2: i go there are of course you on the family of apps segment margin but it doesn't come up yet but it was down but six point year on year and i know that you would kind of for kept at the expense or that you gave me an ad for twenty one but i think that down is coming years of
spk_11: bit of a surprise
spk_2: for some folks who thought your add to this said fairly stable margins out anymore color on what's driving that of the just the revenue headwinds that you're experiencing or any other lumpy items and then related to that as he built out short form video cause you're thinking evolve around paying rev cheryl
spk_11: like you tube does or other things like that are to catalyze the shift any thoughts on that yeah right
spk_12: i think in terms terms of lumpy i had any you will initiate up a lot you know a pretty substantial amount in you tube for so appointed as related expenses that and to be
spk_2: kennedy lumpy i'm sure that there was that a factor there i think in general as it relates to family of ass and in in margin don't come back and commentary carry that i made on on investment that were making him and family that you don't be an area where we're investing heavily in in twenty five that's the to that mark outlining including real you don't messaging commerce and and there's a big investment will maybe on a kappa side is primarily geared towards you know a i have a sheet learning more
spk_1: you don't for the county that stiffness so
spk_0: segment so there's a lot of investment that will make their own
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