Meta Platforms, Inc.

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Facebook first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, please press star, then the number one on your telephone keypad. This call will be recorded. Thank you very much. Ms. Deborah Crawford, Facebook's Vice President of Investor Relations, you may begin.

Thank you. Good afternoon and welcome to Facebook's first quarter 2020 earnings conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO, Sheryl Sandberg, COO, and Dave Wehner, CFO. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's press release and in our annual report on Form 10-K filed with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The press release and an accompanying investor presentation are available on our website at investor.fb.com. Finally, we hope that everyone listening today is staying safe. The vast majority of us at Facebook are working productively from home, and everyone on this call this afternoon has dialed in remotely. And now I'd like to turn the call over to Mark.

All right. Thanks, everyone, for joining us today. Before we get started, I also just want to say that I know that this is a very hard time for a lot of people. I know a lot of you are calling in from New York, where this has been particularly tough, although almost everyone has been affected by what's going on in some way. So I just want to start by acknowledging that and taking a moment to thank everyone working on the front lines to help all of us get through this. There's a lot of uncertainty now about the world and what it will look like over the coming months. And Cheryl and Dave are going to give some more context on what that means for our business. The impact on our business has been significant. And I remain very concerned that this health emergency and therefore the economic fallout will last longer than people are currently anticipating. And while there are massive societal costs from the current shelter-in-place restrictions, I worry that reopening certain places too quickly before infection rates have been reduced to very minimal levels will almost guarantee future outbreaks and worse longer-term health and economic outcomes. So with that said, I want to use this time today to discuss how we're responding to COVID, what we're seeing across our services, and some reflections on how we plan to run the company going forward. So our response has been focused on three areas, helping people stay connected while we're all apart, assisting the public health response, and working on the economic recovery, especially for small businesses. And I'll start with how we're assisting the public health response. The first step here is connecting people with authoritative health information. And we built a COVID-19 information center with authoritative information from health officials and governments and messages encouraging people to stay home that are coming from public figures they trust. And we put this COVID-19 information center at the top of everyone's Facebook app. And so far we've directed more than 2 billion people to it. Equally important is also limiting the spread of misinformation. We don't allow content that puts people at imminent risk of physical harm. So when people share hoaxes, like that inhaling water cures COVID, which is both false and will be physically harmful if anyone does that, we take that down. For other types of misinformation, We partner with independent fact-checkers who have marked more than 4,000 pieces of content related to COVID as false, which has resulted in more than 40 million warning labels being seen across our services. And we know that these work because 95% of the time when someone sees a warning label, they don't click through to view that content. Now, beyond helping people broadly access high-quality information, we're also helping focused on helping governments and health authorities get better data in a privacy protective way to inform key policy decisions that they need to make as well. So we partnered with Carnegie Mellon to run a widespread symptom survey on Facebook, and we're using their findings to produce daily county by county maps of the symptoms that people are experiencing across the country and soon globally as well. And since people experiencing symptoms is a precursor to them going to the hospital or getting more seriously ill, this tool can help local governments and health officials plan how to allocate scarce resources like PPE and ventilators, as well as determine when it's safe to start reopening an area or when an area will need to have tighter shelter orders if symptoms reemerge. And just this morning, we announced that we're working to connect these symptom surveys to ground truth infection rate data from large serology and PCR studies that are funded separately by the Chan Zuckerberg Initiative in order to more accurately determine the true infection and exposure levels globally on a local region basis as well. So, you know, this is work that we're uniquely positioned to do because Facebook is a global community and people use their authentic identities on our service. So that means that we can make sure that the data is meaningful. But we're very focused on doing this in ways that we know are going to be helpful to the health response and that protect people's privacy and human rights, which is why we've primarily focused on how aggregate data can help. Now, outside of Facebook, Priscilla and my work at the Chan Zuckerberg Initiative, alongside leading experts in science and health, continues to inform my views on the best ways for us to assist in this health response and also what we should expect going forward with this disease. All right, so next I want to discuss how we're helping people stay connected with the people they care about, even while we can't be together during this period. So this is our core mission, and I'm proud of how we've supported people around the world during this time. We know that people especially rely on social apps in times of crisis and in times when we can't be together in person. And right now we are experiencing both of those all around the world at the same time. So we're seeing major increases in use of our services. For the first time ever, There are now more than 3 billion people actively using Facebook, Instagram, WhatsApp, or Messenger each month. That includes 2.6 billion people using Facebook alone, and more than 2.3 billion people using at least one of our services every day. In many of the places that have been hardest hit by the virus, messaging volume has increased more than 50%, and voice and video calling have more than doubled across Messenger and WhatsApp. In Italy, for example, we've seen up to 70% more time spent across our apps. Instagram and Facebook Live views doubled in one week. And we've also seen time in group video calling increase by more than 1,000% over March. So making sure that our services are stable and reliable during this period is a top priority. We're monitoring usage closely and adding capacity in our data centers where we can. The investments we've made in shared infrastructure that power all of our different services over the years have helped us manage through this, but it has been a challenge while all our teams have been working remotely. Now, I'm sharing these numbers to give you a sense of the surge in people relying on these services that we're seeing. Obviously, I wish the circumstances were different. And I don't expect that this exact spike in usage will sustain over a longer period of time. But in some areas, I think we are seeing an acceleration in pre-existing long-term trends, like the dramatic increase in online private social communication that is likely to continue. And if nothing else, this usage shows that for a lot of people around the world, these services are part of the social infrastructure that brings us together. Now, even before COVID-19, our product strategy is already focused on building out private social platforms and enabling online commerce. So it's well aligned with what people need now. Last week, we announced a number of new product improvements around video presence, which has emerged as an especially critical part of the private social platform during this time. Our view is that video presence includes three categories, video calling, video rooms, and live video. And we plan to lead and offer the best services for social uses in each of those different categories. Now, video calling is when you actually ring a person's phone or computer, and it's by far the most used type of video chat. Between WhatsApp and Messenger, there are more than 700 million daily actives participating in calls. We're doubling the size of WhatsApp video calls from four to eight. And this is important because WhatsApp is the most popular end-to-end encrypted calling service. So if you care about privacy and encryption and you want to be able to reach anyone, you're probably using WhatsApp. And now you're going to be able to get your whole family or a larger group together on calls. For video rooms, we announced a completely new product called Messenger Rooms. And the idea here is that you can create a room for any activity or event you want, send a link to your friends or have them discover your room on Facebook, and then they can just drop in and hang out for a bit. And this is different from any other video presence experience because it is serendipitous. You don't have to plan out an event and schedule in advance if you don't want to. It can be much more spontaneous and fun. And I've really enjoyed getting to use this as we've been building out Messenger rooms internally. And I'm looking forward to getting it in more people's hands around the world soon. Live video is also particularly important right now. People used to primarily live stream physical events, but since almost no one is planning physical events right now, live streaming has become the primary venue for many events, whether that's the Pope's weekly mass on Facebook Live or DJs hosting dance parties on Instagram. Every day, more than 800 million daily actives are engaging with live streams, across workout classes, concerts, and more. And we pivoted the Facebook events team to help people create online events, including enabling people and small businesses to charge people to join their events in order to support small businesses that rely on in-person services before. The last area of our response that I want to discuss is how we're helping with the economic recovery, especially for small businesses. Cheryl will talk about this more, But with so many businesses forced to close their physical storefronts, more are looking to build their digital presences. And those which already invested in their digital presences are increasingly viewing them as their primary storefronts. So we're working on a number of ways to deepen this experience, helping people buy items and services directly within our apps. And we're going to have a lot more to share on this soon. Overall, though, our business depends on the success of small businesses. So this is a moment where we feel that we're well positioned to be champions for small businesses' interests and supporters of important infrastructure that they're going to need in order to move online. One aspect of online commerce that I want to mention is the partnership that we just announced with Geo Platforms in India. The largest Facebook and WhatsApp communities in the world are in India, and we think that there's an especially important opportunity to serve small businesses and enable commerce there over the long term. By bringing together Geomart, which is Jio's small business initiative to connect millions of shops across India with WhatsApp, we think that we're going to be able to create a much better shopping and commerce experience. And there's a lot more that we can do here, and I'm looking forward to making progress with the team at Jio. Now, beyond our immediate plans to help respond to the pandemic, I also want to share some reflections on how we're planning to run the company during this period. I have always believed that in times of economic downturn, the right thing to do is to keep investing and building the future. And I believe this for a few reasons. First, when the world changes quickly, people have new needs. And that means that there are more new things to build. Second, since many big companies will pull back on their investments, there are a lot of things that wouldn't otherwise get built, but that we can help deliver. And third, I believe that there's a sense of responsibility and duty to invest in the economic recovery and to provide stability for your community and stakeholders if you have the ability to do so. And we're in a fortunate position to be able to do this. Along with our strong financial position and the important social value our services provide, we're planning to hire at least 10,000 more people in product and engineering roles this year so we can continue building and making progress. Now that said, with advertisers spending less and our business performance below expectations, we do plan to moderate some areas of our expense growth, especially in business functions. We accept that our profit margins will decrease this year as we continue investing. And Dave will share more on our financial outlook in a few minutes. But this economic pullback has certainly reinforced for me the importance of maintaining high margins. Our financial position has allowed us to continue investing and building products and making investments like our partnership with GEO even when the underlying economic conditions are challenging. Now, as always, I am grateful to everyone on this journey with us, and that's especially true during this period. As our services play an especially important role right now in helping people stay connected and assisting the public health response and working on the economic recovery, I really want to thank all of our employees who are working hard to deliver these services and everyone who has believed in us and supported our company over the years to help us get to the point where we can deliver these services for people around the world. So thank you. And with that, here is Cheryl to talk more about our business.