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Facebook, Inc. (FB)

Q3 2012 Earnings Call

October 23, 2012 05:00 pm ET


Deborah Crawford – Director of Investor Relations

Mark Zuckerberg – Chairman, Chief Executive Officer

Sheryl Sandberg – Chief Operating Officer, Director

David Ebersman – Chief Financial Officer


Justin Post – Bank of America Merrill Lynch

Gene Munster – Piper Jaffray

Youssef Squali – Cantor Fitzgerald

Heather Bellini – Goldman Sachs

Scott Devitt – Morgan Stanley

Ross Sandler – Deutsche Bank

Mark Mahaney – Citigroup

Jordan Rohan – Stifel Nicolaus

Douglas Anmuth – JP Morgan

Brian Wieser – Pivotal Research

Daniel Ernst – Hudson Square Research

Rory F. Maher – Capstone Investments

Anthony DiClemente – Barclays



Good afternoon. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Facebook third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. (Operator Instructions)

Thank you very much. Ms. Deborah Crawford, Director of Investor Relations, you may begin.

Deborah Crawford

Thank you. Good afternoon, and welcome to Facebook’s third quarter earnings conference call. Joining me today to talk about our third quarter results are Mark Zuckerberg, CEO; Sheryl Sandberg COO; and David Ebersman, CFO.

Before we get started, I’d like to take this opportunity to remind you that during the course of this call, we will make forward-looking statements regarding the future events and the future financial performance of the company. We caution you to consider the important risk factors that could cause actual results to differ materially from those in the forward-looking statements in the press release and this conference call. These risk factors are described in our press release and are more fully detailed under the caption Risk Factors in our quarterly report on our Form 10-Q filed with the SEC on July 31, 2012. In addition, please note that the date of this conference call is October 23, 2012, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these statements as a result of the new information or future events.

During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today’s earnings press release.

This call is being broadcast on the Internet and is available on the Investor Relations section of the Facebook website at investor.fb.com. A rebroadcast of the call will be available after 6 p.m. Pacific time today. The earnings press release and an accompanying investor presentation are also available on our website. After management’s remarks, we will host a Q&A session.

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

Mark Zuckerberg

Thanks, everyone, for joining us. I’m going to use this time today the same way I will use it on most of these calls, to talk about our vision and strategy.

Our mission is to make the world more open and connected. We do this by building services that give people the power to share whatever they want and stay connected to whomever they want, no matter where they are. For at least the next few years, there are three pillars to our strategy. First, we want to build the best and most ubiquitous mobile product. Second, we want to build a platform so that every new app that gets created can be social and enable people to share. And, third, we want to build a strong monetization and economic engine to build Facebook into one of the world’s most valuable companies.

I’m going to give an update on where we are in building each of these pillars. Let’s start with mobile. I think our opportunity on mobile is the most misunderstood aspect of Facebook today. Most people underestimate how fundamentally good the trend towards mobile can be for Facebook. This is because there are three trends that are kind of compounding together. First, mobile will give us the opportunity to reach way more people than desktop. Second, people on mobile use Facebook more often. And, third, long term, I think we’re going to monetize better per amount of time spent on mobile than desktop. All of these combined together make mobile a much larger opportunity for us than I think most people realize.

Now let’s go through each of these points. First, we should be able to reach more people on mobile than desktop. To us, this isn’t really controversial. In the coming years, there could be billions more smartphones than desktop computers. We already reach more than a billion people worldwide, including 600 million on mobile, growing quickly and up from 376 million last year. Facebook is the most widely downloaded app on basically every smartphone platform, so we’re well positioned to reach the growing smartphone population.

Second, people use our mobile app to visit Facebook more frequently. Somebody who uses only our desktop product has only a 40% likelihood of using Facebook on a given day, but someone who uses mobile has a 70% likelihood of using Facebook on a given day. This thought is surprising to many people and very good news for our opportunity on mobile. Another thing I’ve found encouraging is that we’ve shown that we can really increase mobile engagement.

Over the past year, a lot of people gave us feedback that our mobile apps were just too slow. So we took the time to rewrite them to make them faster. And since we released the new faster iOS app, we’ve seen an 80% increase in iOS News Feed loads and more than a 20% increase in iOS engagement in terms of likes and comments. We haven’t released the rewritten Android app yet, but we have many more updates on the way. So people on mobile are already more engaged than people on desktop, and there’s a lot more we can do to help drive deeper mobile engagement as well.

Read the rest of this transcript for free on seekingalpha.com