Q3 2024 Meta Platforms Inc Earnings Call

As Christa and I will be your conference operator today at this time I would like to welcome everyone to the meta 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. If you'd like to ask a question. Please press star one on your telephone keypad to withdraw your question Press Star One we ask that you limit yourself to one question. This call will be recorded.

Speaker Change: Thank you very much Kenneth Doral Mendez director of Investor Relations you may begin.

Speaker Change: Thank you good afternoon, and welcome to meta platforms third quarter 2024 earnings Conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO and Susan Li CFO.

Speaker Change: 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.

Speaker Change: Factors that could cause these results to differ materially are set forth in todays earnings press release and in our quarterly report on Form 10-Q filed with the SEC.

Speaker Change: 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.

Speaker Change: During this call we will present, both GAAP and certain non-GAAP financial measures.

Speaker Change: A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, the earnings press release, and an accompanying investor presentation are available on our website at Investor Dot F. B Dot com and now I'd like to turn the call over to Mark.

Mark Zuckerberg: Alright, Thanks, Ken this was a good quarter with strong product and business momentum and with parts of our long term vision around AI and the future of computing coming into sharper focus we estimate that there are now more than $3 2 billion people using at least one of our apps each day and we're seeing rapid adoption of meta AI.

Mark Zuckerberg: And llama, which is quickly becoming a standard across the industry.

Mark Zuckerberg: So let's start with some highlights from the ops for Whatsapp. The U S remains one of our fastest growing countries and we just passed a milestone of 2 billion calls made globally every day on Facebook, we continue to see positive trends with young adults, especially in the U S on Instagram global growth remains strong.

Mark Zuckerberg: We also launched teen accounts this quarter, which add built in protections that limit who teams our messaging and what content they can see.

Mark Zuckerberg: Threads. The community now has almost 275 million monthly actives, that's been growing more than a million sign ups per day engagement is growing too. So we continue to be on track towards this becoming our next major social app.

Mark Zuckerberg: We're making a lot of progress with our AI efforts too and we're seeing a I have a positive impact on nearly all aspects of our work from our core business engagement and monetization to our long term roadmaps for new services and computing platforms.

Mark Zuckerberg: And I think that was partially comes from.

Mark Zuckerberg: From having a vision and roadmap that is aligned with the direction that technology is heading but even more importantly from our team is doing some really excellent work on execution on so many fronts.

Mark Zuckerberg: Meta AI now has more than 500 million monthly actives improve.

Mark Zuckerberg: Improvements to our AI driven feed and video recommendations have led to an 8% increase.

Mark Zuckerberg: And time spent on Facebook and a 6% increase on Instagram this year alone.

Mark Zuckerberg: More than a million advertisers used our gen AI tools to create more than 15 million ads in the last month, and we estimate that businesses using image generation are seeing a 7% increase in conversions and we believe that theres a lot more upside here.

We are also seeing great momentum with llama llama token usage has grown exponentially this year and the more widely that Lama gets adopted and becomes the industry standard the more that the improvements to its quality inefficiency will flow back to all of our products.

Mark Zuckerberg: This quarter, we released the Lama three point too.

Mark Zuckerberg: Including the leading small models that run on device.

Mark Zuckerberg: And open source multimodal models.

We are working with enterprises to make it easier to use and now we're also working with the public sector to adopt lama across the U S government.

Mark Zuckerberg: <unk> three models.

Mark Zuckerberg: <unk> have been something of an inflection point in the industry, but.

Mark Zuckerberg: I'm, even more excited about Lama for which is now well into its development. We're training the Lama for models on a cluster that is bigger than 100000, H, one hundreds or a bigger than anything that I've seen reported for what others are doing.

I expect that the smaller Lama for models will be ready first and they'll be ready.

Mark Zuckerberg: We expect sometime early next year, but I think that there can be a big deal on several fronts new modalities capabilities.

Mark Zuckerberg: Stronger reasoning and much faster.

Mark Zuckerberg: It seems pretty clear to me that open source will be the most cost effective.

Mark Zuckerberg: Customizable trustworthy performance and easiest to use option that is available to developers and I am proud that Lama is leading the way on this.

Mark Zuckerberg: All right now.

Mark Zuckerberg: It's the time of the year at meta now when we plan our budget for the next year and that's still in progress, but I wanted to share a few things that have stood out to me as we've gone through this process. So far first that it's clear that there are a lot of new opportunities to use our new AI advances to accelerate our core business that should have.

Mark Zuckerberg: Strong ROI over the next few years.

Mark Zuckerberg: So I think we should invest more there and second.

Our AI investments continue to require serious infrastructure and I expect to continue investing significantly there too we.

Mark Zuckerberg: We haven't decided on a final budget yet, but those are some of the directional trends that I'm seeing.

Mark Zuckerberg: Now moving on.

Mark Zuckerberg: This quarter. We also had several milestones around reality labs and the integration of AI in Wearables, Our Ray ban meta glasses are the Prime example, here, they're great booking glasses that let you take photos and videos listen to music and take calls, but what makes them really special is the meta AI integral.

Mark Zuckerberg: Asian.

Mark Zuckerberg: With our new updates it'll be able to not only answered your questions throughout the day, but also help you remember things are giving you.

Mark Zuckerberg: Justin's as Youre doing things using real time, multimodal II and even translate other languages are right in your ear for you.

Mark Zuckerberg: I continue to think that glasses are the ideal form factor for AI, because you can let your E. I see what you see here, what you hear and talk to you.

Mark Zuckerberg: Demand for the glasses continues to be very strong.

Mark Zuckerberg: Nuclear edition that we released it connect sold out almost immediately and it's been trading online for over a thousand dollars.

Mark Zuckerberg: Deepened our partnership with Essilor luxottica to build future generations of smart eyewear that deliver both cutting edge technology and style.

Mark Zuckerberg: At connect we also showed a Ryan our first full holographic AR glasses are we've been working on this one for about a decade and it gives you a sense of where this is all going we're not too far off from being able to deliver great looking glasses, they'll let you seamlessly blend the physical and digital worlds because you can fuel present with anyone no matter.

Mark Zuckerberg: Where they are and.

Mark Zuckerberg: And we're starting to see the next computing platform come together and it's pretty exciting.

Alright.

We also released our newest mixed reality headset quest three S. It brings the best capabilities of Quest three high quality color pass through a new chipset and more at the much more accessible price point of $300. Our reviews are great. So far and I'm looking forward to seeing how well. It does this holiday season as more people get their hands on it.

Mark Zuckerberg: So overall this has been a good quarter I'm pretty amped about all the work that we're doing right. Now are this may be the most dynamic moment that I've seen in our industry and I am focused on making sure that we build some awesome things and make the most of the opportunities ahead and if we do this well then the potential for meta.

Passes, but let you seamlessly blend the physical and digital worlds. So you can fuel present with anyone no matter where they are.

Mark Zuckerberg: Everyone building with us will be massive as always I'm grateful for everyone, who was on this journey with us our teams our partners and our investors and now here's Susan.

And we're starting to see the next computing platform come together and it's pretty exciting.

Susan Li: Thanks, Mark and good afternoon, everyone let's.

Alright, we also released our newest mixed reality headset quest three S. It brings the best capabilities of Quest three high quality color pass through a new chipset and more at the much more accessible price point of $300. Our reviews are great. So far and I'm looking forward to seeing how well. It does this holiday season as more people get their hands.

Susan Li: Let's begin with our consolidated results.

Susan Li: All comparisons are on a year over year basis, unless otherwise noted.

Susan Li: Q3, total revenue was $40 $6 billion up 19% or 20% on a constant currency basis.

Susan Li: Q3, total expenses were $23 $2 billion up 14% compared to last year.

On it.

So overall this has been a good quarter I'm pretty amped about all the work that we're doing right. Now are this may be the most dynamic moment that I've seen in our industry and I am focused on making sure that we build some awesome things and make the most of the opportunities ahead and if we do this well then the potential for meta.

Susan Li: In terms of the specific line items cost of revenue increased 19% driven primarily by higher infrastructure costs.

Susan Li: R&D increased 21%, mostly driven by higher head count related expenses and infrastructure costs.

Everyone building with us will be massive as always I'm grateful for everyone who is on this journey with us our teams our partners and our investors and now here's Susan.

Susan Li: Marketing and sales decreased 2% driven primarily by lower restructuring costs.

Susan Li: G&A decreased 10% driven primarily by lower legal related expenses.

Thanks, Mark and good afternoon, everyone let's.

Susan Li: We ended the third quarter with over 72400 employees up 9% year over year with growth, primarily driven by hiring in our priority areas of monetization infrastructure reality labs generative AI as well as regulation and compliance.

Let's begin with our consolidated results.

All comparisons are on a year over year basis, unless otherwise noted.

Q3, total revenue was $46 billion up 19% or 20% on a constant currency basis.

Q3, total expenses were $23 $2 billion up 14% compared to last year.

Susan Li: Third quarter operating income was $17 $4 billion, representing a 43% operating margin.

In terms of the specific line items cost of revenue increased 19% driven primarily by higher infrastructure costs.

Susan Li: Our tax rate for the quarter was 12%.

Susan Li: Net income was $15 $7 billion or $6 <unk> per share.

R&D increased 21%, mostly driven by higher head count related expenses and infrastructure costs.

Capital expenditures, including principal payments on finance leases or.

Mark.

Or $9 $2 billion, driven by investments in servers data centers and network infrastructure.

Restructuring costs.

Susan Li: Our capital expenditures were impacted in part by the timing of third quarter server deliveries, which will be paid for in the fourth quarter.

Susan Li: Free cash flow was $15 $5 billion in Q3, we completed a debt offering of $10 $5 billion repurchased eight $9 billion of our class a common stock and paid $1 $3 billion in dividends to shareholders ending the quarter with $70 9 billion.

Susan Li: In cash and marketable securities and $28 $8 billion in debt.

Susan Li: Moving now to our segment results.

Susan Li: I'll begin with our family of apps segment or.

Susan Li: Our community across the family of apps continues to grow with more than $3 2 billion people using at least one of our family of apps on a daily basis in September.

Susan Li: Q3 total family of apps revenue was $40 $3 billion up 19% year over year.

Susan Li: Q3 family of apps AD revenue was $39 $9 billion up 19% or 20% on a constant currency basis.

Susan Li: Within AD revenue the online commerce vertical was the largest contributor to year over year growth, followed by health care and entertainment and media.

Susan Li: On a user geography basis AD revenue growth was strongest in rest of world and Europe at 23% and 21% respectively.

Susan Li: Asia Pacific grew 18% and North America grew 16%.

Susan Li: On an advertiser geography basis total revenue growth was strongest in North America and Europe at 21%.

Susan Li: Rest of World was up 17%, while Asia Pacific was the slowest growing region at 15% decelerating from our second quarter growth rate of 28% due mainly to lapping a period of stronger demand from China based advertisers.

Susan Li: In Q3, the total number of AD impressions served across our services increased 7% and the average price per AD increased 11%.

Susan Li: Impression growth was mainly driven by Asia Pacific and rest of world.

Susan Li: Pricing growth was driven by increased advertiser demand in part due to improved AD performance. This was partially offset by impression growth, particularly from lower monetizing regions and surfaces.

Susan Li: Family of apps other revenue was $434 million up 48% driven primarily by business messaging revenue growth from our Whatsapp business platform.

Susan Li: We continue to direct the majority of our investments toward the development and operation of our family of apps.

Susan Li: In Q3 family of apps expenses were $18 $5 billion, representing approximately 80% of our overall expenses.

Susan Li: Family of apps expenses were up 13%, primarily due to higher infrastructure and head count related expenses, partially offset by lower legal related expenses.

We have apps operating income was 21 $8 billion, representing a 54% operating margin.

Susan Li: Within our reality lab segment Q3 revenue was $270 million up 29% driven by hardware sales.

Susan Li: Reality labs expenses were $4 $7 billion up 19% year over year, driven primarily by higher head count related expenses and infrastructure costs.

Susan Li: Reality labs operating loss was $4 $4 billion.

Susan Li: Turning now to the business outlook. There are two primary factors that drive our revenue performance, our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time.

On the first we are focused on both improving people's experiences within our apps today and investing in longer term initiatives that have the potential to contribute to engagement in the years ahead.

Susan Li: We expect our content recommendations roadmap will span both of these timeframes as we have nearer term work streams focused on improving recommendations as well as multi year initiatives to develop innovative new approaches.

I'll focus first on the near term.

Susan Li: In the third quarter, we continued to see daily usage grow year over year across Facebook and Instagram, both globally and in the U S.

Expenses and infrastructure costs.

Reality labs operating loss was $4 $4 billion.

Susan Li: On Facebook, we're seeing strong results from the global rollout of our unified video player in June.

Turning now to the business outlook. There are two primary factors that drive our revenue performance, our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time.

Susan Li: Since introducing the new experience and predictions systems that power. It we've seen a 10% increase in time spent within the Facebook video player.

Susan Li: This month, we've entered the next phase of Facebooks video product evolution.

On the first we are focused on both improving people's experiences within our apps today and investing in longer term initiatives that have the potential to contribute to engagement in the years ahead.

Susan Li: Starting in the U S and Canada, we are updating the Standalone video tab to a full screen viewing experience, which will allow people to seamlessly watch videos in a more immersive experience. We expect to complete this global rollout in early 2025.

We expect our content recommendations roadmap will span both of these time frames as we have nearer term work streams focused on improving recommendations as well as multi year initiatives to develop innovative new approaches.

On Instagram reels continues to see good traction and we're making ongoing progress with our focus on promoting original content with more than 60% of recommendations now coming from original posts in the U S.

This is helping people find unique and differentiated content on Instagram, while also helping earlier stage creators get discovered.

Susan Li: Next let me talk more about our multi year roadmap for recommendations.

Susan Li: Previously, we operated separate ranking and recommendation systems for each of our products because we found that performance did not scale. If we expanded the model size in compute power beyond a certain point.

Enter the next phase of Facebook's video product evolution.

Starting in the U.S. and Canada, we are updating the standalone video tab to a full screen viewing experience, which will allow people to seamlessly watch videos in a more immersive experience. We expect to complete this global rollout in early 2025.

Susan Li: However, inspired by the scaling laws, we were observing with our large language models.

Susan Li: Last year, we developed new ranking model architectures capable of learning more effectively from significantly larger datasets to.

On Instagram, Reels continues to see good traction, and we're making ongoing progress with our focus on promoting original content. With more than 60% of recommendations now coming from original posts in the US.

Susan Li: To start we have been deploying these new architectures to our Facebook ranking video ranking models, which has enabled us to deliver more relevant recommendations and unlocked meaningful gains in much time.

Susan Li: Now we're exploring whether these new models can unlock similar improvements to recommendations on other surfaces. After that we will look to introduce cross surface data to these models. So our systems can learn from what is interesting to someone on one surface of our apps and use it to improve their recommendations on another.

This is helping people find unique and differentiated content on Instagram while also helping earlier stage creators get discovered.

The End

Next, let me talk more about our multi-year roadmap for recommendations.

Previously, we operated separate ranking and recommendation systems for each of our products, because we found that performance did not scale if we expanded the model size and compute power beyond a certain point.

Susan Li: This will take time to execute and there are other explorations that we will pursue in parallel how's.

Susan Li: However over time, we are optimistic that this will unlock more relevant recommendations, while also leading to higher engineering efficiency as we operate a smaller number of recommendations.

However, inspired by the scaling laws we were observing with our large language models.

Last year we developed new ranking model architectures capable of learning more effectively from significantly larger data sets.

Susan Li: [laughter] beyond recommendations, we're making progress with our other longer term engagement priorities, including generative AI and threats.

To start, we have been deploying these new architectures to our Facebook ranking video ranking models, which is enabled us to deliver more relevant recommendations and unlock meaningful games in much time.

Susan Li: Meta AI usage continues to scale as we make it available in more countries and languages, we're seeing listen usage as we improve our models and have introduced a number of enhancements in recent months to make meta AI more helpful in engaging.

Now, we're exploring whether these new models can unlock similar improvements to recommendations on other services.

Susan Li: Last month, we began introducing voice. So you can speak with many AI more naturally and it's now fully available in English to people in the U S, Australia, Canada and New Zealand.

After that, we will look to introduce cross-surface data to these models, so our systems can learn from what is interesting to someone on one surface of our apps and use it to improve their recommendations on another.

In the U S people can now also upload photos to meta AI to learn more about them write captions for posts and add remove or change things about their images with a simple text prompt.

This will take time to execute, and there are other explorations that we will pursue in parallel.

However, over time we are optimistic that this will unlock more relevant recommendations while also leading to higher engineering efficiency as we operate a smaller number of recommendations.

Susan Li: These are all built with our first multi modal foundation model Lama three point too.

Susan Li: Spreads remains another area, where we see exciting potential we are bringing on an increasing number of new users each quarter, while depth of engagement also continues to grow.

Beyond recommendations, we're making progress with our other longer-term engagement priorities, including generative AI and threats.

Media AI usage continues to scale as we make it available in more countries and languages. We're seeing lists and usage as we improve our models and have introduced a number of enhancements in recent months to make Media AI more helpful and engaging.

Looking ahead, we plan to introduce more features to make it even easier for people to stay up to date on topics they care about.

Susan Li: Now to the second driver of our revenue performance increasing monetization efficiency.

Susan Li: There are two parts to this work.

Last month, we began introducing voice, so you can speak with meta-AI more naturally, and it's now fully available in English to people in the US, Australia, Canada, and New Zealand.

Susan Li: The first is optimizing the level of ads within organic engagement.

Susan Li: We continue to see opportunities to grow AD supply on lower monetizing surfaces like video within Facebook video engagement continues to shift to short form following the unification of our video player and we expect this to continue with the transition of the video tab to a full screen format.

In the US, people can now upload photos to meta-AI to learn more about them, write captions for posts, and add, remove or change things about their images with a simple text prompt.

These are all built with our first multi-modal foundation model, LLaMA 3.2.

Susan Li: And this is resulting in an organic video impressions growing more quickly than overall video time on Facebook, which provides more opportunities to serve ads.

Frags remains another area where we see exciting potential. We are bringing on an increasing number of new users each quarter while depth of engagement also continues to grow.

Susan Li: Across both Facebook and Instagram, we're also continuing our broader work to optimize when and where we should show ads within a person's session.

Looking ahead, we plan to introduce more features to make it even easier for people to stay up-to-date on topics they care about.

Susan Li: This is enabling us to drive revenue and conversion growth without increasing the number of ads.

Now to the second driver of our revenue performance, increasing monetization efficiency.

The second part of improving monetization efficiency is enhancing marketing performance.

There are two parts to this work. The first is optimizing the level of ads within organic engagement.

Similar to organic content ranking we are finding opportunities to achieve meaningful ads performance gains by adopting new approaches to modeling.

We continue to see opportunities to grow and supply on lower monetizing surfaces like video. Within Facebook, video engagement continues to shift to short-form, following the unification of our video player. And we expect this to continue with the transition of the video tab to a full screen format.

Susan Li: For example, we recently deployed new learning and modeling techniques that enable our AD systems to consider the sequence of actions a person takes before and after seeing that.

Susan Li: Previously our AD system could only aggregate those actions together without mapping the sequence. This new approach allows our systems to better anticipate how audiences will respond to specific ads.

This is resulting in an organic video impressions, growing more quickly than overall video time on Facebook, which provides more opportunities to serve ads.

Susan Li: Since we adopted the new models in the first half of this year, we've already seen a 2% to 4% increase in conversions based on testing within selected segments.

Across both Facebook and Instagram, we're also continuing our broader work to optimize when and where we should show us within a person's session.

This is enabling us to drive revenue and conversion growth without increasing the number of ads.

Susan Li: We're also evolving our ads platform to ensure that the results we drive our customized to each business's objectives and to the way they measure value.

The second part of improving monetization efficiency is enhancing marketing performance.

Susan Li: In Q3, we introduced changes to our ads ranking and optimization models to take more of the cross publisher journey into account, which we expect to increase the meta attributed conversions that advertisers see in their third party analytics tools.

Similar to organic content ranking, we are finding opportunities to achieve meaningful ads performance gains by adopting new approaches to modeling.

For example, we recently deployed new learning and modeling techniques that enable our add systems to consider the sequence of actions a person takes before and after seeing an add.

Susan Li: We're also testing new features and settings for advertisers that will allow them to optimize their campaigns for what they value most such as driving incremental conversions rather than absolute conversions.

Previously, our ad system could only aggregate those actions together without mapping the sequence.

This new approach allows our systems to better anticipate how audiences will respond to specific ads.

Susan Li: Finally, there is continued momentum with our advantage plus solutions, including our AD creative tools.

Since we adopted the new models in the first half of this year, we've already seen a 2-4% increase in conversions based on testing within selected segments.

We're seeing strong retention with advertisers using our generative AI powered image expansion background generation and text generation tools.

We're also evolving our ads platform to ensure that the results we drive are customized to each business as objectives and to the way they measure value.

Susan Li: And there are already driving improved performance for advertisers even at this early stage.

Susan Li: Earlier. This month, we began testing our first video generation features video expansion and image animation, we expect to make them more broadly available by early next year.

and Q3, we introduced changes to our ad-spranking and optimization models. To take more of the cross-publisher journey into account, which we expect to increase the meta-attributed conversions that advertise your C in their third party analytics tools.

Susan Li: Next I'd like to discuss our approach to capital allocation.

Susan Li: We continue to take a long term view in running the business, which involves investing in a portfolio of opportunities that we expect will generate returns over different time periods. We are very optimistic about the set of opportunities in front of us and believe that investing now in both infrastructure and talent will not only accelerate our progress.

We're also testing new features and settings for advertisers that will allow them to optimize their campaigns for what they value most, such as driving incremental conversions rather than absolute conversions.

Finally, there is continued momentum with our Advantage Plus Solutions, including our ad creative tools.

Speaker Change: Yes, but increase the likelihood of maximizing returns within each area.

We're seeing strong retention with advertisers using our Gen. AI-powered image expansion, background generation and text generation tools. And they're already driving improved performance for advertisers even at this early stage.

Speaker Change: This includes investing in both near term initiatives to deliver continued healthy revenue growth within our core business.

Speaker Change: As well as longer term opportunities that have the scale to deliver compelling returns over time.

Speaker Change: Given the lead time of our longer term investments. We also continue to maximize our flexibility so that we can react to market developments.

Earlier this month, we began testing our first video generation features. Video expansion and image animation. We expect to make them more broadly available by early next year.

Speaker Change: Within reality launch this has benefited us as we've evolved our roadmaps to respond to the earlier than expected success of smart glasses.

Next, I'd like to discuss a approach to Capital Allocation.

We continue to take a long-term view in running the business, which involves investing in a portfolio of opportunities that we expect will generate returns over different time periods.

Speaker Change: Then generative AI.

Speaker Change: We expect significantly scaling up our infrastructure capacity now while also prioritizing its fungibility will similarly positioned us well to respond to how the technology and market develop in the years ahead.

We are very optimistic about the set of opportunities in front of us, and believe that investing now in both infrastructure and talent will not only accelerate our progress, but increase the likelihood of maximizing returns within each area.

Speaker Change: Moving now to our financial outlook.

Speaker Change: We expect fourth quarter 2020 for total revenue to be in the range of $45 billion to $48 billion.

This includes investing in both near-term initiatives to deliver continued, healthy, revenue growth within our core business, as well as longer-term opportunities that have the scale to deliver compelling returns over time.

Speaker Change: Our guidance assumes foreign currency is approximately neutral to year over year total revenue growth based on current exchange rates.

Speaker Change: Turning now to the expense outlook, we expect full year 2024 total expenses to be in the range of $96 billion to $98 billion.

Given the lead time of our longer-term investments, we also continue to maximize our flexibility so that we can react to market developments.

Speaker Change: <unk> from our prior range of $96 billion to $99 billion.

Within Reality Labs, this has benefited us as we've evolved our roadmap. To respond to the earlier than expected success of smart glasses.

Speaker Change: For reality labs, we continue to expect 2024 operating losses to increase meaningfully year over year due to our ongoing product development efforts and investments to further scale our ecosystem.

Within General to the AI,

We expect significantly scaling up our infrastructure capacity now, while also prioritizing its fundability, while similarly positioned as well to respond to how the technology and market develop in the years ahead.

Speaker Change: Turning now to the Capex outlook, we anticipate our full year 2020 for capital expenditures will be in the range of $38 billion to $40 billion updated from our prior range of $37 million to $40 million.

Moving now to our financial outlook.

We expect fourth quarter 2024 total revenue to be in the range of $45-$48 billion.

Speaker Change: We continue to expect significant capital expenditure growth in 2025, given this along with the backend weighted nature of our 2020 for Capex, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded.

Our guidance assumes foreign currency is approximately neutral to your year total revenue growth based on current exchange rates.

Turning now to the expense outlook.

We expect full year 2024 total expenses to be in the range of $96-98 billion, updated from our prior range of $96-99 billion.

Speaker Change: Infrastructure fleet.

Speaker Change: On to tax.

Speaker Change: Absent any changes to our tax landscape, we expect our fourth quarter 2024 tax rate to be in the low teens.

For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year-over-year, due to our ongoing product development efforts and investments to further scale our ecosystem.

Speaker Change: In addition, we continue to monitor and active regulatory landscape, including the increasing legal and regulatory headwinds in the EU and the U S that could significantly impact our business and our financial results.

The End

Turning now to the CapEx Outlook.

We anticipate our full year 2020 Ford Capital expenditures will be in the range of $38-40 billion, updated from our prior range of $37-40 billion.

Speaker Change: In closing this was another good quarter for our business our global community continues to grow we're seeing ongoing momentum across our core priorities and we have exciting opportunities ahead of us to drive further growth in our core business in 2025 and capitalize on the longer term opportunities ahead.

We continue to expect significant capital expenditure gross in 2025. Given this, along with the back end weighted nature of our 2024 CapEx.

We expect a significant acceleration in infrastructure expense growth next year, as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.

Speaker Change: With that Crystal, let's open up the call for questions.

Thank you we will now open the lines for a question and answer session to ask a question. Please press star one on your Touchtone phone to withdraw your question Press Star one.

On to Tax.

CapEx and any changes to our tax landscape? We expect our fourth quarter, 2024 tax rate to be in the low teams.

Speaker Change: Please limit yourself to one question. Please pick up your handset before asking your question to ensure clarity. If you are streaming today's call. Please mute your computer speakers and your first question comes from Brian Nowak with Morgan Stanley. Please go ahead.

In addition, we continue to monitor an active regulatory landscape, including the increasing legal and regulatory headwinds in the EU, and the US that could significantly impact our business and our financial results.

Brian Nowak: Thanks for taking my questions I have I have two one for Mark and one for Susan Mark I wanted to ask you about met AI, a little bit can you help us understand some of the more recurring types of interactions are query types, you're seeing with this product and whether they have commercial intent and then just over time, how do you think about.

In closing, this was another good quarter for our business.

Our Global Community continues to grow, we're seeing ongoing momentum across our core priorities, and we have exciting opportunities ahead of us to drive further growth in our core business in 2025 and capitalize on the longer term opportunities ahead.

With that crystal, let's open up the call for questions.

Brian Nowak: Building your own in house search offering as opposed to partnering and having another another player partner those queries.

Thank you.

We will now open the lines for a question and answer session.

Brian Nowak: And then Susan I wanted to ask you about sort of head count because you you talked a lot about sort of infrastructure investment in the 25.

To ask a question, please press star 1 on your touch phone. To withdraw your question, again, press star 1. Please limit yourself to one question. Please pick up your handset before asking your question to ensure clarity.

Brian Nowak: How do we sort of think about relative headcount investments in the 25 to sort of support all that infrastructure versus what you've been doing in 2024.

If you are streaming today's call, please mute your computer speakers. And your first question comes from Brian Noak with Morgan Stanley. Please go ahead.

Brian Nowak: Thank you.

Brian Nowak: Yeah.

Brian Nowak: Brian. Thanks for the question. This is Susan So your first question was around what kinds of recurring interactions that we see between our people and their usage of meta AI and and you know we're seeing you know first of all I think is as Mark mentioned, just we're excited about the progress of meta AI. It's.

Thanks for taking my questions. I have two, one for Mark and one for Susan. Mark, I wanted to have a few about many. I, a little bit, can you help us understand some of the more recurring types of interactions or query types you're seeing with this product, whether they have a commercial intent?

Brian Nowak: Obviously very early in its journey, but it continues to be on track to be the most used AI assistant in the world by end of year than it has over 500 million monthly actives.

And then just over time, how do you think about building your own in-house search offering as opposed to partnering and having another player partner those queries?

Brian Nowak: And people are using it for many things a number of the frequent use cases. We're seeing include information gathering you know help with how to tasks, which is the largest use case, but we also see people using it to go deeper on entrust to look for content on our services.

and Susan, I wanted to ask you about sort of headcount because you talked a lot about sort of infrastructure investment at 25. How do we sort of think about relative headcount investments into 25 to sort of support all of the infrastructure of versus what you've been doing in 2020?

Brian Nowak: Sure you know image generation. That's also been another pretty popular use case, so far and I would say that in the near term. Our focus is really on making that a AI increasingly valuable for people and if we're successful. We think there will be you know a broadening set of queries that people use it for including including more monetize them.

4. Thanks.

Ryan, thanks for the question. This is Susan. Your first question was around what kinds of...

for curing interactions that we see between people and their usage of meta-AI.

And you know, we're seeing, you know, first of all, I think as Mark mentioned, just we're excited about the progress of meta-AI. It's obviously very early in its journey, but it continues to be on track to be the most used AI assistant in the world by end of year, and has over 500 million month the active.

Brian Nowak: Bold queries overtime.

Brian Nowak: The second part of your question you know meta AI draws from content across the web to address timely questions from users and it provides sources for those results from our search engine partners, we've integrated them with Bing and Google both of whom offer great search experiences like other companies. We also train our.

And people are using it for many things. A number of the frequent use cases were seeing include information gathering, you know, help with how to task.

Brian Nowak: Jenny I models on content that is publicly available online and you know we crawl the web for a variety of purposes.

which is the largest use case but we also see people using it to go deeper on interest to look for content on our services.

Brian Nowak: Your second question was really I think around maybe how we're thinking about head count in 2025, and you know we are still working through our budgeting processes for 25 and that's in part why we changed our.

For Image Generation, that's also been another pretty popular use case so far. And I would say that in the near-term, our focus is really on making meta-AI increasingly valuable for people.

And if we're successful, we think there will be a broadening set of queries that people use it for, including more monetizable queries over time.

Brian Nowak: Forward looking guidance approach to give them guidance and and the the next call.

Brian Nowak: But as we're working through this you know we are looking at where there are opportunities for us to invest in our strategic priorities and that includes monetization infrastructure reality labs, Jenny I am our ongoing investments in regulation and compliance and we're really you know evaluating each of those opportunities with an eye towards what either.

The second part of your question, you know, meta-AI draws.

from content across the web to address timely questions from users and it provides sources for those results from our search engine partners. We've integrated with Bing and Google, both of whom offer great search experiences.

Brian Nowak: The the measurable ROI looks like or what the strategic opportunity looks like depending on what the area is and we're supporting that by continuing to really focus on streamlining our operations elsewhere.

Like other companies, we also train our Gen AI models and content that is publicly available online and we crawl the web for a variety of purposes.

Your second question was really, I think, around maybe, how we're thinking about...

Brian Nowak: So you know we don't have you know, we don't have specifics to share about head count growth in 2025, but that gives you a little bit of the flavor of where we are in the budgeting process.

Headcount in 2025. And you know, we are still working three-hour budgeting processes for 25. That's in part why we changed our...

Speaker Change: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Or we're looking guidance approach to give guidance in the next call.

Eric Sheridan: Thanks, So much for taking the question maybe just one building on that question from from Brian and going back to Mark's comments about the learnings as you do go through the business planning process Mark I wanted to understand better what you continue to learn about what the biggest opportunity sets are to apply AI to when you think about your.

But as we're working through this, we are looking at where there are opportunities for us to invest in our strategic priorities, and that includes monetization, infrastructure, reality labs, Gen.I.

Our ongoing investments in regulation and compliance, and more really evaluating each of those opportunities with an eye towards what either the measurable ROI looks like or what this strategic opportunity looks like depending on what the area is.

Eric Sheridan: Short form your product portfolio and your internal processing is because you sound quite optimistic about key learnings and how they continue to ramp and maybe even accelerate in terms of the potential for return profile I just wanted to go a little bit deeper into what your key learnings are as you go through that process. Thank you.

And we're supporting that by continuing to really focus on streamlining our operations elsewhere. So, you know, we don't have specifics to share about Headcount growth in 2025, but that gives you a little bit of the flavor of where we are in the budgeting process.

Eric Sheridan: Okay.

Eric Sheridan: Okay.

Eric Sheridan: Okay.

Speaker Change: I think the main point here is just that it seems broadly applicable to a very wide variety of products. So there are.

Speaker Change: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Speaker Change: Areas that are more part of our core business from a I'm, making.

Thanks so much for taking the question. Maybe just one building on that question from Ryan and going back to Mark Zuckerberg.

He'd more relevant in reals more more relevant.

Speaker Change: Two making ads more more relevant to helping advertisers generate better ads to helping people create the content that they want helping our our integrity.

Our operations in compliance and in the work that we do there that's that's important.

It's very valuable across all these aspects of the core business, but then it also is going to enable completely new types of services like we didn't have something like meta AI before we didn't have something like the ray ban meta glasses before and AI is going to be a really important ingredient of of all of these things.

Speaker Change: There are also other new products like that.

Speaker Change: I think the main point here is just that it seems broadly applicable to a very wide variety of products.

Speaker Change: <unk> around AI studio this year, we really focused on rolling out and met AI.

Speaker Change: Our our kind of single assistant that people can ask any question too, but I think theres a lot of opportunities.

That I think will.

Speaker Change: We'll see ramp more over the next year.

Speaker Change: In terms of both consumer and business use cases for people interacting with a wide variety of different AI agents consumer ones with with AI studio around whether it's different creators or kind of different agents that people create.

Speaker Change: For entertainment or on the business side, we do want to continue making progress on this vision of making its that any small business or any business over time can with a few clicks, a standup and AI agent that can help.

Speaker Change: Help do customer service and sell things so all of their customers around the world, but that's a huge opportunity. So it's a it's a very broad and I think part of what we're seeing is that.

There are also other new products like that, things around AI Studio, this year we really focused on rolling out Meta-AI as kind of our single assistant that people can ask any question to, but I think there's a lot of opportunities that I think will

Speaker Change: There are a lot of opportunities.

Speaker Change: Some of the longer term ones are unmatched AI or AI studio those arent necessarily a next few years massive profit opportunity, but there are a lot of things in the in the core business around engagement and monetization, which which I think will be.

We'll see RAMP more over the next year.

Speaker Change: in terms of both consumer and business use cases.

Speaker Change: Over the next few years, so I think what we're trying to make sure that we get the right people working on this and that we have the right amount of investment that's just going towards what we view as a very very large opportunity.

Speaker Change: for people interacting with a wide variety of different AI agents, consumer ones with

with AI Studio around, you know, whether it's different creators or kind of different agents that people create for entertainment.

Speaker Change: Your next question comes from the line of Doug Anmuth with J P. Morgan. Please go ahead.

Or, on the business side, we do want to continue making progress on this vision of making it so that any small business or any business over time can...

Great. Thanks for taking the questions.

with a few clicks stand up an AI agent that can help do customer service and sell things to all of their customers around the world, and I think that's a huge opportunity. So it's very broad, and I think part of what we're seeing...

Speaker Change: Maybe just to follow up first on that.

Speaker Change: Helpful context.

Speaker Change: Certainly to understand how people are using.

Speaker Change: The platform today, maybe you can just talk more about some of that functionality over time as agents or introduce just how you really expect huge cases to expand beyond just <unk>.

is that there are a lot of opportunities.

Speaker Change: Thank you.

Speaker Change: Some of the longer-term ones are on Meta-AI or AI Studio.

Speaker Change: A longer and more complex queries and then.

Those aren't necessarily a next few years massive profit opportunity, but there are a lot of things in the core business around engagement and monetization, which I think will be over the next few years. So I think we're trying to make sure that we get the right people working on this and that we have the right amount of investment that's just going towards what we view as a very, very large opportunity.

Speaker Change: Susan on Capex, just trying to understand your comment on <unk>, a little bit more it sounds like some of the payments pushed into <unk> with the guidance, suggesting $15 billion to $17 billion in capex in the quarter and is that something we should think about as run rate into 2025. Thank you.

Your next question comes from the line of Doug and Ruth with JPMorgan. Please go ahead.

Yeah, I can take them at a I question, although you know sort of intentionally now not I'm, saying too much about the new capabilities and modalities that we're launching with long before that are coming.

Great, thanks for taking the questions. Maybe just to follow up first on MetaAI, Mark, a helpful context certainly to understand how people are using...

Speaker Change: I I noted in the comments upfront that there you know with each major generational update I expect that there will be large new.

Speaker Change: the platform today. Maybe you can just talk more about some of that functionality over time as agents are introduced, just how, you know, you really expect huge cases to expand beyond just

Speaker Change: Capacity is that that that get added.

Speaker Change: But I think that that's just going to be.

longer and more complex queries. And then, Susan, on CapEx, just trying to understand your comment on 4Q a little bit more. It sounds like some of the payments pushed into 4Q with the guidance suggesting $15 to $17 billion.

Speaker Change: That's that's partially what I'm excited about and we'll talk more about that next year when we're when we're ready to.

Speaker Change:

Speaker Change: One of the trends that I do think we're gonna see though is having.

Speaker Change: The models not just power meta AI our single assistant.

in CapEx in the quarter, and is that something we should think about as run rate into 2025? Thank you.

Speaker Change: But.

Speaker Change: Across AI studio and business agents.

Speaker Change: Have that grow this year.

Speaker Change: If you look back to where we were about a year ago, we were starting to rollout.

Yeah, I mean, I can take the Meta-AI question, although...

Speaker Change: This year, we have really so far succeeded in having that grow and having a lot of people use that theres, obviously, a lot more depth of engagement and in new use cases that we want to we went out overtime.

You know, I'm sort of intentionally now not

Speaker Change: AUDIENCE MEMBER AMERICAN DIAMOND JUNIOR

I don't want to think too much about the new capabilities and modalities that we're launching with LLaMA4 that are coming to MetAI. I noted in the comments up front that with each major generational update, I expect that there will be large new capacities that get added.

Speaker Change: But I'd say that we're today with AI studio and business is.

We're rewarded with meta AI about a year ago. So I think in the next year or our goal around that is going to be to try to make those.

But I think that that's just going to be, that's partially what I'm excited about, and we'll talk more about that next year when we're ready to.

Speaker Change: Pretty widespread use cases, even though theres going to be a multi year path to getting them kind of the depth of usage in and and and the business results around that that we want so.

One of the trends that I do think we're going to see, though, is having the models not just power meta-AI or single assistant, but...

Speaker Change: There's a lot to do here, though and I'm excited to talk about that starting early next year.

Thanks, Doug. So your second question was about our Q4 Capex you know the expected step up in Q4 Capex from Q3 mm is you know part of that comes from increases in and server spend and to a lesser extent data center capex, but with servers. There are these timing dynamics at play that you were.

across AI studio and business agents have that grow. I mean, this year, you know, if you look back to where we were about a year ago,

We were starting to roll out MetAI this year. We have really so far succeeded in having that grow and having a lot of people use that. There's obviously a lot more depth of engagement and new use cases that we want to add over time. But I'd say that we're

Speaker Change: Two because we had these server deliveries Atlanta late in Q3, and so the cash doesn't go out the door basically till Q4, and that's when you'll see the Capex show up and given the nature of <unk>.

Today with AI studio and business AI is about where we were with meta AI about a year ago So I think in the next year our goal around that is going to be to to try to make those

Speaker Change: Capital expenditures generally there is some actually quite a bit of lumpiness quarter to quarter.

Speaker Change: And so it's a little bit hard to sort of extrapolate from any particular quarter overall I'd say, we're growing our infrastructure investments you know significantly this year and we expect significant growth again in 2025.

pretty widespread use cases, even though there's going to be a multi-year path to getting kind of the depth of usage and the business results around that that we want. So there's a lot to do here, though, and I'm excited to talk about that starting earlier next year.

Speaker Change: Your next question comes from the line of Justin Post with Bank of America. Please go ahead.

Thanks Doug. So your second question was about Q4 CapEx.

Speaker Change: Oh, Great I think I'll ask a question at this time I'm, just thinking about use of AI and employee productivity.

You know, the expected step up in Q4 CapEx from Q3

Speaker Change: Part of that comes from increases in server spend and, to a lesser extent, data center CapEx.

How are you able to utilize AI internally and are you seeing big productivity gains in your R&D Degroup and second I know after the head count one more time, but how flexible is your head count.

Speaker Change: But with servers, there are these timing dynamics at play that you referred to because we had these server deliveries that landed late in Q3, and so the cache doesn't go out the door basically till Q4, and that's when you'll see the CapEx show up.

Speaker Change: As you think about cost growth in other areas. Thanks.

Speaker Change: Yeah.

and given the nature of...

Speaker Change: Justin So oh I'll take a crack at both of those on the use of AI in employee productivity. It's certainly.

Speaker Change: You know capital expenditures generally there is some actually quite a bit of lumpiness quarter to quarter So it's a little bit hard to sort of extrapolate from any particular quarter Overall, I'd say we're growing our infrastructure investments, you know significantly this year and we expect significant growth again in 2025

Speaker Change: Something that we that we're very excited about I don't know that we have anything, particularly quantitative that we're sharing right. Now you know I think there are.

Speaker Change: Your next question comes from the line of Justin Post with Bank of America. Please go ahead.

Speaker Change: Current efficiency opportunities with AI that we've been that we've been focused on in terms of where we can reduce costs over time and generate savings through you know increasing internal projects productivity in areas like coding them. For example, it's early but we're seeing a lot of adoption internally of our internal our assistant and <unk>.

Great. I think I'll ask a cost question this time.

Just thinking about use of AI and employee productivity, how are you able to utilize AI internally? And are you seeing big productivity gains in your R&D group? And second, I know I'll go after the headcount one more time, but Susan, how flexible is your headcount as you think about cost growth in other areas? Thanks.

Speaker Change: Coating agent and you know we continue to make Lama more effective at coding, which should also make this use case increasingly valuable to developers over time.

Speaker Change: There are also places where you know we hope over time that we'll be able to deploy.

Justin, so I'll take a crack at both of those. On the use of AI and employee productivity, it's certainly something that we're very excited about. I don't know that we have anything particularly quantitative that we're sharing right now.

Speaker Change: These tools against a lot of our content moderation efforts to help make a big body of content moderation of work that we undertake are to help it make it make it more efficient and effective for us to do so.

Speaker Change: And there are lots of other places around the company, where I would say we're relatively early in exploring the way that we can use them at all on base tools to make.

You know, I think...

Speaker Change: There are different efficiency opportunities with AI that we've been focused on in terms of where we can reduce costs over time.

Speaker Change: Different types of work streams and more efficient. So all of that is to say, it's something we're pretty excited about we have lots of teams focused on it there are sort of small opportunities and you know G&A functions to what we hope will be big opportunities in areas like content moderation in coding productivity over time.

and Generate Savings Through Increasing Internal Productivity in Areas Like Coding.

Speaker Change: early, but we're seeing a lot of adoption internally of our internal assistants and coding agents. And, you know, we continue to make LLaMA more effective at coding, which should also make this use case increasingly valuable to developers over time. There are also places where, you know, we hope over time that we'll be able to deploy

Speaker Change: On your second question about head count.

Speaker Change: No were really.

Speaker Change: Again, we're still mid budget. So there's well you know we don't have very much that is definitive to share about this at the time, but as we're evaluating you know where there are opportunities for us to make good investments you know, we we really think about there is a bucket of very ROI driven head count opportunities, we're very rigorous about.

to help make the big body of content moderation work that we undertake to help make it more efficient and effective for us to do so.

Speaker Change: The way, we think about returns there and what the return opportunity is and you know how how what we think is the likelihood of those returns and you know what is the aggregate incremental any of those investments and those are all things that sort of were evaluating when we think about where to invest in the core business and where we think we can you know we can.

There are lots of other places around the company where I would say we're relatively early in exploring the way that we can use LLM-based tools to make

different types of work streams more efficient. So all that is to say it's something we're pretty excited about. We have lots of teams focused on it. There are sort of small opportunities in, you know, GNA functions to what we hope will be big opportunities in areas like content moderation and coding productivity over time.

Speaker Change:

Speaker Change: We can deliver sort of ROI on a near term basis and then you know at the same time. We're also assessing you know what the opportunities look like in some of the.

Speaker Change: On your second question about headcount, you know, we're really...

Speaker Change: More medium and long term.

Speaker Change: Strategic areas of investment you know and that includes our efforts, you know and and Jenny I and the infrastructure needed to support it and includes our investments in reality labs and so you know those are all things that were kind of assessing them in kind of a portfolio of what we could do you know of what we think we would do in 2025.

Again, we're still mid-budget, so there's, you know, we don't have...

Very much that is definitive to share about this at the time, but as we're evaluating, you know Where there are opportunities for us to make good investments, you know We we really think about there is a bucket of very ROI driven headcount opportunities We're very rigorous about the way we you know Think about returns there and what the return opportunity is and you know how what we think is the likelihood of those returns and you know, what is the

<unk> with a couple of thoughts you know one is again.

Where can we sort of build the most flexibility into the way that you know, we're thinking about either infrastructure or head count plans.

Speaker Change:

Speaker Change: And the second is we're really focused you know across the company are you now on our efficiency efforts broadly and you know, making sure that we feel like we're continuing to you know push the whole company, including areas in which you know we expect that we will.

Speaker Change: We can deliver sort of ROI on a newer term basis. And then, you know, at the same time, we're also assessing, you know, what the opportunities look like in some of the

Speaker Change: Be making additional head count investments to to think about how they can be more efficient and twenty-five than they were in 'twenty four.

Speaker Change: more medium and long-term.

strategic areas of investment, you know, and that includes our efforts, you know, in, in Gen AI and the infrastructure needed to support it. It includes our investments in reality labs. And so, you know, those are all things that we're, we're kind of assessing in kind of a portfolio of what we could.

Speaker Change: Your next question comes from the line of Ross Sandler with Barclays. Please go ahead.

Speaker Change: Oh great.

Ross Sandler: Quick ones, Marc you said something along the lines of the more standardized Lama becomes the more improvement will flow back to the core.

Ross Sandler: Get a business.

Ross Sandler: And I guess could you just dig in a little bit more on that so.

Ross Sandler: Hum.

Ross Sandler: The series of all the malls.

Ross Sandler: Being used by lots of developers building different things in a I guess, how are you using a vantage point to incubate new ideas inside matter and then second question is you mentioned in one of the podcast after the amount of connected assuming scaling walls hold up well, we may need hundreds of billions.

And the second is we're really focused across the company on our efficiency efforts broadly and making sure that we feel like we're continuing to push the whole company, including areas in which we expect that we will be making additional headcount investments to think about how they can be more efficient in 25 than they were in 24.

Ross Sandler: To compute capex to kind of reach our goals around Gen. Gen AI.

Ross Sandler: So I guess, how quickly could you conceivably stand up without much infrastructure, there given some of the constraints around energy or.

Speaker Change: Your next question comes from the line of Ross Sandler with Barclays. Please go ahead.

Speaker Change: Thank you for watching.

Mark Zuckerberg, JPMorgan, Kenneth Dorell, OpEx, Reels, Evercore ISI, LLaMA, Advantage+,

Ross Sandler: Custom asics or other factors.

Ross Sandler: Just any more color on the speed by which we could get.

Ross Sandler: That amount of compute online thank you.

Speaker Change: Yeah, I can try to give some more color on this I mean, the improvements to llama.

The series of LLaMA models are being used by lots of developers building different things in AI. I guess, how are you using that vantage point to incubate new ideas inside meta?

Speaker Change: I'd say come in a couple of flavors, there sort of a quality flavor and the efficiency flavor.

Speaker Change: There are a lot of researchers and independent developers, who who do work and because Lama is available.

And then second question is, you mentioned on one of the podcasts after the MetaConnect that assuming scaling laws hold up, we may need hundreds of billions of compute CapEx to kind of reach our goals around Gen AI.

Speaker Change: They do the work on Lama and they make improvements and then they publish it and it becomes very easy for US to then incorporate that both back into Lala and into our met or products like meta AI or AI studio or business is because.

Speaker Change: So, I guess, how quickly could you conceivably stand up that much infrastructure given, you know, some of the constraints?

Speaker Change: The work the examples that are being shown or are people doing it on our stock.

Speaker Change: Perhaps more importantly is just the efficiency and cost I mean this stuff is all.

around energy or, you know, custom ASICs or other factors, just any more color on the speed by which we could get that amount of compute online at Meta. Thank you.

Speaker Change: Obviously very expensive.

Speaker Change: When someone figures out a way to run this better if that if they can run it 20% more effectively than.

Speaker Change: It will save us a huge amount of money and that was sort of the experience that we had with open compute and why why part of why we are leaning so much into open source here in the first place.

Yeah, I can try to give some more color on this.

Speaker Change: The improvements to LLaMA

I'd say come in a couple of flavors. There's sort of the quality flavor and the efficiency flavor. You know, there are a lot of researchers and...

Speaker Change: Is that we found counterintuitively with open compute that by publishing and sharing the architectures and designs that we had for our compute the industry standardized around it a bit more we got some suggestions also that helped us save costs and that just ended up being a really valuable for US here you know one of the big causes chip.

independent developers who do work and because LLaMA is available, they do the work on LLaMA and they make improvements and then they publish it and it becomes it's very easy for us to then incorporate that both back into LLaMA and into our meta products like Meta AI or AI Studio or Business AI because

Speaker Change: You know a lot of the infrastructure there what we're seeing is that as long as it gets adopted more.

Speaker Change: Thank you.

Speaker Change: Youre seeing folks like Nvidia at AMD and optimize their chips more to run Walmart, specifically, well, which clearly benefits us so.

Speaker Change: The work, the examples that are being shown are people doing it on our stack. Perhaps more importantly is just the efficiency and cost. I mean this stuff is...

Speaker Change: So it benefits everyone who's using lama, but it makes our products better right rather than if we were just on an island building a model that that no. One was was kind of standardizing around in the industry. So that's that's some of what we're seeing around Lama and why I think it's it's a it's good good business for us to do this in an open way.

Speaker Change: Obviously very expensive.

Speaker Change: When someone figures out a way to run this better, if they can run it 20% more effectively, then that will save us a huge amount of money. And that was sort of the experience that we had with OpenCompute and part of why we are leaning so much into open source here in the first place.

Speaker Change: In terms of scaling infra.

Speaker Change: No I mean, when I talk about our team's executing well you know some.

Publishing and sharing the architectures and designs that we had for our compute, the industry standardized around it a bit more. We got some suggestions also that helped us save costs and that just ended up being really valuable for us. Here, you know, one of the big costs is you know, chips.

Speaker Change: Some of that goes towards delivering.

Speaker Change: More engaging products and some of it goes towards delivering more revenue on the infra side. It goes towards building out the expenses faster right. So so I think part of what we're seeing this year is the infra team is executing quite well and I think that's why over the course of the year, we've been able to build out more capacity I mean is going into the year, we had a range for what we thought we could potentially do.

You know, a lot of the infrastructure there, what we're seeing is that as LLaMA gets adopted more, you're seeing folks like NVIDIA and AMD optimize their chips more to run LLaMA specifically well, which clearly benefits us. So,

Speaker Change: And we have been able to do I think more than that.

So, it benefits everyone who's using LLaMA, but it makes our products better, right, rather than if we were just on an island building a model that no one was kind of standardizing around in the end.

Speaker Change: But I think we'd kind of hoped and expected at the beginning of the year and.

Speaker Change: While that reflect says higher expenses, it's actually something that I'm quite happy that the team is executing well on and I think that that will.

So that's some of what we're seeing around LLaMA and why I think it's good business for us to do this in an open way. In terms of scaling infra...

Speaker Change: That execution makes me somewhat more optimistic that we're gonna be able to keep on building this out at a good pace.

Speaker Change:

Speaker Change: That's part of this whole thing is you know this is.

You know, I mean, when I talk about our teams executing well...

Speaker Change: This part of of.

You know, some of that goes towards...

Speaker Change: The formula around around kind of building out the infrastructures is maybe.

Speaker Change: Thank you.

You know, delivering.

Speaker Change: More engaging products and some of it goes towards delivering more revenue. On the Infra side, it goes towards building out the expenses faster, right? So I think part of what we're seeing this year is the Infra team is executing

Speaker Change: No maybe not what what investors want to hear in the near term that we're growing that but I just think that the opportunities here are really big we're going to continue investing significantly in this.

Speaker Change: And I'm proud of the teams that are our are doing great work to stand up a large amount of capacity that way, we can deliver world class models and world class products.

Speaker Change: quite well. And I think that's why over the course of the year, we've been able to build out more capacity. I mean, going into the year, we had a range for what we thought we could potentially do. And

We have been able to do, I think, more than I think we'd kind of hoped and expected at the beginning of the year. And while that reflects as higher expenses, it's actually something that I'm quite happy that the team is executing well on. And I think that that will

Speaker Change: Your next question comes from the line of Ron Josey with Citi. Please go ahead.

Ron Josey: Great. Thanks for taking the question, maybe a bigger picture one as well Mark just this time on thread now one of the core apps on its way to become the next major social app in $275 million and they use wanted to hear your thoughts on how this product evolves overtime, specifically from a monetization perspective, but also <unk>.

So that execution

Speaker Change: makes me somewhat more optimistic that we're going to be able to keep on building this out at a good pace.

Speaker Change: Thank you.

But, you know, that's part of this whole thing is, you know, this is this part of

Speaker Change: Next steps on users and then Susan with pricing up 11% in the quarter I wanted to hear more about the pricing dynamics on the platform. I think you talked about just pricing increasing due to greater advertising demand and improved AD performance. So help us understand that a little bit more thank you.

of the the formula around around kind of building out the infrastructure is is

Speaker Change: Maybe not what investors want to hear in the near term that we're growing that, but I just think that the opportunities here are really big. We're going to continue investing significantly in this.

Mark Zuckerberg: Thanks, Ron So your first question was about threads you know, we're making good progress there we are.

And I'm proud of the teams that are doing great work to stand up a large amount of capacity so that way we can deliver world-class models and world-class products.

Mark Zuckerberg: <unk> to launch more features and make improvements to two or a ranking stack you know we you know feel.

Mark Zuckerberg: Very good about the continued user growth on threads, we're bringing on an increasing number of users each quarter and depth of engagement also continues to grow and in Q3, we saw you know.

Your next question comes from the line of Ron Josie with Citi. Please go ahead.

Ron Josie: Great, thanks for taking the question. Maybe a bigger picture one as well, Mark, just this time on thread. You know, now one of the core apps and on its way to becoming the next major social app and 275 million MAUs. Wanted to hear your thoughts on how this product evolves over time, specifically, you know, from a monetization perspective, but also, you know, next steps on users. And then, Susan, with pricing up 11% in the quarter, I wanted to hear more about the pricing dynamics on the platform. I think you talked about just pricing increasing due to greater advertising demand and improved ad performance. So help us understand that a little bit more. Thank you.

Mark Zuckerberg: Especially strong user growth in key markets like the U S Taiwan.

Mark Zuckerberg: And Japan.

You know and we.

Mark Zuckerberg: We've added a number of new features over the course of Q3, including you know account insights for businesses and creators to see how their post perform the ability to save multiple drafts kantar.

Mark Zuckerberg: Continuing to deliver on our commitment to integrate threads with them with our with the fed adverse and basically you know we're very focused on continuing to build out that sort of functionality of threads every time and being responsive to what what users tell us that they're interested in.

Mark Zuckerberg: Specifically as it pertains to monetization, we don't expect spreads to be a meaningful driver of 2025 revenue at this time.

Speaker Change: Continuing to launch more features and make improvements to our ranking stack, you know, we, you know, feel very good about.

Mark Zuckerberg: Ben just you know pleased with the growth trajectory and are again are really focused on introducing features that the community find valuable and working to deepen growth and engagement.

The continued user growth on Threads, we're bringing on an increasing number of users each quarter. And depth of engagement also continues to grow. And in Q3, we saw, you know, especially strong user growth in key markets like the U.S., Taiwan, and Japan. You know, and we...

Speaker Change: Your second question was about the increase in average price per AD. So that grew 11% year over year, driven by strong advertiser demand and part of that is because of better AD performance overtime also and we saw that.

We've added a number of new features over the course of Q3 including, you know, account insights for businesses and creators to see how their posts perform, the ability to save multiple drafts.

Speaker Change: C P M growth accelerate slightly from 10% in Q2 in part because we experienced lower impression growth in Q3, but you know more broadly as it as you know we think about pricing growth and this metric the year over year growth in reported price per ad.

Speaker Change: continuing to deliver on our commitment to integrate threads with with with the FedAverse and basically you know we're very focused on continuing to build out the sort of functionality of threads over time and being responsive to what what users tell us that they're interested in.

Speaker Change: I know, there's a lot that goes into that including the auction dynamics, resulting from fluctuations in impression growth.

Speaker Change: Specifically, as it pertains to monetization, we don't expect threads to be a meaningful driver of 2025 revenue at this time. We've been just pleased with the growth trajectory and, again, are really focused on introducing features that the community finds valuable and working to deepen growth and engagement.

Speaker Change: And one of the things that we feel like we're very focused on is really the input metrics.

Speaker Change: What are the conversions that we are delivering to advertisers are they getting more value over time.

Your second question was about the increase in average price per ad, so that grew 11% year-over-year, driven by, you know, strong advertiser demand, and part of that is because of better ad performance over time also, and we saw that

Speaker Change: The sort of blended reported price per AD is complicated because all of those things get rolled up into it. There are so many different objectives. The advertiser are advertisers are optimizing for those objectives have very different values that make them hard to compare on an apples to apples basis, but we care a lot about you know conversion growth, which is growing continues to grow faster than them.

Speaker Change: CPM growth accelerates slightly from 10% in Q2, in part because we experienced lower impression growth in Q3. But more broadly, as we think about price and growth and this metric, the year-over-year growth in reported price per ad

Speaker Change: <unk> growth and are we seeing healthy cost per action or cost per conversion trends.

Speaker Change: We are and as long as we continue to get better at driving conversions for advertisers that should have the effect of lifting cpm's every time.

You know, there's a lot that goes into that, including the auction dynamics resulting from fluctuations and impression growth.

Speaker Change: Cause we're delivering more conversions per impression served and that will result in higher value impressions.

Speaker Change: Your next question comes from the line of Ken Goralski with Wells Fargo. Please go ahead.

One of the things that we feel like we're very focused on is really the input metrics, you know What are the conversions that we are delivering to advertisers? Are they getting more value over time?

Ken Goralski: Thanks, Thanks for the opportunity I appreciate that a bigger picture kind of like ecosystem question here is.

The sort of blended reported price per ad is complicated because all of those things get rolled up into it. There are so many different objectives that advertisers are optimizing for. Those objectives have very different values that make them hard to compare on an apples-to-apples basis. But we care a lot about conversion growth, which continues to grow faster than impression growth.

Ken Goralski: When we think.

Ken Goralski: I'm curious how far do you think we are from seeing a proliferation of third party.

Ken Goralski: Applications.

Ken Goralski: Specifically on the on the kind of the consumer side I know, we're seeing more and more on the enterprise side agents et cetera, but when do we see how how far out until we see a proliferation of consumer applications in the AI space and.

and Are We Seeing Healthy Cost-Per-Action or Cost-Per-Conversion Trends, which we are. And as long as we continue to get better at driving conversions for advertisers, that should have the effect of lifting CPMs over time.

Ken Goralski: And how do you think about and how does it matter to think of itself as one of those key it was one of those key application applications in.

Because we're delivering more conversions per impression served and that will result in higher value impressions

Ken Goralski: The mobile Internet and the desktop Internet, but now you're also seemingly an infrastructure player as well so I'd love to hear your thoughts there. Thank you.

Your next question comes from the line of Ken Gowralski with Wells Fargo. Please go ahead.

Thanks for the opportunity. I appreciate that.

Speaker Change: Yeah, I mean, there there are a lot of consumer products that we're working on and with Lama I would expect that app developers will be able to build a lot of really good things too.

I have a bigger picture kind of like ecosystem question here is

When we think, I'm curious, how far do you think we are from seeing a proliferation of third-party AI applications?

Speaker Change: On NII.

Speaker Change: NII studio and business AI is a bunch I expect those to be important parts of the consumer experience. Another part that I havent talked about quite as much yet is.

Speaker Change: Thank you.

specifically on the on the kind of the consumer side. I know we're seeing more and more on the enterprise side, agents and etc, but

When do we see, how far out until we see a proliferation of consumer applications in the AI space?

Speaker Change: The opportunity for AI to help people create content.

Speaker Change: That.

Speaker Change: That just makes people's feet experiences better, but if you look at.

Speaker Change: and how do you think about and how does Meta think of itself as one of those key it was one of those key application applications in you know the the mobile internet and the desktop internet but now you're also seemingly an infrastructure player as well so I'd love to hear your thoughts there thank you

Speaker Change:

Speaker Change: The big trends in feeds over the.

Speaker Change: History of the company it started off as.

Speaker Change: As friends right. So all the updates that were in there were basically from your friends posting things and then we went into this euro where we added and create or content to where now a very large.

Yeah, I mean there are a lot of...

Speaker Change: Were sent to the content on Instagram and Facebook.

Speaker Change: Is not from your friends.

consumer products that we're working on. And with LLaMA, I would expect that app developers will be able to build a lot of really good things, too. You know, I've touched on meta-AI and AI studio and business AI as a bunch, and I expect those to be important parts of the consumer experience. Another part that I haven't talked about quite as much yet is

Speaker Change: Not even be from people that you're following directly it could just be recommended content from creators that we.

Speaker Change: Can algorithmic, we determined is going to be interesting and engaging in and and valuable to you and I think we're going to add a whole new category of content, which is AI generated array I summarized content.

Speaker Change: the opportunity for AI to help people create content that just makes people's feed experiences better. But if you look at

Speaker Change: Or kind of existing content pulled together by AI and in some way and I think that that's going to be just very exciting for the.

The big trends and feeds over the, you know, history of the company, it started off as

Speaker Change: For for Facebook, and Instagram, and maybe threads or other kind of feed experiences overtime.

It's friends, right? So all the updates that were in there were basically from your friends posting things. And then we went into this era where we added in creator content, too, where now a very large percent of the content on Instagram and Facebook

Speaker Change: We're starting to test different things around this I don't know if we we we know exactly what's going to work really well yet.

Speaker Change: Some things are promising I don't know that there's this isn't going to be a big impact on the business and 25 would be my guess, but but I think that there is.

Speaker Change: I have high confidence that over the next several years. This is going to be an important trend and one of the important applications, but youre going to get that you're going to get better.

Speaker Change: Studio business AI isn't a whole lot of things that developers will do it with Lama too.

Speaker Change: And I think we're going to add a whole new category of content, which is AI-generated or AI-summarized content, or kind of existing content pulled together by AI in some way. And I think that that's going to be just very exciting for the

Speaker Change: Your next question comes from the line of Youssef Squali with Truest Securities. Please go ahead.

Thank you very much mark it appears that matter and I now call the web than provides conversational answers.

Youssef Squali: Pretty much of anything including current events and so with over 10 million advertisers one of the best or less offerings out there in your core business. Just wondering if there are any plans to start maybe just an add on commercial queries and move meta AI.

for Facebook and Instagram and maybe threads or other kind of feed experiences over time.

It's something that we're starting to test different things around this. I don't know if we know exactly what's going to work really well yet.

Youssef Squali: Closer to becoming a real answer engines for the 1 billion scores that you guys are already seeing.

Speaker Change: Some things are promising. I don't know that this isn't going to be a big impact on the business in 25 would be my guess but but I think that there is

Speaker Change: And then Susan one of the biggest theory the pushback, we get is around the reality lapses on the losses I think 16 billion last year, probably north of $20 billion. This year.

I have high confidence that over the next several years, this is gonna be an important trend and one of the important applications. But you're gonna get that, you're gonna get MedAI, AI Studio, Business AI, and a whole lot of things that developers would do with LLaMA too.

Speaker Change: <unk> is are we getting any closer to peak losses, there or alternatively, what products do you think have the biggest potential there over the next couple of years. Thanks.

Your next question comes from the line of Yousef Squally with Truist Securities. Please go ahead.

Speaker Change: I'm happy to take both of these are you self. So your first question was on plans to provide ads on commercial queries.

Yousef Squally: Yeah, thank you very much. Mark, it appears that Meta.ai now crawls the web and provides conversational answers about pretty much anything, including current events. And so with over 10 million advertisers and one of the best ROAS offerings out there in your core business,

Speaker Change: I think I alluded to this maybe in a mitral. Your question right now, we're really focused on making meta AI, you know as engaging and valuable a consumer experience as possible.

Just wondering if there are any plans to start maybe testing ads on commercial queries and move meta AI closer to becoming real answer engines for the billions of queries that you guys are already seeing.

Speaker Change: Over time, you know, we think there will be a broadening set of queries that people use it for and I think that the monetization opportunities will exist. When you know over time is as we get there, but right now I would say we are really focused on the consumer experience above all and and if this is.

And then, Susan, one of the biggest areas of pushback we get is around reality lapsing on the losses there. I think $16 billion last year, probably north of $20 billion this year. The question is, are we getting any closer to peak losses there, or alternatively, what products do you think?

Speaker Change: Sort of a playbook for us with products that you know we put out in the world, where we really dial in the consumer experience before we focus on what the monetization could look like.

have the biggest potential there over the next couple of years. Thanks.

Speaker Change: And the second part of your question is about reality labs are we aren't sharing expectations beyond 2020 for them at this point.

I'm happy to take both of these, Yousef. So your first question was on...

Speaker Change: And you know we are certainly as we think about the 2025 mm.

Plans to provide ads on commercial queries, you know, I think I alluded to this maybe in a much earlier question right now We're really focused on making meta AI, you know as

Speaker Change: Budgeting process for reality Labs, you know, we're certainly thinking about where we want to make sure were putting our sort of focus and energy you know we are very excited again about.

Engaging and Valuable a Consumer Experience is Possible. Over time, you know, we think there will be a broadening set of queries that people use it for, and I think that the monetization opportunities, you know, will exist when, you know, over time as we get there. But right now, I would say we are, you know, really focused on the consumer experience above all, and this is sort of a playbook for us, you know, with...

Speaker Change: The progress that we've seen with our smart glasses as well as the sort of strong consumer interest in them and so you know we're kind of thinking about where we want to make sure that we are investing appropriately behind the consumer momentum that we see overall I'd say you know reality labs as you know clearly one of our strategic long term priorities and we expect it will be it.

Speaker Change: An area of significant investment in.

Speaker Change: Ah as we build out towards the very ambitious product roadmap that we have there.

products that, you know, we put out in the world where we really dial in the consumer experience before we focus on what the monetization could look like.

Speaker Change: Krista, we have time for one last question.

The second part of your question is about Reality Labs. We aren't sharing expectations beyond 2024 at this point and you know we are certainly as we think about the 2025

Speaker Change: Okay.

Krista: Your last question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.

Mark Mahaney: Let me throw two questions. Please one this is a year in which we've had a lot of unusual events.

budgeting process for Reality Labs. You know, we're certainly thinking about where we want to make sure we're putting our sort of focus and energy. You know, we are very excited, again, about the progress that we've seen with our smart glasses, as well as the sort of strong consumer interest in them. And so, you know, we're kind of...

Mark Mahaney: That could be driving AD revenue major elections, not just the U S, but Europe and in India in major sports events like World Cup, and I know Theres some other things.

Mark Mahaney: Is there any just.

Mark Mahaney: Just in thinking about comps for next year and maybe in the future any anything Susan you would call out like how much of an impact or may have come from these one in every four or five year events.

thinking about where we want to make sure that we are investing appropriately behind the consumer momentum that we see. Overall, I'd say, you know, Reality Labs is clearly one of our strategic long-term priorities, and we expect it will be an area of significant investment, you know, in

Speaker Change: And then secondly could you just talk a little bit more about whatsapp monetization and where you are with that now it sounds like thats the business messaging part, it's really feeding nicely into other revenue, but it.

as we build out towards the very ambitious product roadmap that we have there.

Speaker Change: Help us think about where the monetization levels of Whatsapp are now versus where they can be two or three years down the road how far away. We are from optimization. Thank you.

Krista, we have time for one last question.

Your last question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.

Susan Li: Thanks, Mark. So your first question was about sort of the the revenue backdrop in 2024, and you mentioned events that occur once every four or five years. So I imagine we're talking about the Olympics you know, we historically have not seen meaningful incremental contribution from events like the Olympics, we believe that was.

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Let me throw out two questions, please. One, this is a year in which we've had a lot of unusual events.

That could be driving ad revenue, major elections in not just the U.S. but, you know, Europe and in India and major sports events like World Cup and some other things.

Largely the case this year. So you know when we think about the Q4 outlook and when we think about you know going into next year, where we generally expect growth to continue to benefit from the healthy global advertising demand that we've seen them, we think that our investments in improving our ads are ads performance.

Speaker Change: Is there any, just in thinking about comps for next year and maybe in the future, anything Susan you would call out, like how much of an impact there may have come from these, you know, one in every four or five year events?

And then secondly, could you just talk a little bit more about WhatsApp monetization and where you are with that now? It sounds like that's the business messaging part. It's really feeding in nicely into other revenue.

Susan Li: As you know, we will continue to accrue benefits to advertisers.

Susan Li:

Help us think about where the monetization levels of WhatsApp are now versus where they can be, you know, two or three years down the road, how far away we are from optimization. Thank you.

But obviously, there's a big range of possible you know a possible macro backdrops and that's something that we you know try to reflect in the range of revenue guidance.

Thanks, Mark. So your first question was about sort of the revenue backdrop in 2024. You mentioned events that occur once every four or five years, so I imagine we're talking about the Olympics. You know, we historically have not seen...

Susan Li: That that we get so but I don't know that there are a lot of specific events that we would say had a you know had a material sort of idiosyncratic to 2024 type of revenue impact.

Yousef Squally: and more.

Susan Li: You know your your second question was around Whatsapp monetization and where we are and you know right now what I would say again as quick to message is really you know the the big focus area for US here, we're seeing continued traction in this area.

You know, when we think about...

Q4 outlook, and when we think about going into next year, we generally expect growth to continue to benefit from the healthy global advertising demand that we've seen. We think that our investments in improving our ads performance will continue to accrue benefits to advertisers.

Susan Li: And in particular growth in quick to Whatsapp adds remain particularly strong and so you know we're continuing to focus both on scaling click to whatsapp ads and more markets, where whatsapp is strong user adoption like Brazil. For example, it's obviously earlier in the U S. But we're seeing good growth in click to Whatsapp.

But obviously, there's a, you know, big range of possible, you know, of possible macro backdrops, and that's something that we, you know, try to reflect in the range of revenue guidance.

Susan Li: Ads and are continuing.

Susan Li: Continuing to invest in scaling and consumer adoption of Whatsapp and the U S also which will create a bigger opportunities down the line. So and then of course a lot of work that we're doing to make the click to messaging ads more effective in helping to focus where the particular, helping advertisers optimize sorry for.

I don't know that there are a lot of specific events that we would say had a material sort of idiosyncratic to 2024 type of revenue impact.

Yousef Squally: You know, your second question, you know, was around WhatsApp monetization and where we are. And, you know, right now what I would say, again, is Click-to-Message is really, you know, the big focus area for us here. We're seeing.

Susan Li: Particular conversion events that they care about.

Susan Li: The other element of revenue on Whatsapp I would say is paid messaging that continues to grow at a strong pace again. This quarter remains in fact, the primary driver of growth in our family of apps other revenue line, which was up 48% in Q3 and.

Yousef Squally: Continued traction in this area, you know, and in particular.

Yousef Squally: Growth in Click-to-WhatsApp ads remain particularly strong and so

Susan Li: And we're seeing generally a strong increase in the volume of paid conversations driven both by growth in the number of businesses adopting paid messaging as well as in the conversation of volume per business.

We continue to focus both on scaling Click-to-WhatsApp ads in more markets where WhatsApp has strong user adoption.

like Brazil, for example. It's obviously earlier in the U.S., but we're seeing good growth in Click-to-WhatsApp.

Speaker Change: Great. Thank you for joining us today, we appreciate your time and we look forward to speaking with you again soon.

Yousef Squally: Advertisement

and benjy.com

Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.

Yousef Squally: The other element of revenue on WhatsApp, I would say, is paid messaging. That continues to grow at a strong pace again. This quarter remains

In fact, the primary driver of growth in our family of apps on the revenue line, which was up 48% in Q3 and

and we're seeing generally a strong increase in the volume of paid conversations driven both by growth in the number of businesses adopting paid messaging as well as in the conversational volume per business.

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