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Speaker 1: We now want to welcome our Bloomberg radio and TV

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Speaker 1: audiences worldwide. We want of deep even deeper into metas

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Speaker 1: earnings reports, CEO Mark Zuckerberg saying, look quote, we continue

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Speaker 1: to see strong engagement across our apps with the most

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Speaker 1: exciting roadmap I've seen in a while. Our investments in

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Speaker 1: AI will continue. We remain fully committed to the metaverse

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Speaker 1: vision as well. Let's again further with Meta Chief financial

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Speaker 1: Officer Susan Lee joining us. And it's not just Mark

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Speaker 1: finding things, exciting investors, analysts, upgrading, exciting economy for the

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Speaker 1: world at large. Today, it feels here in the United States.

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Speaker 1: How excited, Susan are your clients right now? How resilient

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Speaker 1: is this digital ad spending?

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Speaker 2: Well?

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Speaker 3: First of all, thank you Ed and Caroline for having me.

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Speaker 3: It's a pleasure to be with you guys and with

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Speaker 3: your viewers this morning. You know you noted that we

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Speaker 3: reported really strong Q two results. We're really happy with

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Speaker 3: all of our execution efforts across our core user and

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Speaker 3: engagement metrics. Obviously, the reacceleration in our ad revenue, which

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Speaker 3: we've been talking about and which we think is the

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Speaker 3: as the reflection both of an improvement in the macroeconomic

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Speaker 3: landscape which the digital ads market is so closely tied to,

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Speaker 3: along with our own efforts continuing to invest in and

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Speaker 3: execute on quarters and years of work in making sure

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Speaker 3: that our ad systems are performing well, that we're delivering

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Speaker 3: measurable results for our advertisers. And we really have seen

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Speaker 3: those results bear fruit. So that's something we're really excited about.

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Speaker 3: In Q two, we also talked about how our year

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Speaker 3: of efficiency work is really setting us up for success

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Speaker 3: going forward. I think it's put us into a place

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Speaker 3: where we have a leaner cost structure, which will serve

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Speaker 3: us well as we plan for the future.

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Speaker 2: And it's also enabling us.

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Speaker 3: To move faster, to build more and ship more quickly

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Speaker 3: new products and experiences in service of what of our customers.

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Speaker 3: And so Mark talked about this yesterday on the call.

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Speaker 3: Threads is a really good example of that. It's something

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Speaker 3: that we built with a relatively smaller team on a

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Speaker 3: tighter timeline, and I think is a good reflection of the.

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Speaker 2: Year of efficiency paying off for us.

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Speaker 3: Finally, the last theme I'd highlight from our earnings call

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Speaker 3: is around twenty twenty four, we have I think a

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Speaker 3: lot of compelling opportunities to invest in. We talked about

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Speaker 3: our AI investments and how that will flow through and

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Speaker 3: to infrastructure costs. We talked about hiring top tier technical

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Speaker 3: talent as we evolve our workforce towards a more technical mix,

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Speaker 3: and then of course our longer term ambitions and vision

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Speaker 3: for reality labs and for the metaverse.

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Speaker 4: You know, AI also seen Susan two AI recommendations on

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Speaker 4: the timeline to have a real impact on engagement, particularly

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Speaker 4: on the core Facebook platform. How much is that a

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Speaker 4: driver behind the forecast for the current period of thirty

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Speaker 4: four point five billion dollars in sales.

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Speaker 2: It's a great question.

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Speaker 3: First, I want to say we have been investing in

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Speaker 3: AI for a really long time. We often use the

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Speaker 3: phrase core AI to talk about the work that's been

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Speaker 3: powering our ranking and recommendations engines, which are really the

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Speaker 3: foundation of both our organic recommendations for the content that

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Speaker 3: you see along with the ads work. And in particular,

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Speaker 3: one of the big drivers of growth that's been both

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Speaker 3: strong on our platforms and increasingly incremental is around recommending

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Speaker 3: content from accounts that you don't already follow. We often

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Speaker 3: call this unconnected content, and that's been really good for

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Speaker 3: core engagement trends, and then of course the AI investments

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Speaker 3: as we've put gpu capacity towards our ads, ranking and

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Speaker 3: recommendation systems have really paid off. So I think that's

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Speaker 3: really translating both into the results that you've seen. It's

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Speaker 3: part of what factors into our guidance, along with of

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Speaker 3: course a big range of possible macroeconomic outcomes. At the

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Speaker 3: same time, we're really excited about a newer opportunity ahead

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Speaker 3: of us in the GENAI space, and that's really around

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Speaker 3: building compelling new consumer experiences. Mark talked about some of

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Speaker 3: the things we're working on on the call yesterday, making

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Speaker 3: it easier for people to create better, more individualized content,

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Speaker 3: and then of course also making it easier for businesses

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Speaker 3: to communicate with the consumers that they want to reach.

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Speaker 2: That is newer for us. That's not factored.

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Speaker 3: Into our revenue guidance or our revenue outlook in any

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Speaker 3: meaningful way, but it's something that we're really excited about

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Speaker 3: the opportunity to build new and compelling experiences, and we

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Speaker 3: think it'll be an important part of our future.

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Speaker 4: Susan, why did Meta change its mind about charging cloud

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Speaker 4: providers for access to Lama too.

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Speaker 2: I'm not sure what you mean by change.

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Speaker 3: By changing our mind, we've made Lama to free and

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Speaker 3: widely accessible. They're a small handful of really large cloud

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Speaker 3: providers that we're working on specific arrangements with, But broadly speaking,

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Speaker 3: we expect this to be free and we want it

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Speaker 3: to be accessible to really to a really wide range of.

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Speaker 2: Possible use cases.

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Speaker 1: Cloud providers, will they be charged anything?

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Speaker 3: This is a place where, again with very specific cloud

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Speaker 3: providers who have very large user bases. Again we're working

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Speaker 3: on specific arrangements with them, but it's not something that

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Speaker 3: we broadly anticipate charging for.

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Speaker 1: And of course we're all waiting to see when you

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Speaker 1: turn on the money funnel from Threads. I'm interested as

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Speaker 1: to how much inbound you're getting from clients, how many

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Speaker 1: want the capacity to start advertising alongside Threads.

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Speaker 3: At the moment, you know, we're really very pleased with Threads.

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Speaker 3: It's a new standalone app that you know, we released

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Speaker 3: earlier this month, and we're where it is in both

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Speaker 3: user growth terms as well as engagement and retention trends.

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Speaker 3: Is certainly ahead of where we would have expected for

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Speaker 3: a brand new standalone app, but it's incredibly early in

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Speaker 3: its life cycle. This is not something that we expect

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Speaker 3: that we're going to monetize in the near term.

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Speaker 2: We know when we launch new.

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Speaker 3: Consumer experiences that there is a playbook around all of

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Speaker 3: the product foundation work that needs to be done, around

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Speaker 3: core features that users will ask for, being responsive to

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Speaker 3: things that futures users are looking for in the product,

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Speaker 3: scaling it over time to a much larger user base,

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Speaker 3: focusing on driving increased engagement and retention. Those are all

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Speaker 3: things that we're going to need to do, you know,

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Speaker 3: in advance of thinking about monetization.

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Speaker 2: But it's a playbook that we've executed.

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Speaker 3: Multiple times and we're excited for the opportunity to do

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Speaker 3: that again.

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Speaker 4: Here, Susan, I think I'm right in saying you a

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Speaker 4: Facebook employee number four hundred and something, four hundred and eight,

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Speaker 4: how has the launch of threads compared internally to bringing

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Speaker 4: in Instagram, WhatsApp, the launch of the hardware business and quest. Yeah.

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Speaker 3: So I joined then Facebook back in two thousand and

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Speaker 3: eight when they're around four hundred people here, and so

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Speaker 3: I've seen us launch a lot of things over the

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Speaker 3: course of that period. Now, some of those examples that

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Speaker 3: you mentioned, like Instagram obviously were already popular apps when

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Speaker 3: we acquired them, but I think that over the course

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Speaker 3: of that time, we've learned a lot of things about

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Speaker 3: how to bring products to market, thinking about the trade

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Speaker 3: offs between standalone apps or features within existing apps. We've

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Speaker 3: learned a lot in our growth playbook and how to

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Speaker 3: drive engagement and retention, and I think we're going to

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Speaker 3: bring a lot of those lessons to the way that

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Speaker 3: we execute against our vision for Threads.

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Speaker 4: Caroline asked you about the inbound interest your existing advertisers, saying, Hey, Susan,

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Speaker 4: when can I put something on the Threads platform. I

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Speaker 4: know you're being conservative and careful about the development, and

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Speaker 4: that Mark emphasize a lot of product work needs to

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Speaker 4: be done as well, but how do you see the

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Speaker 4: roadmaps for Threads going? You know, how do you change

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Speaker 4: the product so it is monetizable.

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Speaker 3: Well, we're excited obviously that there is interest both in Threads,

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Speaker 3: the consumer product and of course the eventual prospect of

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Speaker 3: advertising on it, but it's really just too early, I think,

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Speaker 3: to be very specific about what the ads business on

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Speaker 3: thread will look like in detail. We're really focused on

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Speaker 3: executing on the consumer experience first, making it a great

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Speaker 3: and productive and friendly place for people to have public conversations,

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Speaker 3: growing it to scale, investing in the features that people want,

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Speaker 3: and we'll get to monetization at the right time.

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Speaker 1: Of course, us in the media had a field day

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Speaker 1: thinking about the competitive force that threads is Visa VX,

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Speaker 1: and then we think about the competition more broadly, you

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Speaker 1: versus TikTok. When I'm thinking of the success of Reels

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Speaker 1: of late, when we're actually more broadly thinking about how

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Speaker 1: Meta makes it self not just the money spinner, but

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Speaker 1: a culture spinner here where people start trends, not just

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Speaker 1: perhaps copy them from TikTok and bring them on to reels.

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Speaker 1: Do you feel you've got that now at Meta?

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Speaker 3: I think that we've been, over the course of the

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Speaker 3: time that I've been here, you know, constantly focused on innovation,

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Speaker 3: and I think that we've brought that to bear with

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Speaker 3: a lot of the experiences in our family of apps.

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Speaker 3: And at the same time, when there are clear secular

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Speaker 3: trends in the industry in terms of formats or experiences

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Speaker 3: that consumers are looking for, we look to integrate those too,

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Speaker 3: and I think we've done a really good job at

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Speaker 3: executing on both of those fronts, and then of course

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Speaker 3: looking forward, I think we're really excited about the innovation

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Speaker 3: opportunities ahead of us. With Genai, we think we're industry

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Speaker 3: leading here, and then of course over the very long

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Speaker 3: term with our vision for reality labs and the metaverse.

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Speaker 1: We are of course with the Meta Chief financial Officer

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Speaker 1: Susan Lee, We're welcome across TV and radio with our audiences,

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Speaker 1: and Susan, I've also started talking about everything apps now.

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Speaker 1: I know you're about the money, not always developing the product,

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Speaker 1: but you think about everything app as meta as there

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Speaker 1: are race on to ensure that we can build that

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Speaker 1: here in the US, and you'll be part of it.

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Speaker 2: It's a great question.

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Speaker 3: I know that there are other regions around the world,

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Speaker 3: in particular Asia, where there are apps that have gone

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Speaker 3: down this model. That's not a model that we have

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Speaker 3: right now. We haven't seen that use case to the

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Speaker 3: same extent in North America. But you know, I would

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Speaker 3: say that we're really invested in the opportunities that we

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Speaker 3: have ahead of us across our family of apps right now,

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Speaker 3: including Threads, which is the newest standalone app in our portfolio.

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Speaker 3: And then there's just a lot that we can do

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Speaker 3: to make the experiences across our family of apps richer

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Speaker 3: and more engaging with the investments that we've made already

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Speaker 3: in AI and especially recommending content that you don't already follow,

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Speaker 3: and we know that that's brought richer content experiences to people,

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Speaker 3: is growing engagement across the apps, and we'll release you know,

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Speaker 3: we'll be releasing features over the course of the next years.

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Speaker 3: But we're really excited about what we think that this

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Speaker 3: is going to bring to bear for the consumer experience

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Speaker 3: and of course also eventually for businesses to connect with

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Speaker 3: consumers across the family of apps too.

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Speaker 4: Susan investors were sanguine about the idea that expenses could

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Speaker 4: creep up. I want if you just tell us what

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Speaker 4: your priorities are, where you'll invest in talent in the metaverse,

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Speaker 4: whether your investments will be on the content side or

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Speaker 4: the hardware side.

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Speaker 2: Great question.

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Speaker 3: We talked about this a little bit on the call

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Speaker 3: yesterday when we gave some coller into the twenty twenty

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Speaker 3: four outlook. The three themes that I really want to

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Speaker 3: talk about there are. First, we expect that our infrastructure

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Speaker 3: costs are going to grow because of the investments we've

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Speaker 3: made in AI, building GPU capacity, you know, that will

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Speaker 3: go towards both the core AI work and the ranking

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Speaker 3: and recommendation engines that I talked about, along with the

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Speaker 3: new GENAI investments. So that's a place where we're investing,

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Speaker 3: certainly in a lot of hardware, along with the infrastructure

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Speaker 3: such as data centers and network equipment that you need

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Speaker 3: to support that.

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Speaker 2: The second area that we talked.

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Speaker 3: About is we are evolving our workforce toward a more

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Speaker 3: technical mix, you know, and we want to hire top

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Speaker 3: tier technical talent where we can towards some of our

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Speaker 3: most compelling opportunities, including AI and machine learning engineers to

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Speaker 3: work on the AI efforts we talked about. And so

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Speaker 3: that's a place where we are going to be investing,

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Speaker 3: but we're going to be doing it in a very

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Speaker 3: thoughtful way, making sure that we're really focusing on the

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Speaker 3: core priorities and making trade offs we're appropriate. So is

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Speaker 3: the third thing that we talked about is on the

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Speaker 3: reality lab side. That's certainly a very long time horizon

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Speaker 3: and ambitious vision, and we're going to be investing in

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Speaker 3: deploying capital toward it.

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Speaker 1: The capital coming from that you already have. Are you

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Speaker 1: looking at the bond market, are you looking at raising

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Speaker 1: more funds?

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Speaker 3: You know, we certainly generate enough free cash flow right

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Speaker 3: now for us to invest across the organic opportunities ahead

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Speaker 3: of us that we see that are compelling. We have

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Speaker 3: been raising that we did earlier this year, just as

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Speaker 3: we're evolving our capital structure going forward, and that's something

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Speaker 3: that we'll continue to look at and I think do

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Speaker 3: on a measured pace going forward. But in terms of

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Speaker 3: thinking about the capital available to us now, you know,

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Speaker 3: we generate a lot of capital that we're always looking

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Speaker 3: to allocate across the organic opportunities that we have, and

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Speaker 3: we've talked about some of those, and then of course

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Speaker 3: shareholder returns.

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Speaker 4: Susan really quickly before we lose you. How do you

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Speaker 4: and Mark split up responsibilities at the company. What's it

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Speaker 4: like working with Mark?

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Speaker 3: You know, I've had the privilege of working with and

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Speaker 3: learning from Mark for fifteen years here, obviously as CEO,

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Speaker 3: you know, and as a product visionary. He really shepherds

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Speaker 3: the product roadmap and has defined the long term vision

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Speaker 3: for a lot of the things that we're investing in

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Speaker 3: with incredibly ambitious goals, and I think that's a tremendous

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Speaker 3: and powerful motivator for us, and I try to make

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Speaker 3: sure that we have the financial frameworks and targets that

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Speaker 3: are going to enable us to invest against those things.

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Speaker 2: Innovation isn't free, and.

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Speaker 3: That's something that we're very mindful of and we reckon

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Speaker 3: is that, especially against some of our longest time horizon ambitions,

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Speaker 3: we have to earn the right to put capital towards

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Speaker 3: those things.

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Speaker 2: In the way that we do.

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Speaker 3: What I will say, having worked with Mark for such

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Speaker 3: a long time is he's tremendous at adapting to the

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Speaker 3: time that we're in. And so whether that was leading

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Speaker 3: a four hundred person startup when I joined, whether that

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Speaker 3: was overseeing our transition to the public markets during the

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Speaker 3: shift to mobile, or whether that was this past year

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Speaker 3: helping us really retool our cost structure and the way

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Speaker 3: we operate and leading on the year of Efficiency. I

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Speaker 3: think Mark is tremendously good at making hard decisions, at

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Speaker 3: acting on them with conviction and looking forward.

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Speaker 4: META Chief Financial Officer, Susan Lee, thank you so much

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Speaker 4: for your time