Facebook posted strong third quarter earnings on Tuesday evening.
The theme of the earnings call was Facebook’s future, and how the company can use its current success to invest in long-term goals that will make it an even stronger company over the next decade.
Facebook’s CFO Dave Wehner and CEO Mark Zuckerberg both said that next year, Facebook will be making a series of aggressive talent and ad tech investments that will set it up for a successful future. But that could mean Facebook’s expenses will increase 50% — 70%.
Zuckerberg also outlined his 3, 5, and 10 year plan for the company.
In summary, he wants to have multiple Facebook products — WhatsApp, Messenger, Search, Video, NewsFeed, Oculus and Instagram — each connect 1 billion users. Once those have reached mass scale, then he’ll start to aggressively monetise them.
He also wants to improve the advertising experience for brands, particularly on mobile. Facebook will be investing in ways to better target and measure campaigns through data. It wants to help brands measure online to offline sales conversions. Currently advertisers only spend about 11% of their budgets on mobile, according to Facebook COO Sheryl Sandberg, because the right tools aren’t yet in place.
Finally, Facebook wants to build the next major computing platform, which Zuckerberg believes could be augmented reality and Oculus. He also wants to bring the Internet to more people through Internet.org.
“We’re going to prepare for the future by investing aggressively,” Zuckerberg said.
“The strength of the business today is putting us in a strong position to invest in the future,” Wehner added.
Here’s the transcript of Zuckerberg’s plan, from Seeking Alpha.
On previous calls, you’ve heard me talk about our big company goals of connecting everyone, understanding the world and building the next generation of platforms. These goals are important for us and part of our foundation of our strategy for the next decade, but achieving these will involve many different efforts and steps along the way, some that will be achieved rapidly and others that are going to take longer.
So with that in mind, I’d like to run through our progress this quarter on the different efforts that we expect to deliver a lot of impact over the next three, five and 10 years.
Let’s begin with our three-year goals. Over the next three years, our main goals are around continuing to grow and serve our existing communities and businesses and help them reach their full potential.
When you look at the size and engagement of our community, our progress remains very strong. 864 million use Facebook every day and across our core products, we continue to see huge engagement. For example around 700 million people now use Facebook Groups every month. Achieving this scale shows that we’re delivering experiences for the way that people want to share and connect.
Another example is our progress on public content. Last quarter I talked about how we’re working to connect people around important public moments and personalities on Facebook. This quarter we’ve continued to build on our results and there are now more than 1 billion interactions every week between public figures and their fans on Facebook.
The investments we have made in video have also played a big part here. This quarter we announced a new milestone for video on Facebook achieving 1 billion video views, a day of made of videos. During the summer the ice bucket challenge drew more than 10 billion video views by 440 million people which is a good sign of how far our video product has come.
Instagram has also made a lot of progress this quarter. In August, the Instagram team launched Hyperlapse, a standalone app for time lapse of videos on iOS. The team has also invested heavily in improving the speed and performance of Instagram on Android. This has helped drive Instagram’s strong international growth which in some countries has achieved more than 100% year-over-year growth. Globally, people using Instagram now spend around 21 minutes a day on average using the app. This is a strong figure compared to the industry and a good sign that Instagram’s strategy is on the right path. Our other big focus over the next three years is to continue to serving businesses well and creating a lot of value for marketers.
As our results show, our approach here is working. To continue delivering value for businesses, we work to improve the quality of ads and news feed by reducing low quality content and improving our targeting to show more timely and relevant content. We’ve also made some big advances in our ad tech, most importantly the launch of our new Atlas platform. Atlas offers marketers a lot of new capabilities to help reach people across devices, platforms and publishers as well as improving measurement in online campaign. We’re very excited for the future of Atlas and Cheryl is going to talk more about this in a moment.
Next, let’s talk about our strategy over the next five years. Over the next five years, our goals are around taking our next generation of services, Instagram, Messenger, WhatsApp and Search and helping them connect billions of people and become important businesses in their own right.
One big priority for us here is messaging. And continuing to build and grow Messenger and now WhatsApp as well as great services. This quarter we made an important change to our mobile messaging efforts by transitioning people to Messenger on iOS, Android and Windows Phone. We believe that this change allows us to offer a better and faster messaging experience on mobile, and our data shows that people who use Messenger, usually respond to messages about 20% faster.
This month we also completed our acquisition of WhatsApp. I’m excited to be working with this team and John to join our Board. WhatsApp continues to be on a path to connect more than 1 billion people around the world and we’re going to be working into accelerate their efforts here. Another key part of our strategy is helping developers to build more great social experiences on our platform.
Over the next few years, our goal is to make Facebook a cross-platform platform that allows developers to build, grow and monetise their apps across every major mobile platform. We’ve continued to make good progress here. This quarter, we opened our audience networks to all developers and publishers, allowing over 1.5 million advertisers on Facebook to extend their campaigns across mobile and for developers to begin monetizing their apps.
We’re also excited by the continued adoption of App Links, our deep-linking technology for mobile apps. App Links is now used by hundreds of apps across iOS, Android and Windows phone and in just the past six months, the developers have created links to more than 3 billion individual destinations in these apps.
Now let’s talk about how we’re approaching our goals over the next 10 years. For the next 10 years our focus is on driving the fundamental changes in the world that we need to achieve our mission, connecting the whole world, understanding a world with big leaps in AIs and developing the next generation of platforms, especially in computing.
This is a very big period, a very busy period for our efforts with Internet.org. In July we worked with Airtel to launch the Internet.org app in Zambia. This provides free data access to a set of basic internet services for health, education, employment and communication. The results from this are very encouraging. We’ve already heard a lot amazing stories about how people are using the internet to add value to their lives. We hope to bring the Internet.org app to many more countries soon.
Over the last few months, I’ve also travelled to several countries and met with policy makers, key distributors and people and communities that are coming online for the first time. Increasingly industry and governments are seeing expanding internet access as one of their core priorities. This is positive development for our work with Internet.org in our long-term goal of connecting everyone in the world.
Finally, let’s talk for a minute about our progress of Oculus. As I’ve said before, with Oculus, we’re making a long-term bet on the future of computing. Every 10 to 15 years, a new major computing platform arrives and we think that virtual and augmented reality are important parts of this upcoming next platform. This quarter, Oculus continued to make progress towards this vision.
In September, the first Oculus developer conference took place, where we announced a new prototype VR headset on the path of a consumer version of the Rift. We continue to see a lot of excitement in the developer community and we’ve now shipped more than 100,000 of Rift developer kits to over a 130 countries. It’s still early for Oculus but we are encouraged to see the variety of apps and games being developed for this platform.
Internet.org and Oculus are just two of the huge opportunities ahead. Our efforts here will take longer to achieve their full impact, but we’re going to continue preparing for the future by investing aggressively. So that’s how we’re approaching our strategy over the next three, five and 10 years, while focusing on our big goals of connecting everyone, understanding the world and building the next generation of platforms.
This has been a quarter with strong results. I want to thank the entire Facebook community, our employees, our partners and our stockholders for their continued support. Because of your contribution, Facebook continues to grow in strength and to create greater value in the world for people, partners and businesses. We have a long journey ahead, we’re on the right path and I’m excited about the progress that we’re making.