Thread by @borrowed_ideas

1/ Thread: $FB 4Q’20 earnings update

While market’s reaction has been at best lukewarm to FB’s earnings, it is difficult to find faults on operating performance, but the temperature of the feud with $AAPL is rising exponentially.

Here are my notes for Q4.

2/ DAU +11% YoY; MAU +12%; Family DAP +15%

Revenue +33% YoY; Ad revenue +31%

Europe +35%, North America +31%, APAC +29%, RoW +25%

# of impressions +25%, avg price/ad +5% (first-time in a long time)

Other revenue reached $886 mn, up 156% driven by Quest 2

3/ Operating margin +46% (+400 bps)
FCF $9.4 Bn, up ~90% YoY (what?!)
FCF margin +33.6%, up by ~1,000 bps (what?!)

Outlook: expect topline to be stable or modestly accelerate in 1H, but decelerate in 2H because of tough comps

4/ 2021 opex kept at $68-73 Bn.

Take this with a grain of salt; just look at their historical guidance and actual opex:

https://twitter.com/JerryCap/status/1118133251237924871

2021 Capex $21-23 Bn (vs $15 Bn in 2020)

Okay, enough with the numbers. Let’s look at highlights from the call.

5/ Four themes in 2021:

1. Communities
2. Private Messaging
3. Commerce Tools for SMBs and
4. Building the next computing platform

6/ Communities: 600 mn people are part of at least one FB group.

1 mn groups were removed last year alone because of policy violation.

Interestingly, FB stopped recommending political groups to people.

7/ Private Messaging: Zuck is bringing the heat against $AAPL. This level of candor is usually not reserved for earnings calls, but I think he’s a little more than annoyed with the latest tantrum related to WhatsApp.

8/ Zuck identified $AAPL as major competitor in 3 of the 4 core themes.

I wonder whether he is also trying to teach the regulator the lens thorough which they should view competitive dynamics.

9/ Commerce: “when you hear people argue that we shouldn't be doing these things or that we should go back to the old days of untargeted television ads, I think that what they're really arguing for is a regression where only the largest companies have this capacity."

10/ Zuck is excited with VR. He wants it to succeed so that $FB can control its own destiny.

“This is going to unlock the types of social experiences that I have dreamed about building since I was a kid. And it's what we're building towards at Facebook Reality Labs.”

11/ Other notes: Stories ads have become much more effective, but still lags the effectiveness of newsfeed ads.

Pretty clear Zuck prefers more and clear regulation.

Reels: “pretty pleased with the early data on consumption”. Rolled in 50 countries, but no other data point.

12/ “If all personalized ads went away, small businesses would see a 60% cut in website sales.”

Zuck and Sheryl did not mince their words when it comes to $AAPL.

13/ I will cover $AMZN, $GOOG, $UBER, $ANGI earnings call in next one week.

Thanks to @theTIKR for the transcript. Feel free to join by clicking this (no affiliation): tikr.com/MBI

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