Good afternoon. My name is Chris and I'll be your conference operator today. At this time, I would like to welcome everyone to the Facebook Third Quarter 2015 Earnings 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. This call will be recorded. Thank you very much. Ms. Deborah Crawford, Facebook's Vice President of Investor Relations, you may begin.

Thank you. Good afternoon and welcome to Facebook's third quarter earnings conference call. Joining me today to talk about our results are Mark Zuckerberg, CEO; Sheryl Sandberg, COO; and Dave Wehner, CFO. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements and actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's press release and in our quarterly report on Form 10-Q filed with the SEC. 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. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The press release and an accompanying investor presentation are available on our website at investor.fb.com. And now, I'd like to turn the call over to Mark. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: Thanks, Deborah, and thanks, everyone, for joining us today. This was another good quarter, and we continue to grow the size and engagement of our community. 1.55 billion people now use Facebook every month and more than 1 billion people use Facebook every day. On mobile, we continue to have a lot of momentum. 1.39 billion people now use Facebook on mobile devices, including more than 1 billion on Android. 50 million people also use Facebook Lite, our app for people on low bandwidth connections and one of our fastest-growing interfaces. This is a great sign for how our mobile strategy continues to make progress across markets, devices and platforms.…

Thanks, Sheryl. And good afternoon, everyone. Echoing Mark and Sheryl's comments, Q3 was another strong quarter for Facebook. We generated $4.5 billion in revenue and over $1.4 billion in free cash flow. Growth and engagement of our community again provided a great platform for our strong financial performance this quarter. In September, we reached a new milestone with over 1 billion people using Facebook on an average day, an increase of 17% compared to last year. This daily number represents 65% of the 1.55 billion people who used Facebook during the month of September. Mobile continued to drive our growth. In September, approximately 1.39 billion people accessed Facebook on mobile devices, up 23% from last year. Additionally, our next generation of services continued to grow, with Instagram, Messenger and WhatsApp now exceeding 400 million, 700 million and 900 million monthly actives respectively. Now turning to the financials. All of our comparisons are on a year-over-year basis unless otherwise noted. Additionally, our non-GAAP measures exclude stock-based compensation and the amortization of intangibles. Total revenue was $4.5 billion, up 41%, or 51% on a constant currency basis. Ad revenue was $4.3 billion, up 45%, or 57% on a constant currency basis. The strengthening of the U.S. dollar continued to have an unfavorable impact on our revenue in Q3. Had foreign exchange rates remained constant with Q3 2014 levels, our total revenue would have been approximately $340 million higher. Regionally, U.S. and Canada and Asia-Pacific were our strongest markets, producing ad revenue growth of 56% and 48% respectively. Europe and Rest of World grew more slowly at 33% and 29% respectively, impacted by our currency exposure in both of those regions. As Sheryl mentioned, mobile continued to drive our revenue growth. Mobile ad revenue was $3.4 billion, up 73% from last year representing…

Thank you. Your first question comes from Eric Sheridan with UBS. Your line is open.

Thanks for taking the questions. Mark, maybe one for you and one for Sheryl. For Mark, on virtual reality and Oculus, how do you see the development of the entertainment and content ecosystem around virtual reality playing out in 2016 and beyond? And what's the role Facebook's going to have to play in maybe seeding some of the content and entertainment side of VR. And then for Sheryl, any color you can give us on Instagram? We've obviously seen a ramp-up now in advertising on the property. How the company's thinking about ad load monetization, some of the opportunities and how those will be balanced against engagement. Thank you. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: I can start off talking about Oculus and virtual reality. So the first thing that I want to stress here is that these kind of new platforms take a long time to develop. So we've said often that we think that virtual reality and augmented reality could be the next big computing platform. But just to put that in perspective and compare it to the development of previous computing platforms like phones and computers, I think the first smartphones came out in 2003, and in the first year, I think BlackBerry and Palm Treo were the initial smartphones that came out. And I think they each sold in the hundreds of thousands of units. So just to kind of give a sense of the timeframe that we're thinking about this and how we expect this to develop, that's how we're thinking about that. In terms of the actual content, first, we think gaming is going to be the most obvious market. There are around, I think, more than 200 million, almost 250 million people who have either an Xbox, a PlayStation or…

The next question is from Heather Bellini with Goldman Sachs. Your line is open. Heather Anne Bellini - Goldman Sachs & Co.: Great. Thank you. I had two quick questions as well. One, Sheryl, just to follow up on what you mentioned about Instagram, obviously, it's a very visual experience. I'm just wondering, when you're talking to advertisers, are they viewing this as a separate channel? So I think there's been some questions as to the incremental nature of Instagram. And it would seem like it could be extremely incremental, given these are the two top platforms in mobile. So I was wondering if you could talk a little bit about what the advertisers say about blending the experiences. And also, a question for Mark. I was just wondering if you could share with us how we might see your content strategy evolve over time and, in particular, just wondering what your view is on longer form content on the video side, sorry. Thank you. Sheryl K. Sandberg - Chief Operating Officer & Director: Yeah. To the Instagram question, what we see in the short run is that some of the spend on Instagram is incremental to Facebook and some isn't. Some clients are comfortable with Instagram and bringing a new budget to bear. Some clients are shifting some of their Facebook budget. For us in the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media. And if you want the most eyeballs and we think the highest ROI, over time we think that will benefit Facebook and Instagram. And so, for us, what we really want is people to experiment and learn and get to experience Instagram as they have on Facebook so that we can make…

The next question is from Douglas Anmuth with JPMorgan. Your line is open.

Thank you for taking the question. One for Mark and then one for Dave. Mark, you recently spent time in China and India. And I was hoping to get some of your key takeaways both in terms of Internet.org and then also about Facebook's potential in China. And then secondly, Dave, I was hoping to get some early thoughts on OpEx for 2016, at least perhaps qualitatively, if you could walk us through some of the puts and takes for next year, Oculus in particular. Thanks. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: Sure. I can start off with the India and China question. So they are very different situations. So India is a unique country where there are 1.25 billion people, more than 1 billion of them are not on the Internet. So it is the country in the world that benefits the most from connectivity. And there's a lot of research that we've seen and reports that third parties have put out that show, that when you connect to place like India, it makes a very big difference socially and for the economy there. A lot of us here, everyone we know is on the internet and we think about the internet as entertainment and basic communication but if you don't have access to a good school, then getting basic Internet access could be your best educational information or if you don't have access to a good doctor, then getting access to the Internet could be the only way that you can learn about how to avoid certain diseases or how to raise your kids and help them avoid certain diseases and find jobs and a lot of stuff. So what we find through the research is that for every 10 people who get connected to…

Doug, on your question on 2016, we're not going to obviously give specific guidance at this time, that'll be coming with our Q4 call. But we're focused on continuing to invest heavily in the business across our near, mid and long-term opportunities and we see a bunch of great opportunities to invest there. So in the near term, we're focused on growing the community and executing on our existing business. In the medium-term, we're focused on those next generation of services, Instagram, Messenger and WhatsApp. And in the long-term, we've got the investments we're making and things like artificial intelligence, VR, and obviously the Internet.org efforts that Mark just spoke about. Specifically with regards to Oculus and how that could impact the plan for next year, we're, as Mark said, very bullish about the long-term opportunity for VR and excited about the launch for the Rift next year. But VR is still very much in the development stage. So it would be early to be talking about large shipment volumes.

The next question is from Brian Nowak with Morgan Stanley. Your line is open. Brian Nowak - Morgan Stanley & Co. LLC: Thanks for taking my questions. I have two, one for Mark and one for Sheryl. Mark, can you talk a little about what factors and metrics you consider when you're thinking about a multi-app strategy versus rolling out more products and offerings on Facebook? There's a difference in Facebook Paper, Messenger, the video viewer on the platform. Just be curious how you think about multi-app versus adding more functionality to the mothership. And then for Sheryl, it sounds like there's still a lot of SMBs on the platform that are not yet paying advertisers. Can you talk about some of the biggest hurdles you need to overcome to get more SMBs paying and initiatives you have in place? Thanks. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: Sure. So I can talk to the multi-app question first. So we view the social space as almost this matrix. You can think about it as a two-dimensional grid where one axis is the richness of the content that people want to share, then other axis is the size of the audience, or intimacy of how people want to share. So on the first axis, you get everything ranging from text to links, to photos, to videos, to immersive 360 videos and virtual reality content and this progression. And on the other axis, you get everything ranging from one-to-one messaging to small group communication, to communicating with all your friends at once, to big interest groups, to completely public. And what we believe is that you can intersect at any point on that. And there will be something interesting to build. So a small group product for sharing video, that's…

The next question is from Justin Post with Bank of America Merrill Lynch. Your line is open.

First, Mark, could you talk a little bit about how much activity you see around Events on Facebook and maybe your views on whether Facebook could benefit from political activity or advertising? And then, Sheryl, could you talk a little bit about where ad loads are today? Is there still room there? And also just what your feedback you're getting on advertiser ROIs, is there still more room there? Thank you.

Yeah, sure. I'll start with the question on ad load. It's Dave and then Sheryl can follow up on the political question. So, yeah, so, Justin, over time ad load has been one of the factors driving year-over-year growth. It's just worth noting that it is up significantly from where we were two years ago. Looking forward, we continue to feel like there are good opportunities to grow the business. I talked about the three factors that contributed to growth this quarter: ad demand, users and engagement and ad load. And we see all of those continuing to be factors for growth going forward. And then, Sheryl, did you want to take the question on the political? Sheryl K. Sandberg - Chief Operating Officer & Director: Yeah. And I'll take Events, too. Just as Mark said with Groups, Events are growing quickly on Facebook. We don't break out by product, but we're pleased with the growth. On the elections and political activity and political advertising, we're excited about the elections because we think we give politicians and people a really compelling way to interact. If you wanted to feel like you were interacting with someone running for office before, you had to go to a town hall meeting. And increasingly, that's happening on Facebook. So between January 1 and October 7 of this year, over 68 million people on Facebook in the U.S. made over 1 billion interactions about the campaign alone, and every candidate and every member of Congress is on Facebook now. In terms of the revenue impact, no one vertical drives our business. We have a very large and diversified business. But we think we offer something pretty compelling, which is the reach of Facebook with very unique targeting. So on Facebook, you can target an ad by district, by interest. Ben Carson ran 240 different ads targeted at different audiences, and so we're starting to see candidates use our platform to communicate, to advertise and to share.

The next question is from Anthony DiClemente with Nomura. Your line is open.

Thank you very much. Mark, on the subject of media content on Facebook, it seems like the big opportunity is for Facebook to be the portal with which to access the short form video content that you mentioned earlier, and maybe the idea is to keep the consumption of that content in line or inside the Facebook wall, the garden. So the follow-up question that I would have is how do you think you could best partner with the media providers and convince them the merits of bringing their valuable, in some cases expensive, content into the Facebook world, particularly at a time in media when they're really trying hard to guard their own existing ecosystems? And then a question for Sheryl. I wonder if you could just touch on the relative growth of branded advertising versus direct response ads. You mentioned total ratings point buying. Can you help us think about the mix of branded versus DR? And for you, do you think that TRP buying and video is going to shift your ad mix more towards branded over time? Thanks. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: I can talk about video and the business model around that. So you're definitely right that there's a certain class of content which is only going to come on to Facebook if there's a good way to compensate the content owners for that. And we've recently rolled out the business model for this, which is for premium content, we'll give a revenue share on a portion of the views to the content owners. And we've got good feedback so far on that. We're working with a small set of partners to start, and we'll roll it out beyond that as that keeps on going. But it's important to keep…

The next question is from John Blackledge with Cowen & Company. Your line is open. John Blackledge - Cowen & Co. LLC: Great. Thank you. Two questions. So with the explosive video consumption growth and growth in public content being consumed in the News Feed, could engagement perhaps materially increase from current levels over the next couple years? And then on WhatsApp, as it heads towards 1 billion MAUs, and/or greater, could you give us a sense of how you're thinking about monetization of that platform and perhaps timing of the monetization? Thank you.

On engagement, John, I think we're obviously focused across a number of different dimensions to drive engagement. Videos had a big contribution there. So that's certainly been helpful in terms of making News Feed even more engaging and we'll continue to be focusing on a number of initiatives, public content and just sharing with your friends. So there's lots that we are working on on engagement that continue to drive time spent. On WhatsApp, I don't think there's a particular magical number with 1 billion users. The focus really for our messaging products is to continue to drive user growth and continue to build great products that are fast, useful, engaging and fun. And on that front, they're both doing great. Messenger has over 700 million users and WhatsApp obviously has over 900 million users. So the business side is not the main focus right now, but we believe there are going to be opportunities as we further scale those properties.

The next question is from Paul Vogel with Barclays. Your line is open.

Great. Thanks. Two questions. One, big picture, Mark, there's a lot of debate around what content is appropriate for Facebook to block and not block. I'm just wondering if you could talk a little bit about how you decide what to censor and not censor in terms of on the content side. And then less big picture, but just in terms of fourth quarter, given it's a big retail quarter, any increased testing around direct retail on the platform? Thanks. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: I can answer the policy question and then I guess Sheryl will take the other one. The guiding principle for us on this is that we want to give the most voice to the most people. And the idea is that there are all these different barriers that any given person has to being able to share and express everything that they want, from technical barriers, it's really hard to communicate with someone if you're not on the internet and they're far away, to product barriers, it's hard to share videos if we don't have a good product for sharing videos, to legal barriers, it's hard to share content that your government says is illegal for you to share. And at the end of the day, there's also policy and you're in a community and we have community standards for how we think people should communicate in order to be safe. Because even if you have all of the internet connectivity and the products and the legal framework that you need, if you don't feel safe saying what you want to express, then you're probably not going to share it. And we see a lot of that online and that's a pretty big issue from everything from bullying to terrorism, there…

The next question is from Rich Greenfield with BTIG. Your line is open.

Hi. Thanks for taking the question. When you look at ad quality, I think when Facebook started, Sheryl, you were really adamant that you were focused on improving the ad quality and really making sure you were serving the highest quality ad to the right person. When you look at Instagram, I felt like you took incredible care to make sure that the advertising, like every ad, was of the highest quality. And as you've opened up the API, there's a tremendous amount of ads, some of them incredibly good quality, but some of them of lesser quality. How do you work to make sure that Instagram maintains what you started it with, which is incredibly beautiful ads that fit the platform and so that you don't get criticized by users for pushing, not so much the amount of ads, but the type of ads? Sheryl K. Sandberg - Chief Operating Officer & Director: You're right. The quality is really important to us because your experience on Facebook or Instagram is about the quality of what you see, both in terms of the organic posts you see from your friends or public people you're following and the ads as well. And what we do is we monitor it carefully. We ramp slowly, we monitor engagement, sentiment, quality of ads. We get a lot of feedback directly from people who use Facebook. They can X out the ads. If they do, we ask them why they're Xing out the ads and we just continue to monitor the metrics. We're pleased with what's happened with quality on our platform overall. And a lot of the product innovations and investments I've been talking about on this call feed into quality. So the carousel ads, they're not just that they're showing multiple products, it's that they're showing products that are more specifically directed at the person. And so a lot of the underlying things we do to build our ad systems don't just feed into revenue, they feed into quality. And that's important because over the long run our quality today is our revenue tomorrow.

The next question is from Mark May with Citi. Your line is open.

Thanks. I had two, if I could. We noticed a very impressive acceleration in user MAU growth and focus in the quarter. It seemed like it was pretty much in every region of the world. What, if anything, can you attribute that to? I know that you seem to be running more TV ads, at least where I live. But wonder if anything you could attribute that to. And then secondly, again on video, as more and more people and businesses are uploading video, I assume that there's a lot of good video content on Facebook, but I don't see all of it. Question is really around video discovery. What strategies do you have going forward to improve video discovery from what is today more of a push-based model to something that may be akin to a pull-based model where I can enjoy all the great video content that's on Facebook? Thanks.

Hey, Mark, it's Dave. Just on the user growth point, we're obviously pleased with the growth we're seeing across the globe in terms of DAU growth. The three largest countries were India, the U.S. and Brazil. So we're seeing good diversified growth. I mean, specifically we've made a lot of initiatives to help improve and invest in the Facebook experience in emerging markets and that has helped drive some of the acceleration in growth. And so we've made a number of product and performance investments there with Facebook like being a good example of that. The question then was on video and discovery and...

Yeah. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: And also just on the growth point, I just think the team that's working on that is executing extremely well. I mean, sometimes it's not that you came up with some brilliant strategy, it's just like really good work consistently over a long period of time. So – and then I think they are. On video, yeah, right now the strength in our system is definitely through helping people discover content that they hadn't really asked for through News Feed. And a lot of, I think, what we need to do is give people a way to see all of the videos that page that they like or follow is interested in sharing on Facebook. And there's a pretty clear roadmap of stuff that we're going to do over the next couple of years that I'm quite excited about to add some more dimensions to the video experience on Facebook. But we're just so early in this right now. It's pretty amazing how quickly it's growing but there's a lot more to do.

The next question is from Ross Sandler with Deutsche Bank. Your line is open.

Great. I just had one for Sheryl. Sheryl, you mentioned that Marriott and MercadoLibre are both using DPA and seeing comparable ROI to paid search. That's a pretty incredible data point. So I guess the question is, what kind of lift in ROI and overall budget do you see as e-commerce or travel marketers migrate from your first few products, like custom audiences and other to DPA? And are the yields that you're getting from DPA ads higher than other formats like video and app downloads and those types of things? Thank you. Sheryl K. Sandberg - Chief Operating Officer & Director: Our goal is to give marketers the highest return they can and over time to capture the amount of budget that's equivalent to the percentage of media time we capture and we're not there. Consumers have shifted to mobile and consumers have moved to Facebook and Instagram more quickly than ad budgets. And that's the opportunity we have in front of us. What product you use really depends upon what you're trying to do. If you're trying to tell a brand story, then you want to do a video ad. If you're trying to sell a direct product, then you want to use DPA ads. And all of these products and all of the underlying targeting like custom audiences are designed to help people meet different objectives and we're trying to be really clear on that. If you're trying to move a brand objective, if you want to move favorability or brand sentiment, we can do that and that's often a video ad or one of our branded ads where you optimize for brand awareness. If you're trying to sell a product, you might want to use carousel ads or dynamic product ads. And the targeting that is custom audiences underlies all of our product offerings. So our goal is to have lots of different things we can do for our marketers and measure them really deeply all the way through to business results.

And – sorry, Ross, you just asked about yields. The way the auction system works is going to just be whatever is the ad that is going to necessarily have the best return is going to win in the auction. So it doesn't necessarily mean you're paying a premium for a given product and so if we've got a good DPA ad that might win in the auction for a given user.

Operator, we have time for one last question.

Certainly. The final question is from Mark Mahaney with RBC Capital Markets. Your line is open.

Okay. Let me try going back to future use cases and, Mark, I think this was touched on a couple times. But can you talk about whether you're seeing greater attempts to do Search, the Search functionality on the site and how that could change over the next three years to five years, and also comment on news and to the extent to which you're seeing a rising utilization by regular users of Facebook as a way to get news and what you can do to make that even easier for people if that's something a behavior you want to facilitate? Thank you. Mark Elliot Zuckerberg - Chairman & Chief Executive Officer: Sure. So on Search, we already have one very big use case which is people basically using our search engine to look out pages and people who are on Facebook and that by itself is already one of the biggest search engines in the world. The next big use case that we've really been working on for a couple of years now and I think is going to – is starting to roll out and is growing quickly is people finding content on Facebook. So that's trending. It's people finding post that their friends or others had posted in News Feed that they saw but then might want to go check out later. And I think this is going to be a very important part of the video experience as well, because one half is pushed, right, going to News Feed and not asking for content but just coming across and discovering it. And then the other half is pull, right, and going to some experience where you're asking for some type of content and getting to a point where we can do that very well is just…

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

Ladies and gentlemen, this concludes today's conference call. Thank you for joining us. You may now disconnect your lines.