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The Instagram Technology Ecosystem Aly Gillani | RBC Capital Markets | December 2014

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| 2 Introduction

Managing Director at RBC Capital

Markets

15+ years of CME experience

Technology coverage ranging from

Hootsuite to Celestica

Joined Instagram on October 21, 2012

ALYG

Aly Gillani

Biography

Actively Following

Vice President RBC Capital Markets

35+ Number of Countries Visited

7+ Years of Experience Communications, Media, and Entertainment

Broad Technology Coverage Ranging from Hootsuite to Celestica

53 27 3

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| 3 Today’s Agenda

Instagram’s Incredible Journey

Q & A

Predictions for the Future

Instagram’s Rapidly Evolving

Ecosystem

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| 4

1.2B+

messages / day

11M+

matches / day

20B+ photo shares

30B+ total pins

3

6

9

12

15

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Ze

tab

yte

s (

ZB

)

50B+

messages / day

>4ZB

(+50% Y/Y)

13ZB

(+40% Y/Y)

Macro Trends Driving Innovation and New Internet Leadership

“SoLoMo” Growth of Digital Universe (1)

(1) 1 petabyte = 1MM gigabytes; 1 zetabyte = 1MM petabytes

2/3 of today’s content is consumed / created by

consumers (Video Watching, Social Media

Usage, Image Sharing etc.)

Consumers care about getting nearby info on

demand, wherever they might be located

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| 5

Jan 2011

1M

Jan 2012

~10M

Jan 2013

~100M ~200M

Jan 2014

20+ Billion Total Photos Shared

1.6+ Billion Likes per Day

$1+ Billion Acquisition Price by Facebook

75+ Million Daily Average Users

60+ Million Photos Shared per Day

13%+ Internet User Penetration

Instagram: A Silicon Valley Fairy Tale

Explosive Growth in Monthly Active Users

Amazing Instagram Statistics

~300M

Jan 2015E

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| 6 A Powerful Platform for Celebrities & Brands…

Top 10 Celebrities (1) Top 10 Brands (1)

Name Followers

Justin Bieber 12,389,220

Kim Kardashian 12,108,550

Rihanna 10,960,798

Beyonce 8,872,333

Ariana Grande 8,393,735

Miley Cyrus 8,155,288

Kendall Jenner 8,112,323

Taylor Swift 7,412,308

Khloe Kardashian 7,410,566

Kylie Jenner 6,932,381

Name Followers

National Geo. 9,284,462

Nike 8,182,675

9GAG 7,788,665

The Ellen Show 7,248,815

Victoria’s Secret 6,481,173

Forever 21 5,402,717

H&M 4,378,497

NBA 4,099,931

GoPro 3,551,279

Starbucks 3,497,664

(1) As of November 2014

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| 7

2.2M followers 4.5M followers

Emerged as a social media celebrity for postings

documenting a lifestyle of yachts, cars and clubs

Antics have helped him attract millions of

followers

Recently profiled in Wall Street Journal

Monetizing Instagram through product placement

and sponsorships

Known for strolling the streets, taking people’s

pictures and interviewing them about their lives

Posts the portraits and captions on the Humans of

New York blog, on Instagram and on Facebook

Profiled in New York Times, Time, Huffington Post

Documenting street life near dangerous areas

and war zones on a 50-day UN-sponsored tour

Using Instagram to promote books / brand

...and Individuals

Case Study: Dan Bilzerian Case Study: Humans of New York

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| 8 Instagram Adoption is Helping to Spawn a New Ecosystem

$12.4 million raised

Emerging Business Models Recent Financings

$11.2 million raised

$29 million raised

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| 9

0

60

120

180

240

300

360

420

480

540

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14

Volu

me (M

M))

Share

Price (

US

$)

Facebook’s Million Dollar Question: Monetizing Instagram

Trading Performance – IPO to present Still Several Growth Levers to Pull (1)

Successful shift from desktop to mobile

Continued user adoption / engagement

Attractive financial profile (top line growth and

margins)

Best in class executive leadership

Monetizing Instagram

Key Factors Driving Recent Performance

~300M MAUs by end of 2014 and ~350MM-410M

MAUs by end of 2015

ARPMAU(2) at a range to drive potential revenue of

$1.3BN - $2.1BN of incremental revenue in 2015

Autoplay Video Ads

Most recent example: ALS Ice Bucket Challenge

Potential for $700M - $2.0BN incremental 2015

revenue

Facebook Audience Network (FAN)

Enables marketers to target mobile app user

audience away from Facebook’s own site

Potential for $300M - $400M of 2015 revenue

(1) RBC Capital Markets Estimates. (2) Ad revenue per monthly average user

Monetizing WhatsApp

600M MAUs – 100% YoY growth

Potential for $400M - $500M incremental 2015

revenue

1

2

3

4

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| 10 But How Will the Instagram Ecosystem Participate?

Facebook Ads: App ads,

Domain ads, Event ads,

Mobile app ads, etc.

Sponsored Stories: Page

post, page/place, Event

RSVP, App, Game Played,

etc.

Other: Revenue Share,

Retargeting, Data, etc.

Revenue Share: 30% split w/

App Developers (i.e. – Zynga)

Display Advertising:

Standard Banner Ads, In-

Video Overlay Ads

In-Stream Advertising:

Pre-roll, In-Slate

Other: Data (Targeting),

Retargeting, Channels

Revenue Share: 45% split

w/ Creators (i.e. – Maker

Studios)

Display Advertising:

Promoted Pins

Other: Affiliate, Data

(Targeting)

Evaluating Current Advertising Models of Other Social Platforms

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Q&A