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Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
In millions, except percentages and per share amounts |
2014 |
2013 |
2014 |
2013 |
|||||||||||
Revenue |
$ |
3,203 |
$ |
2,016 |
$ |
8,615 |
$ |
5,286 |
|||||||
Income from Operations |
|||||||||||||||
GAAP |
$ |
1,397 |
$ |
736 |
$ |
3,861 |
$ |
1,672 |
|||||||
Non-GAAP* |
$ |
1,820 |
$ |
1,024 |
$ |
4,987 |
$ |
2,451 |
|||||||
Operating Margin |
|||||||||||||||
GAAP |
44 |
% |
37 |
% |
45 |
% |
32 |
% |
|||||||
Non-GAAP* |
57 |
% |
51 |
% |
58 |
% |
46 |
% |
|||||||
Net Income |
|||||||||||||||
GAAP |
$ |
806 |
$ |
425 |
$ |
2,239 |
$ |
977 |
|||||||
Non-GAAP* |
$ |
1,149 |
$ |
666 |
$ |
3,194 |
$ |
1,520 |
|||||||
Diluted Earnings per Share (EPS) |
|||||||||||||||
GAAP |
$ |
0.30 |
$ |
0.17 |
$ |
0.86 |
$ |
0.39 |
|||||||
Non-GAAP* |
$ |
0.43 |
$ |
0.27 |
$ |
1.22 |
$ |
0.61 |
• |
Daily active users (DAUs) were 864 million on average for September 2014, an increase of 19% year-over-year.
|
• |
Mobile DAUs were 703 million on average for September 2014, an increase of 39% year-over-year.
|
• |
Monthly active users (MAUs) were 1.35 billion as of September 30, 2014, an increase of 14% year-over-year.
|
• |
Mobile MAUs were 1.12 billion as of September 30, 2014, an increase of 29% year-over-year.
|
• |
Revenue from advertising was $2.96 billion, a 64% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 63%.
|
• |
Mobile advertising revenue represented approximately 66% of advertising revenue for the third quarter of 2014, up from approximately 49% of advertising revenue in the third quarter of 2013.
|
• |
Payments and other fees revenue was $246 million, a 13% increase from the same quarter last year.
|
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In millions, except for per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
Revenue |
$ |
3,203 |
$ |
2,016 |
$ |
8,615 |
$ |
5,286 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
565 |
507 |
1,501 |
1,384 |
|||||||||||
Research and development |
608 |
369 |
1,555 |
1,006 |
|||||||||||
Marketing and sales |
374 |
233 |
1,055 |
704 |
|||||||||||
General and administrative |
259 |
171 |
643 |
520 |
|||||||||||
Total costs and expenses |
1,806 |
1,280 |
4,754 |
3,614 |
|||||||||||
Income from operations |
1,397 |
736 |
3,861 |
1,672 |
|||||||||||
Interest and other income/(expense), net |
(61 |
) |
(10 |
) |
(65 |
) |
(48 |
) |
|||||||
Income before provision for income taxes |
1,336 |
726 |
3,796 |
1,624 |
|||||||||||
Provision for income taxes |
530 |
301 |
1,557 |
647 |
|||||||||||
Net income |
$ |
806 |
$ |
425 |
$ |
2,239 |
$ |
977 |
|||||||
Less: Net income attributable to participating securities |
4 |
3 |
10 |
6 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
802 |
$ |
422 |
$ |
2,229 |
$ |
971 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.31 |
$ |
0.17 |
$ |
0.87 |
$ |
0.40 |
|||||||
Diluted |
$ |
0.30 |
$ |
0.17 |
$ |
0.86 |
$ |
0.39 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,587 |
2,430 |
2,565 |
2,408 |
|||||||||||
Diluted |
2,644 |
2,528 |
2,616 |
2,504 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
16 |
$ |
12 |
$ |
44 |
$ |
31 |
|||||||
Research and development |
243 |
164 |
643 |
432 |
|||||||||||
Marketing and sales |
53 |
34 |
146 |
91 |
|||||||||||
General and administrative |
41 |
29 |
108 |
79 |
|||||||||||
Total share-based compensation expense |
$ |
353 |
$ |
239 |
$ |
941 |
$ |
633 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
1 |
$ |
— |
$ |
3 |
$ |
1 |
|||||||
Research and development |
6 |
8 |
27 |
26 |
|||||||||||
Marketing and sales |
1 |
2 |
7 |
7 |
|||||||||||
General and administrative |
3 |
2 |
7 |
6 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
11 |
$ |
12 |
$ |
44 |
$ |
40 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
26 |
$ |
5 |
$ |
42 |
$ |
9 |
|||||||
Research and development |
9 |
9 |
25 |
28 |
|||||||||||
Marketing and sales |
1 |
1 |
3 |
3 |
|||||||||||
General and administrative |
23 |
22 |
71 |
66 |
|||||||||||
Total amortization of intangible assets |
$ |
59 |
$ |
37 |
$ |
141 |
$ |
106 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2014 |
December 31, 2013 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
8,999 |
$ |
3,323 |
|||||
Marketable securities |
5,251 |
8,126 |
|||||||
Accounts receivable |
1,363 |
1,109 |
|||||||
Prepaid expenses and other current assets |
502 |
512 |
|||||||
Total current assets |
16,115 |
13,070 |
|||||||
Property and equipment, net |
3,703 |
2,882 |
|||||||
Intangible assets, net |
1,317 |
883 |
|||||||
Goodwill |
2,612 |
839 |
|||||||
Other assets |
441 |
221 |
|||||||
Total assets |
$ |
24,188 |
$ |
17,895 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
120 |
$ |
87 |
|||||
Partners payable |
208 |
181 |
|||||||
Accrued expenses and other current liabilities |
709 |
555 |
|||||||
Deferred revenue and deposits |
48 |
38 |
|||||||
Current portion of capital lease obligations |
149 |
239 |
|||||||
Total current liabilities |
1,234 |
1,100 |
|||||||
Capital lease obligations, less current portion |
129 |
237 |
|||||||
Other liabilities |
1,587 |
1,088 |
|||||||
Total liabilities |
2,950 |
2,425 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
15,949 |
12,297 |
|||||||
Accumulated other comprehensive (loss) income |
(109 |
) |
14 |
||||||
Retained earnings |
5,398 |
3,159 |
|||||||
Total stockholders' equity |
21,238 |
15,470 |
|||||||
Total liabilities and stockholders' equity |
$ |
24,188 |
$ |
17,895 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
806 |
$ |
425 |
$ |
2,239 |
$ |
977 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
289 |
274 |
810 |
737 |
|||||||||||
Lease abandonment |
(5 |
) |
43 |
(31 |
) |
108 |
|||||||||
Share-based compensation |
353 |
239 |
941 |
633 |
|||||||||||
Deferred income taxes |
4 |
2 |
(30 |
) |
21 |
||||||||||
Tax benefit from share-based award activity |
479 |
129 |
1,354 |
277 |
|||||||||||
Excess tax benefit from share-based award activity |
(482 |
) |
(130 |
) |
(1,365 |
) |
(285 |
) |
|||||||
Other |
2 |
19 |
5 |
39 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(182 |
) |
(83 |
) |
(264 |
) |
(145 |
) |
|||||||
Prepaid expenses and other current assets |
(55 |
) |
5 |
(45 |
) |
433 |
|||||||||
Other assets |
(176 |
) |
9 |
(158 |
) |
(35 |
) |
||||||||
Accounts payable |
(57 |
) |
(19 |
) |
12 |
(17 |
) |
||||||||
Partners payable |
(17 |
) |
(1 |
) |
(22 |
) |
2 |
||||||||
Accrued expenses and other current liabilities |
123 |
(114 |
) |
198 |
(105 |
) |
|||||||||
Deferred revenue and deposits |
(12 |
) |
4 |
3 |
6 |
||||||||||
Other liabilities |
178 |
148 |
227 |
345 |
|||||||||||
Net cash provided by operating activities |
1,248 |
950 |
3,874 |
2,991 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(482 |
) |
(284 |
) |
(1,314 |
) |
(879 |
) |
|||||||
Purchases of marketable securities |
(1,733 |
) |
(904 |
) |
(6,215 |
) |
(4,364 |
) |
|||||||
Sales of marketable securities |
5,423 |
1,158 |
7,391 |
2,433 |
|||||||||||
Maturities of marketable securities |
636 |
780 |
1,710 |
2,954 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(735 |
) |
(16 |
) |
(754 |
) |
(237 |
) |
|||||||
Change in restricted cash and deposits |
(111 |
) |
— |
(113 |
) |
4 |
|||||||||
Other investing activities, net |
(1 |
) |
— |
(2 |
) |
(1 |
) |
||||||||
Net cash provided by (used in) investing activities |
2,997 |
734 |
703 |
(90 |
) |
||||||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement of equity awards |
— |
(148 |
) |
(3 |
) |
(706 |
) |
||||||||
Proceeds from exercise of stock options |
5 |
10 |
7 |
20 |
|||||||||||
Repayment of long-term debt |
— |
(1,500 |
) |
— |
(1,500 |
) |
|||||||||
Principal payments on capital lease obligations |
(49 |
) |
(91 |
) |
(199 |
) |
(291 |
) |
|||||||
Excess tax benefit from share-based award activity |
482 |
130 |
1,365 |
285 |
|||||||||||
Net cash provided by (used in) financing activities |
438 |
(1,599 |
) |
1,170 |
(2,192 |
) |
|||||||||
Effect of exchange rate changes on cash and cash equivalents |
(68 |
) |
14 |
(71 |
) |
7 |
|||||||||
Net increase in cash and cash equivalents |
4,615 |
99 |
5,676 |
716 |
|||||||||||
Cash and cash equivalents at beginning of period |
4,384 |
3,001 |
3,323 |
2,384 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
8,999 |
$ |
3,100 |
$ |
8,999 |
$ |
3,100 |
|||||||
Supplemental cash flow data |
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
3 |
$ |
7 |
$ |
11 |
$ |
33 |
|||||||
Income taxes |
$ |
46 |
$ |
43 |
$ |
107 |
$ |
61 |
|||||||
Cash received during the period for: |
|||||||||||||||
Income taxes |
$ |
4 |
$ |
— |
$ |
6 |
$ |
419 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions |
$ |
20 |
$ |
36 |
$ |
38 |
$ |
31 |
|||||||
Property and equipment acquired under capital leases |
$ |
— |
$ |
— |
$ |
— |
$ |
11 |
|||||||
Fair value of shares issued related to acquisitions of businesses |
$ |
1,368 |
$ |
— |
$ |
1,368 |
$ |
77 |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures* | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
GAAP revenue |
$ |
3,203 |
$ |
2,016 |
$ |
8,615 |
$ |
5,286 |
|||||||
Foreign exchange effect on 2014 revenue using 2013 rates |
21 |
42 |
|||||||||||||
Revenue excluding foreign exchange effect |
$ |
3,182 |
$ |
8,573 |
|||||||||||
GAAP revenue year-over-year change % |
59 |
% |
63 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
58 |
% |
62 |
% |
|||||||||||
GAAP advertising revenue |
$ |
2,957 |
$ |
1,798 |
$ |
7,898 |
$ |
4,641 |
|||||||
Foreign exchange effect on 2014 advertising revenue using 2013 rates |
21 |
42 |
|||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
2,936 |
$ |
7,856 |
|||||||||||
GAAP advertising revenue year-over-year change % |
64 |
% |
70 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
63 |
% |
69 |
% |
|||||||||||
GAAP costs and expenses |
$ |
1,806 |
$ |
1,280 |
$ |
4,754 |
$ |
3,614 |
|||||||
Share-based compensation expense |
(353 |
) |
(239 |
) |
(941 |
) |
(633 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(11 |
) |
(12 |
) |
(44 |
) |
(40 |
) |
|||||||
Amortization of intangible assets |
(59 |
) |
(37 |
) |
(141 |
) |
(106 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
1,383 |
$ |
992 |
$ |
3,628 |
$ |
2,835 |
|||||||
GAAP income from operations |
$ |
1,397 |
$ |
736 |
$ |
3,861 |
$ |
1,672 |
|||||||
Share-based compensation expense |
353 |
239 |
941 |
633 |
|||||||||||
Payroll tax expenses related to share-based compensation |
11 |
12 |
44 |
40 |
|||||||||||
Amortization of intangible assets |
59 |
37 |
141 |
106 |
|||||||||||
Non-GAAP income from operations |
$ |
1,820 |
$ |
1,024 |
$ |
4,987 |
$ |
2,451 |
|||||||
GAAP net income |
$ |
806 |
$ |
425 |
$ |
2,239 |
$ |
977 |
|||||||
Share-based compensation expense |
353 |
239 |
941 |
633 |
|||||||||||
Payroll tax expenses related to share-based compensation |
11 |
12 |
44 |
40 |
|||||||||||
Amortization of intangible assets |
59 |
37 |
141 |
106 |
|||||||||||
Income tax adjustments |
(80 |
) |
(47 |
) |
(171 |
) |
(236 |
) |
|||||||
Non-GAAP net income |
$ |
1,149 |
$ |
666 |
$ |
3,194 |
$ |
1,520 |
|||||||
GAAP and Non-GAAP diluted shares |
2,644 |
2,528 |
2,616 |
2,504 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.30 |
$ |
0.17 |
$ |
0.86 |
$ |
0.39 |
|||||||
Net income attributable to participating securities |
— |
— |
(0.01 |
) |
— |
||||||||||
Non-GAAP adjustments to net income |
0.13 |
0.10 |
0.37 |
0.22 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.43 |
$ |
0.27 |
$ |
1.22 |
$ |
0.61 |
|||||||
GAAP operating margin |
44 |
% |
37 |
% |
45 |
% |
32 |
% |
|||||||
Share-based compensation expense |
11 |
% |
12 |
% |
11 |
% |
12 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
1 |
% |
1 |
% |
1 |
% |
|||||||
Amortization of intangible assets |
2 |
% |
2 |
% |
2 |
% |
2 |
% |
|||||||
Non-GAAP operating margin |
57 |
% |
51 |
% |
58 |
% |
46 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,336 |
$ |
726 |
$ |
3,796 |
$ |
1,624 |
|||||||
GAAP provision for income taxes |
530 |
301 |
1,557 |
647 |
|||||||||||
GAAP effective tax rate |
40 |
% |
41 |
% |
41 |
% |
40 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,336 |
$ |
726 |
$ |
3,796 |
$ |
1,624 |
|||||||
Share-based compensation and related payroll tax expenses |
364 |
251 |
985 |
673 |
|||||||||||
Amortization of intangible assets |
59 |
37 |
141 |
106 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
1,759 |
$ |
1,014 |
$ |
4,922 |
$ |
2,403 |
Non-GAAP provision for income taxes |
610 |
348 |
1,728 |
883 |
|||||||||||
Non-GAAP effective tax rate |
35 |
% |
34 |
% |
35 |
% |
37 |
% |
|||||||
Net cash provided by operating activities |
$ |
1,248 |
$ |
950 |
$ |
3,874 |
$ |
2,991 |
|||||||
Purchases of property and equipment |
(482 |
) |
(284 |
) |
(1,314 |
) |
(879 |
) |
|||||||
Property and equipment acquired under capital leases |
— |
— |
— |
(11 |
) |
||||||||||
Free cash flow |
$ |
766 |
$ |
666 |
$ |
2,560 |
$ |
2,101 |