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Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
2015 |
2014 |
|||||||||||
Revenue |
$ |
4,042 |
$ |
2,910 |
$ |
7,586 |
$ |
5,412 |
|||||||
Income from Operations |
|||||||||||||||
GAAP |
$ |
1,273 |
$ |
1,390 |
$ |
2,206 |
$ |
2,464 |
|||||||
Non-GAAP* |
$ |
2,228 |
$ |
1,753 |
$ |
4,068 |
$ |
3,167 |
|||||||
Operating Margin |
|||||||||||||||
GAAP |
31 |
% |
48 |
% |
29 |
% |
46 |
% |
|||||||
Non-GAAP* |
55 |
% |
60 |
% |
54 |
% |
59 |
% |
|||||||
Net Income |
|||||||||||||||
GAAP |
$ |
719 |
$ |
791 |
$ |
1,231 |
$ |
1,433 |
|||||||
Non-GAAP* |
$ |
1,437 |
$ |
1,122 |
$ |
2,626 |
$ |
2,047 |
|||||||
Diluted Earnings per Share (EPS) |
|||||||||||||||
GAAP |
$ |
0.25 |
$ |
0.30 |
$ |
0.43 |
$ |
0.55 |
|||||||
Non-GAAP* |
$ |
0.50 |
$ |
0.43 |
$ |
0.92 |
$ |
0.79 |
• |
Daily active users (DAUs) – DAUs were 968 million on average for June 2015, an increase of 17% year-over-year.
|
• |
Mobile DAUs – Mobile DAUs were 844 million on average for June 2015, an increase of 29% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 1.49 billion as of June 30, 2015, an increase of 13% year-over-year.
|
• |
Mobile MAUs – Mobile MAUs were 1.31 billion as of June 30, 2015, an increase of 23% year-over-year.
|
GAAP |
Year-over-Year % Change |
|||||||||
Three Months Ended June 30, |
||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
||||||||
Revenue: |
||||||||||
Advertising(1)
|
$ |
3,827 |
$ |
2,676 |
43 |
% |
||||
Payments and other fees |
215 |
234 |
(8 |
)% |
||||||
Total revenue(2)
|
4,042 |
2,910 |
39 |
% |
||||||
Total costs and expenses |
2,769 |
1,520 |
82 |
% |
||||||
Income from operations |
$ |
1,273 |
$ |
1,390 |
(8 |
)% |
||||
Operating margin |
31 |
% |
48 |
% |
||||||
Provision for income taxes |
554 |
|||||||||
Effective tax rate |
44 |
% |
||||||||
Net income |
$ |
719 |
$ |
791 |
(9 |
)% |
||||
Diluted EPS |
$ |
0.25 |
$ |
0.30 |
(17 |
)% |
NON-GAAP |
Year-over-Year % Change |
|||||||||
Three Months Ended June 30, |
||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
||||||||
GAAP revenue |
$ |
4,042 |
$ |
2,910 |
39 |
% |
||||
Total costs and expenses |
1,814 |
1,157 |
57 |
% |
||||||
Income from operations |
$ |
2,228 |
$ |
1,753 |
27 |
% |
||||
Operating margin |
55 |
% |
60 |
% |
||||||
Effective tax rate |
36 |
% |
||||||||
Net income |
$ |
1,437 |
$ |
1,122 |
28 |
% |
||||
Diluted EPS |
$ |
0.50 |
$ |
0.43 |
16 |
% |
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 76% of advertising revenue for the second quarter of 2015, up from approximately 62% of advertising revenue in the second quarter of 2014.
|
• |
Capital expenditures – Capital expenditures for the second quarter of 2015 were $549 million.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $14.13 billion at the end of the second quarter of 2015.
|
• |
Free cash flow – Free cash flow for the second quarter of 2015 was $1.33 billion.
|
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In millions, except for per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Revenue |
$ |
4,042 |
$ |
2,910 |
$ |
7,586 |
$ |
5,412 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
668 |
473 |
1,323 |
936 |
|||||||||||
Research and development |
1,170 |
492 |
2,231 |
947 |
|||||||||||
Marketing and sales |
626 |
358 |
1,247 |
681 |
|||||||||||
General and administrative |
305 |
197 |
579 |
384 |
|||||||||||
Total costs and expenses |
2,769 |
1,520 |
5,380 |
2,948 |
|||||||||||
Income from operations |
1,273 |
1,390 |
2,206 |
2,464 |
|||||||||||
Interest and other income/(expense), net |
— |
(4 |
) |
(1 |
) |
(4 |
) |
||||||||
Income before provision for income taxes |
1,273 |
1,386 |
2,205 |
2,460 |
|||||||||||
Provision for income taxes |
554 |
595 |
974 |
1,027 |
|||||||||||
Net income |
$ |
719 |
$ |
791 |
$ |
1,231 |
$ |
1,433 |
|||||||
Less: Net income attributable to participating securities |
4 |
3 |
7 |
6 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
715 |
$ |
788 |
$ |
1,224 |
$ |
1,427 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.26 |
$ |
0.31 |
$ |
0.44 |
$ |
0.56 |
|||||||
Diluted |
$ |
0.25 |
$ |
0.30 |
$ |
0.43 |
$ |
0.55 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,796 |
2,560 |
2,790 |
2,552 |
|||||||||||
Diluted |
2,850 |
2,615 |
2,844 |
2,609 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
21 |
$ |
16 |
$ |
38 |
$ |
28 |
|||||||
Research and development |
603 |
219 |
1,169 |
400 |
|||||||||||
Marketing and sales |
82 |
50 |
154 |
93 |
|||||||||||
General and administrative |
57 |
29 |
105 |
67 |
|||||||||||
Total share-based compensation expense |
$ |
763 |
$ |
314 |
$ |
1,466 |
$ |
588 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
1 |
$ |
— |
$ |
2 |
$ |
2 |
|||||||
Research and development |
7 |
6 |
24 |
21 |
|||||||||||
Marketing and sales |
2 |
2 |
6 |
6 |
|||||||||||
General and administrative |
2 |
— |
5 |
4 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
12 |
$ |
8 |
$ |
37 |
$ |
33 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
45 |
$ |
9 |
$ |
88 |
$ |
17 |
|||||||
Research and development |
10 |
8 |
20 |
16 |
|||||||||||
Marketing and sales |
102 |
1 |
204 |
2 |
|||||||||||
General and administrative |
23 |
23 |
47 |
47 |
|||||||||||
Total amortization of intangible assets |
$ |
180 |
$ |
41 |
$ |
359 |
$ |
82 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
June 30, 2015 |
December 31, 2014 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
5,123 |
$ |
4,315 |
|||||
Marketable securities |
9,002 |
6,884 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $47 and $39 as of June 30, 2015 and December 31, 2014, respectively |
1,815 |
1,678 |
|||||||
Prepaid expenses and other current assets |
1,011 |
793 |
|||||||
Total current assets |
16,951 |
13,670 |
|||||||
Property and equipment, net |
4,955 |
3,967 |
|||||||
Intangible assets, net |
3,605 |
3,929 |
|||||||
Goodwill |
18,025 |
17,981 |
|||||||
Other assets |
594 |
637 |
|||||||
Total assets |
$ |
44,130 |
$ |
40,184 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
139 |
$ |
176 |
|||||
Partners payable |
182 |
202 |
|||||||
Accrued expenses and other current liabilities |
1,472 |
866 |
|||||||
Deferred revenue and deposits |
49 |
66 |
|||||||
Current portion of capital lease obligations |
39 |
114 |
|||||||
Total current liabilities |
1,881 |
1,424 |
|||||||
Capital lease obligations, less current portion |
110 |
119 |
|||||||
Other liabilities |
2,687 |
2,545 |
|||||||
Total liabilities |
4,678 |
4,088 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
32,479 |
30,225 |
|||||||
Accumulated other comprehensive loss |
(357 |
) |
(228 |
) |
|||||
Retained earnings |
7,330 |
6,099 |
|||||||
Total stockholders' equity |
39,452 |
36,096 |
|||||||
Total liabilities and stockholders' equity |
$ |
44,130 |
$ |
40,184 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
719 |
$ |
791 |
$ |
1,231 |
$ |
1,433 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
459 |
257 |
916 |
521 |
|||||||||||
Share-based compensation |
763 |
314 |
1,457 |
588 |
|||||||||||
Deferred income taxes |
(66 |
) |
(33 |
) |
(289 |
) |
(34 |
) |
|||||||
Tax benefit from share-based award activity |
386 |
530 |
809 |
875 |
|||||||||||
Excess tax benefit from share-based award activity |
(386 |
) |
(535 |
) |
(809 |
) |
(883 |
) |
|||||||
Other |
1 |
(19 |
) |
7 |
(23 |
) |
|||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(282 |
) |
(187 |
) |
(198 |
) |
(82 |
) |
|||||||
Prepaid expenses and other current assets |
(47 |
) |
14 |
(90 |
) |
10 |
|||||||||
Other assets |
7 |
2 |
(25 |
) |
18 |
||||||||||
Accounts payable |
31 |
79 |
16 |
69 |
|||||||||||
Partners payable |
(6 |
) |
(12 |
) |
(19 |
) |
(5 |
) |
|||||||
Accrued expenses and other current liabilities |
107 |
102 |
241 |
75 |
|||||||||||
Deferred revenue and deposits |
(7 |
) |
15 |
(17 |
) |
15 |
|||||||||
Other liabilities |
201 |
23 |
350 |
49 |
|||||||||||
Net cash provided by operating activities |
1,880 |
1,341 |
3,580 |
2,626 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(549 |
) |
(469 |
) |
(1,051 |
) |
(832 |
) |
|||||||
Purchases of marketable securities |
(2,505 |
) |
(1,508 |
) |
(5,560 |
) |
(4,482 |
) |
|||||||
Sales of marketable securities |
2,118 |
1,121 |
2,726 |
1,968 |
|||||||||||
Maturities of marketable securities |
376 |
455 |
715 |
1,074 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(25 |
) |
(19 |
) |
(282 |
) |
(19 |
) |
|||||||
Change in restricted cash and deposits |
21 |
(2 |
) |
44 |
(2 |
) |
|||||||||
Other investing activities, net |
— |
— |
— |
(1 |
) |
||||||||||
Net cash used in investing activities |
(564 |
) |
(422 |
) |
(3,408 |
) |
(2,294 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement |
(7 |
) |
— |
(12 |
) |
(3 |
) |
||||||||
Proceeds from exercise of stock options |
— |
1 |
— |
2 |
|||||||||||
Principal payments on capital lease obligations |
(37 |
) |
(66 |
) |
(84 |
) |
(150 |
) |
|||||||
Excess tax benefit from share-based award activity |
386 |
535 |
809 |
883 |
|||||||||||
Net cash provided by financing activities |
342 |
470 |
713 |
732 |
|||||||||||
Effect of exchange rate changes on cash and cash equivalents |
46 |
(3 |
) |
(77 |
) |
(3 |
) |
||||||||
Net increase in cash and cash equivalents |
1,704 |
1,386 |
808 |
1,061 |
|||||||||||
Cash and cash equivalents at beginning of period |
3,419 |
2,998 |
4,315 |
3,323 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
5,123 |
$ |
4,384 |
$ |
5,123 |
$ |
4,384 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
2 |
$ |
4 |
$ |
5 |
$ |
8 |
|||||||
Income taxes, net |
$ |
40 |
$ |
22 |
$ |
159 |
$ |
59 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions |
$ |
8 |
$ |
21 |
$ |
194 |
$ |
18 |
|||||||
Promissory note payable issued in connection with an acquisition |
$ |
— |
$ |
— |
$ |
198 |
$ |
— |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
GAAP revenue |
$ |
4,042 |
$ |
2,910 |
$ |
7,586 |
$ |
5,412 |
|||||||
Foreign exchange effect on 2015 revenue using 2014 rates |
332 |
520 |
|||||||||||||
Revenue excluding foreign exchange effect |
$ |
4,374 |
$ |
8,106 |
|||||||||||
GAAP revenue year-over-year change % |
39 |
% |
40 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
50 |
% |
50 |
% |
|||||||||||
GAAP advertising revenue |
$ |
3,827 |
$ |
2,676 |
$ |
7,144 |
$ |
4,941 |
|||||||
Foreign exchange effect on 2015 advertising revenue using 2014 rates |
332 |
520 |
|||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
4,159 |
$ |
7,664 |
|||||||||||
GAAP advertising revenue year-over-year change % |
43 |
% |
45 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
55 |
% |
55 |
% |
|||||||||||
GAAP costs and expenses |
$ |
2,769 |
$ |
1,520 |
$ |
5,380 |
$ |
2,948 |
|||||||
Share-based compensation expense |
(763 |
) |
(314 |
) |
(1,466 |
) |
(588 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(12 |
) |
(8 |
) |
(37 |
) |
(33 |
) |
|||||||
Amortization of intangible assets |
(180 |
) |
(41 |
) |
(359 |
) |
(82 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
1,814 |
$ |
1,157 |
$ |
3,518 |
$ |
2,245 |
|||||||
GAAP income from operations |
$ |
1,273 |
$ |
1,390 |
$ |
2,206 |
$ |
2,464 |
|||||||
Share-based compensation expense |
763 |
314 |
1,466 |
588 |
|||||||||||
Payroll tax expenses related to share-based compensation |
12 |
8 |
37 |
33 |
|||||||||||
Amortization of intangible assets |
180 |
41 |
359 |
82 |
|||||||||||
Non-GAAP income from operations |
$ |
2,228 |
$ |
1,753 |
$ |
4,068 |
$ |
3,167 |
|||||||
GAAP net income |
$ |
719 |
$ |
791 |
$ |
1,231 |
$ |
1,433 |
|||||||
Share-based compensation expense |
763 |
314 |
1,466 |
588 |
|||||||||||
Payroll tax expenses related to share-based compensation |
12 |
8 |
37 |
33 |
|||||||||||
Amortization of intangible assets |
180 |
41 |
359 |
82 |
|||||||||||
Income tax adjustments |
(237 |
) |
(32 |
) |
(467 |
) |
(89 |
) |
|||||||
Non-GAAP net income |
$ |
1,437 |
$ |
1,122 |
$ |
2,626 |
$ |
2,047 |
|||||||
GAAP and Non-GAAP diluted shares |
2,850 |
2,615 |
2,844 |
2,609 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.25 |
$ |
0.30 |
$ |
0.43 |
$ |
0.55 |
|||||||
Non-GAAP adjustments to net income |
0.25 |
0.13 |
0.49 |
0.24 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.50 |
$ |
0.43 |
$ |
0.92 |
$ |
0.79 |
|||||||
GAAP operating margin |
31 |
% |
48 |
% |
29 |
% |
46 |
% |
|||||||
Share-based compensation expense |
19 |
% |
11 |
% |
19 |
% |
11 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
— |
% |
— |
% |
1 |
% |
|||||||
Amortization of intangible assets |
4 |
% |
1 |
% |
5 |
% |
2 |
% |
|||||||
Non-GAAP operating margin |
55 |
% |
60 |
% |
54 |
% |
59 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,273 |
$ |
1,386 |
$ |
2,205 |
$ |
2,460 |
|||||||
GAAP provision for income taxes |
554 |
595 |
974 |
1,027 |
|||||||||||
GAAP effective tax rate |
44 |
% |
43 |
% |
44 |
% |
42 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,273 |
$ |
1,386 |
$ |
2,205 |
$ |
2,460 |
|||||||
Share-based compensation and related payroll tax expenses |
775 |
322 |
1,503 |
621 |
Amortization of intangible assets |
180 |
41 |
359 |
82 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
2,228 |
$ |
1,749 |
$ |
4,067 |
$ |
3,163 |
|||||||
Non-GAAP provision for income taxes |
791 |
627 |
1,441 |
1,116 |
|||||||||||
Non-GAAP effective tax rate |
36 |
% |
36 |
% |
35 |
% |
35 |
% |
|||||||
Net cash provided by operating activities |
$ |
1,880 |
$ |
1,341 |
$ |
3,580 |
$ |
2,626 |
|||||||
Purchases of property and equipment |
(549 |
) |
(469 |
) |
(1,051 |
) |
(832 |
) |
|||||||
Free cash flow |
$ |
1,331 |
$ |
872 |
$ |
2,529 |
$ |
1,794 |