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Three Months Ended September 30, |
Year-over-Year % Change |
|||||||||
In millions, except percentages and per share amounts |
2016 |
2015 |
||||||||
Revenue: |
||||||||||
Advertising |
$ |
6,816 |
$ |
4,299 |
59 |
% |
||||
Payments and other fees |
195 |
202 |
(3 |
)% |
||||||
Total revenue |
7,011 |
4,501 |
56 |
% |
||||||
Total costs and expenses |
3,889 |
3,042 |
28 |
% |
||||||
Income from operations |
$ |
3,122 |
$ |
1,459 |
114 |
% |
||||
Operating margin |
45 |
% |
32 |
% |
||||||
Provision for income taxes |
790 |
|||||||||
Effective tax rate |
25 |
% |
||||||||
Net income |
$ |
2,379 |
$ |
896 |
166 |
% |
||||
Diluted Earnings per Share (EPS) |
$ |
0.82 |
$ |
0.31 |
165 |
% |
* |
The information in the Third Quarter 2016 Financial Highlights table is presented in accordance with generally accepted accounting principles in the United States (GAAP). For non-GAAP financial information, see the table below titled "Reconciliation of GAAP to Non-GAAP Results." |
• |
Daily active users (DAUs) – DAUs were 1.18 billion on average for September 2016, an increase of 17% year-over-year.
|
• |
Mobile DAUs – Mobile DAUs were 1.09 billion on average for September 2016, an increase of 22% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 1.79 billion as of September 30, 2016, an increase of 16% year-over-year.
|
• |
Mobile MAUs – Mobile MAUs were 1.66 billion as of September 30, 2016, an increase of 20% year-over-year.
|
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 84% of advertising revenue for the third quarter of 2016, up from approximately 78% of advertising revenue in the third quarter of 2015.
|
• |
Capital expenditures – Capital expenditures for the third quarter of 2016 were $1.10 billion.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $26.14 billion at the end of the third quarter of 2016.
|
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, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Revenue |
$ |
7,011 |
$ |
4,501 |
$ |
18,829 |
$ |
12,087 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
987 |
720 |
2,741 |
2,043 |
|||||||||||
Research and development |
1,539 |
1,271 |
4,345 |
3,502 |
|||||||||||
Marketing and sales |
925 |
706 |
2,651 |
1,953 |
|||||||||||
General and administrative |
438 |
345 |
1,216 |
924 |
|||||||||||
Total costs and expenses |
3,889 |
3,042 |
10,953 |
8,422 |
|||||||||||
Income from operations |
3,122 |
1,459 |
7,876 |
3,665 |
|||||||||||
Interest and other income/(expense), net |
47 |
(27 |
) |
125 |
(28 |
) |
|||||||||
Income before provision for income taxes |
3,169 |
1,432 |
8,001 |
3,637 |
|||||||||||
Provision for income taxes |
790 |
536 |
2,057 |
1,510 |
|||||||||||
Net income |
$ |
2,379 |
$ |
896 |
$ |
5,944 |
$ |
2,127 |
|||||||
Less: Net income attributable to participating securities |
6 |
5 |
18 |
12 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
2,373 |
$ |
891 |
$ |
5,926 |
$ |
2,115 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.83 |
$ |
0.32 |
$ |
2.07 |
$ |
0.76 |
|||||||
Diluted |
$ |
0.82 |
$ |
0.31 |
$ |
2.05 |
$ |
0.75 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,871 |
2,808 |
2,857 |
2,796 |
|||||||||||
Diluted |
2,915 |
2,863 |
2,902 |
2,848 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
30 |
$ |
21 |
$ |
80 |
$ |
59 |
|||||||
Research and development |
633 |
598 |
1,842 |
1,767 |
|||||||||||
Marketing and sales |
94 |
82 |
269 |
236 |
|||||||||||
General and administrative |
62 |
56 |
180 |
161 |
|||||||||||
Total share-based compensation expense |
$ |
819 |
$ |
757 |
$ |
2,371 |
$ |
2,223 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
1 |
$ |
— |
$ |
4 |
$ |
2 |
|||||||
Research and development |
14 |
10 |
57 |
34 |
|||||||||||
Marketing and sales |
2 |
2 |
9 |
8 |
|||||||||||
General and administrative |
3 |
2 |
11 |
7 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
20 |
$ |
14 |
$ |
81 |
$ |
51 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
55 |
$ |
44 |
$ |
153 |
$ |
133 |
|||||||
Research and development |
9 |
10 |
28 |
29 |
|||||||||||
Marketing and sales |
109 |
102 |
321 |
307 |
|||||||||||
General and administrative |
22 |
24 |
66 |
70 |
|||||||||||
Total amortization of intangible assets |
$ |
195 |
$ |
180 |
$ |
568 |
$ |
539 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2016 |
December 31, 2015 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
6,038 |
$ |
4,907 |
|||||
Marketable securities |
20,102 |
13,527 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $83 and $68 as of September 30, 2016 and December 31, 2015, respectively |
3,070 |
2,559 |
|||||||
Prepaid expenses and other current assets |
1,118 |
659 |
|||||||
Total current assets |
30,328 |
21,652 |
|||||||
Property and equipment, net |
7,899 |
5,687 |
|||||||
Intangible assets, net |
2,702 |
3,246 |
|||||||
Goodwill |
18,085 |
18,026 |
|||||||
Other assets |
660 |
796 |
|||||||
Total assets |
$ |
59,674 |
$ |
49,407 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
260 |
$ |
196 |
|||||
Partners payable |
239 |
217 |
|||||||
Accrued expenses and other current liabilities |
2,018 |
1,449 |
|||||||
Deferred revenue and deposits |
78 |
56 |
|||||||
Current portion of capital lease obligations |
— |
7 |
|||||||
Total current liabilities |
2,595 |
1,925 |
|||||||
Capital lease obligations, less current portion |
— |
107 |
|||||||
Other liabilities |
2,964 |
3,157 |
|||||||
Total liabilities |
5,559 |
5,189 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
38,756 |
34,886 |
|||||||
Accumulated other comprehensive loss |
(372 |
) |
(455 |
) |
|||||
Retained earnings |
15,731 |
9,787 |
|||||||
Total stockholders' equity |
54,115 |
44,218 |
|||||||
Total liabilities and stockholders' equity |
$ |
59,674 |
$ |
49,407 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
2,379 |
$ |
896 |
$ |
5,944 |
$ |
2,127 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
591 |
486 |
1,728 |
1,402 |
|||||||||||
Share-based compensation |
819 |
757 |
2,371 |
2,214 |
|||||||||||
Deferred income taxes |
19 |
(383 |
) |
(123 |
) |
(672 |
) |
||||||||
Tax benefit from share-based award activity |
459 |
346 |
1,420 |
1,155 |
|||||||||||
Excess tax benefit from share-based award activity |
(459 |
) |
(346 |
) |
(1,420 |
) |
(1,155 |
) |
|||||||
Other |
4 |
6 |
23 |
13 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(253 |
) |
(207 |
) |
(478 |
) |
(405 |
) |
|||||||
Prepaid expenses and other current assets |
(51 |
) |
(55 |
) |
(311 |
) |
(145 |
) |
|||||||
Other assets |
42 |
29 |
46 |
4 |
|||||||||||
Accounts payable |
18 |
(9 |
) |
(21 |
) |
7 |
|||||||||
Partners payable |
6 |
59 |
20 |
40 |
|||||||||||
Accrued expenses and other current liabilities |
219 |
50 |
641 |
291 |
|||||||||||
Deferred revenue and deposits |
(2 |
) |
(1 |
) |
21 |
(18 |
) |
||||||||
Other liabilities |
(214 |
) |
564 |
(103 |
) |
914 |
|||||||||
Net cash provided by operating activities |
3,577 |
2,192 |
9,758 |
5,772 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(1,095 |
) |
(780 |
) |
(3,222 |
) |
(1,831 |
) |
|||||||
Purchases of marketable securities |
(7,733 |
) |
(4,773 |
) |
(17,368 |
) |
(10,333 |
) |
|||||||
Sales of marketable securities |
5,633 |
1,399 |
9,791 |
4,125 |
|||||||||||
Maturities of marketable securities |
131 |
848 |
1,034 |
1,563 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(61 |
) |
(27 |
) |
(81 |
) |
(309 |
) |
|||||||
Change in restricted cash and deposits |
8 |
33 |
82 |
77 |
|||||||||||
Net cash used in investing activities |
(3,117 |
) |
(3,300 |
) |
(9,764 |
) |
(6,708 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Principal payments on capital lease and other financing obligations |
— |
(23 |
) |
(312 |
) |
(107 |
) |
||||||||
Excess tax benefit from share-based award activity |
459 |
346 |
1,420 |
1,155 |
|||||||||||
Other financing activities, net |
(8 |
) |
(8 |
) |
(2 |
) |
(20 |
) |
|||||||
Net cash provided by financing activities |
451 |
315 |
1,106 |
1,028 |
|||||||||||
Effect of exchange rate changes on cash and cash equivalents |
19 |
(22 |
) |
31 |
(99 |
) |
|||||||||
Net increase (decrease) in cash and cash equivalents |
930 |
(815 |
) |
1,131 |
(7 |
) |
|||||||||
Cash and cash equivalents at beginning of period |
5,108 |
5,123 |
4,907 |
4,315 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
6,038 |
$ |
4,308 |
$ |
6,038 |
$ |
4,308 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
— |
$ |
3 |
$ |
11 |
$ |
8 |
|||||||
Income taxes, net |
$ |
357 |
$ |
40 |
$ |
764 |
$ |
199 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in accounts payable, accrued expenses and other current liabilities, and other liabilities related to property and equipment additions |
$ |
230 |
$ |
(87 |
) |
$ |
319 |
$ |
107 |
||||||
Promissory note payable issued in connection with an acquisition |
$ |
— |
$ |
— |
$ |
— |
$ |
198 |
|||||||
Settlement of contingent consideration liability |
$ |
33 |
$ |
— |
$ |
33 |
$ |
— |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
GAAP revenue |
$ |
7,011 |
$ |
4,501 |
$ |
18,829 |
$ |
12,087 |
|||||||
Foreign exchange effect on 2016 revenue using 2015 rates |
31 |
234 |
|||||||||||||
Revenue excluding foreign exchange effect |
$ |
7,042 |
$ |
19,063 |
|||||||||||
GAAP revenue year-over-year change % |
56 |
% |
56 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
56 |
% |
58 |
% |
|||||||||||
GAAP advertising revenue |
$ |
6,816 |
$ |
4,299 |
$ |
18,256 |
$ |
11,442 |
|||||||
Foreign exchange effect on 2016 advertising revenue using 2015 rates |
31 |
234 |
|||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
6,847 |
$ |
18,490 |
|||||||||||
GAAP advertising revenue year-over-year change % |
59 |
% |
60 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
59 |
% |
62 |
% |
|||||||||||
GAAP costs and expenses |
$ |
3,889 |
$ |
3,042 |
$ |
10,953 |
$ |
8,422 |
|||||||
Share-based compensation expense |
(819 |
) |
(757 |
) |
(2,371 |
) |
(2,223 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(20 |
) |
(14 |
) |
(81 |
) |
(51 |
) |
|||||||
Amortization of intangible assets |
(195 |
) |
(180 |
) |
(568 |
) |
(539 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
2,855 |
$ |
2,091 |
$ |
7,933 |
$ |
5,609 |
|||||||
GAAP income from operations |
$ |
3,122 |
$ |
1,459 |
$ |
7,876 |
$ |
3,665 |
|||||||
Share-based compensation expense |
819 |
757 |
2,371 |
2,223 |
|||||||||||
Payroll tax expenses related to share-based compensation |
20 |
14 |
81 |
51 |
|||||||||||
Amortization of intangible assets |
195 |
180 |
568 |
539 |
|||||||||||
Non-GAAP income from operations |
$ |
4,156 |
$ |
2,410 |
$ |
10,896 |
$ |
6,478 |
|||||||
GAAP net income |
$ |
2,379 |
$ |
896 |
$ |
5,944 |
$ |
2,127 |
|||||||
Share-based compensation expense |
819 |
757 |
2,371 |
2,223 |
|||||||||||
Payroll tax expenses related to share-based compensation |
20 |
14 |
81 |
51 |
|||||||||||
Amortization of intangible assets |
195 |
180 |
568 |
539 |
|||||||||||
Income tax adjustments |
(245 |
) |
(219 |
) |
(746 |
) |
(687 |
) |
|||||||
Non-GAAP net income |
$ |
3,168 |
$ |
1,628 |
$ |
8,218 |
$ |
4,253 |
|||||||
GAAP and Non-GAAP diluted shares |
2,915 |
2,863 |
2,902 |
2,848 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.82 |
$ |
0.31 |
$ |
2.05 |
$ |
0.75 |
|||||||
Non-GAAP adjustments to net income |
0.27 |
0.26 |
0.78 |
0.75 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
1.09 |
$ |
0.57 |
$ |
2.83 |
$ |
1.50 |
|||||||
GAAP operating margin |
45 |
% |
32 |
% |
42 |
% |
30 |
% |
|||||||
Share-based compensation expense |
12 |
% |
17 |
% |
13 |
% |
18 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
— |
% |
— |
% |
— |
% |
|||||||
Amortization of intangible assets |
3 |
% |
4 |
% |
3 |
% |
4 |
% |
|||||||
Non-GAAP operating margin |
59 |
% |
54 |
% |
58 |
% |
54 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
3,169 |
$ |
1,432 |
$ |
8,001 |
$ |
3,637 |
|||||||
GAAP provision for income taxes |
790 |
536 |
2,057 |
1,510 |
|||||||||||
GAAP effective tax rate |
25 |
% |
37 |
% |
26 |
% |
42 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
3,169 |
$ |
1,432 |
$ |
8,001 |
$ |
3,637 |
|||||||
Share-based compensation and related payroll tax expenses |
839 |
771 |
2,452 |
2,274 |
Amortization of intangible assets |
195 |
180 |
568 |
539 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
4,203 |
$ |
2,383 |
$ |
11,021 |
$ |
6,450 |
|||||||
Non-GAAP provision for income taxes |
1,035 |
755 |
2,803 |
2,197 |
|||||||||||
Non-GAAP effective tax rate |
25 |
% |
32 |
% |
25 |
% |
34 |
% |
|||||||
Net cash provided by operating activities |
$ |
3,577 |
$ |
2,192 |
$ |
9,758 |
$ |
5,772 |
|||||||
Purchases of property and equipment |
(1,095 |
) |
(780 |
) |
(3,222 |
) |
(1,831 |
) |
|||||||
Free cash flow |
$ |
2,482 |
$ |
1,412 |
$ |
6,536 |
$ |
3,941 |