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Three Months Ended September 30, |
Year-over-Year % Change |
|||||||||
In millions, except percentages and per share amounts |
2017 |
2016 |
||||||||
Revenue: |
||||||||||
Advertising |
$ |
10,142 |
$ |
6,816 |
49 |
% |
||||
Payments and other fees |
186 |
195 |
(5 |
)% |
||||||
Total revenue |
10,328 |
7,011 |
47 |
% |
||||||
Total costs and expenses(1)
|
5,206 |
3,894 |
34 |
% |
||||||
Income from operations(1)
|
$ |
5,122 |
$ |
3,117 |
64 |
% |
||||
Operating margin(1)
|
50 |
% |
44 |
% |
||||||
Provision for income taxes |
$ |
529 |
||||||||
Effective tax rate |
10 |
% |
||||||||
Net income(1)
|
$ |
4,707 |
$ |
2,627 |
79 |
% |
||||
Diluted Earnings per Share (EPS)(1)
|
$ |
1.59 |
$ |
0.90 |
77 |
% |
• |
Daily active users (DAUs) – DAUs were 1.37 billion on average for September 2017, an increase of 16% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 2.07 billion as of September 30, 2017, an increase of 16% year-over-year.
|
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 88% of advertising revenue for the third quarter of 2017, up from approximately 84% of advertising revenue in the third quarter of 2016.
|
• |
Capital expenditures – Capital expenditures for the third quarter of 2017 were $1.76 billion.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $38.29 billion at the end of the third quarter of 2017.
|
• |
Headcount – Headcount was 23,165 as of September 30, 2017, an increase of 47% year-over-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, |
||||||||||||||
2017 |
2016(1)
|
2017 |
2016(1)
|
||||||||||||
Revenue |
$ |
10,328 |
$ |
7,011 |
$ |
27,681 |
$ |
18,829 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
1,448 |
987 |
3,843 |
2,742 |
|||||||||||
Research and development |
2,052 |
1,542 |
5,805 |
4,356 |
|||||||||||
Marketing and sales |
1,170 |
926 |
3,351 |
2,654 |
|||||||||||
General and administrative |
536 |
439 |
1,831 |
1,217 |
|||||||||||
Total costs and expenses |
5,206 |
3,894 |
14,830 |
10,969 |
|||||||||||
Income from operations |
5,122 |
3,117 |
12,851 |
7,860 |
|||||||||||
Interest and other income, net |
114 |
47 |
281 |
125 |
|||||||||||
Income before provision for income taxes |
5,236 |
3,164 |
13,132 |
7,985 |
|||||||||||
Provision for income taxes |
529 |
537 |
1,467 |
1,337 |
|||||||||||
Net income |
$ |
4,707 |
$ |
2,627 |
$ |
11,665 |
$ |
6,648 |
|||||||
Less: Net income attributable to participating securities |
3 |
7 |
13 |
20 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
4,704 |
$ |
2,620 |
$ |
11,652 |
$ |
6,628 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
1.62 |
$ |
0.91 |
$ |
4.02 |
$ |
2.32 |
|||||||
Diluted |
$ |
1.59 |
$ |
0.90 |
$ |
3.95 |
$ |
2.28 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,904 |
2,871 |
2,898 |
2,857 |
|||||||||||
Diluted |
2,956 |
2,931 |
2,954 |
2,918 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
47 |
$ |
30 |
$ |
128 |
$ |
81 |
|||||||
Research and development |
776 |
636 |
2,233 |
1,853 |
|||||||||||
Marketing and sales |
114 |
95 |
330 |
272 |
|||||||||||
General and administrative |
73 |
63 |
218 |
181 |
|||||||||||
Total share-based compensation expense |
$ |
1,010 |
$ |
824 |
$ |
2,909 |
$ |
2,387 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2017 |
December 31, 2016 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
7,201 |
$ |
8,903 |
|||||
Marketable securities |
31,088 |
20,546 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $103 and $94 as of September 30, 2017 and December 31, 2016, respectively |
4,424 |
3,993 |
|||||||
Prepaid expenses and other current assets |
1,490 |
959 |
|||||||
Total current assets |
44,203 |
34,401 |
|||||||
Property and equipment, net |
12,158 |
8,591 |
|||||||
Intangible assets, net |
2,050 |
2,535 |
|||||||
Goodwill |
18,213 |
18,122 |
|||||||
Other assets |
2,374 |
1,312 |
|||||||
Total assets |
$ |
78,998 |
$ |
64,961 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
383 |
$ |
302 |
|||||
Partners payable |
314 |
280 |
|||||||
Accrued expenses and other current liabilities |
2,503 |
2,203 |
|||||||
Deferred revenue and deposits |
105 |
90 |
|||||||
Total current liabilities |
3,305 |
2,875 |
|||||||
Other liabilities |
4,485 |
2,892 |
|||||||
Total liabilities |
7,790 |
5,767 |
|||||||
Stockholders' equity: |
|||||||||
Common stock and additional paid-in capital |
40,199 |
38,227 |
|||||||
Accumulated other comprehensive loss |
(200 |
) |
(703 |
) |
|||||
Retained earnings |
31,209 |
21,670 |
|||||||
Total stockholders' equity |
71,208 |
59,194 |
|||||||
Total liabilities and stockholders' equity |
$ |
78,998 |
$ |
64,961 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2017 |
2016(1)
|
2017 |
2016(1)
|
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
4,707 |
$ |
2,627 |
$ |
11,665 |
$ |
6,648 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
773 |
591 |
2,172 |
1,728 |
|||||||||||
Share-based compensation |
1,010 |
824 |
2,909 |
2,387 |
|||||||||||
Deferred income taxes |
(94 |
) |
(23 |
) |
(152 |
) |
(201 |
) |
|||||||
Other |
7 |
4 |
18 |
23 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(458 |
) |
(253 |
) |
(235 |
) |
(478 |
) |
|||||||
Prepaid expenses and other current assets |
(57 |
) |
(57 |
) |
(634 |
) |
(314 |
) |
|||||||
Other assets |
47 |
42 |
130 |
46 |
|||||||||||
Accounts payable |
31 |
18 |
(7 |
) |
(21 |
) |
|||||||||
Partners payable |
32 |
6 |
22 |
20 |
|||||||||||
Accrued expenses and other current liabilities |
(62 |
) |
228 |
95 |
642 |
||||||||||
Deferred revenue and deposits |
16 |
(2 |
) |
12 |
21 |
||||||||||
Other liabilities |
176 |
31 |
550 |
677 |
|||||||||||
Net cash provided by operating activities |
6,128 |
4,036 |
16,545 |
11,178 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(1,755 |
) |
(1,095 |
) |
(4,470 |
) |
(3,222 |
) |
|||||||
Purchases of marketable securities |
(6,273 |
) |
(7,733 |
) |
(20,410 |
) |
(17,368 |
) |
|||||||
Sales of marketable securities |
3,651 |
5,633 |
7,649 |
9,791 |
|||||||||||
Maturities of marketable securities |
730 |
131 |
2,228 |
1,034 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(98 |
) |
(61 |
) |
(106 |
) |
(81 |
) |
|||||||
Change in restricted cash and deposits |
31 |
8 |
64 |
82 |
|||||||||||
Net cash used in investing activities |
(3,714 |
) |
(3,117 |
) |
(15,045 |
) |
(9,764 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement of equity awards |
(866 |
) |
(6 |
) |
(2,360 |
) |
(6 |
) |
|||||||
Principal payments on capital lease and other financing obligations |
— |
— |
— |
(312 |
) |
||||||||||
Repurchases of Class A common stock |
(640 |
) |
— |
(1,018 |
) |
— |
|||||||||
Other financing activities, net |
(26 |
) |
(2 |
) |
(14 |
) |
4 |
||||||||
Net cash used in financing activities |
(1,532 |
) |
(8 |
) |
(3,392 |
) |
(314 |
) |
|||||||
Effect of exchange rate changes on cash and cash equivalents |
67 |
19 |
190 |
31 |
|||||||||||
Net increase (decrease) in cash and cash equivalents |
949 |
930 |
(1,702 |
) |
1,131 |
||||||||||
Cash and cash equivalents at beginning of period |
6,252 |
5,108 |
8,903 |
4,907 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
7,201 |
$ |
6,038 |
$ |
7,201 |
$ |
6,038 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2017 |
2016(1)
|
2017 |
2016(1)
|
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
— |
$ |
— |
$ |
— |
$ |
11 |
|||||||
Income taxes, net |
$ |
434 |
$ |
357 |
$ |
1,793 |
$ |
764 |
|||||||
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 |
$ |
285 |
$ |
230 |
$ |
441 |
$ |
319 |
|||||||
Settlement of acquisition-related contingent consideration liability |
$ |
102 |
$ |
33 |
$ |
102 |
$ |
33 |
|||||||
Change in unsettled repurchases of Class A common stock |
$ |
(10 |
) |
$ |
— |
$ |
20 |
$ |
— |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
GAAP revenue |
$ |
10,328 |
$ |
7,011 |
$ |
27,681 |
$ |
18,829 |
|||||||
Foreign exchange effect on 2017 revenue using 2016 rates |
(128 |
) |
36 |
||||||||||||
Revenue excluding foreign exchange effect |
$ |
10,200 |
$ |
27,717 |
|||||||||||
GAAP revenue year-over-year change % |
47 |
% |
47 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
45 |
% |
47 |
% |
|||||||||||
GAAP advertising revenue |
$ |
10,142 |
$ |
6,816 |
$ |
27,163 |
$ |
18,256 |
|||||||
Foreign exchange effect on 2017 advertising revenue using 2016 rates |
(128 |
) |
35 |
||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
10,014 |
$ |
27,198 |
|||||||||||
GAAP advertising revenue year-over-year change % |
49 |
% |
49 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
47 |
% |
49 |
% |
|||||||||||
Net cash provided by operating activities(1)
|
$ |
6,128 |
$ |
4,036 |
$ |
16,545 |
$ |
11,178 |
|||||||
Purchases of property and equipment |
(1,755 |
) |
(1,095 |
) |
(4,470 |
) |
(3,222 |
) |
|||||||
Free cash flow(1)
|
$ |
4,373 |
$ |
2,941 |
$ |
12,075 |
$ |
7,956 |