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Three Months Ended June 30, |
Year-over-Year % Change |
|||||||||
In millions, except percentages and per share amounts |
2018 |
2017 |
||||||||
Revenue: |
||||||||||
Advertising |
$ |
13,038 |
$ |
9,164 |
42 |
% |
||||
Payments and other fees |
193 |
157 |
23 |
% |
||||||
Total revenue |
13,231 |
9,321 |
42 |
% |
||||||
Total costs and expenses |
7,368 |
4,920 |
50 |
% |
||||||
Income from operations |
$ |
5,863 |
$ |
4,401 |
33 |
% |
||||
Operating margin |
44 |
% |
47 |
% |
||||||
Provision for income taxes |
$ |
762 |
||||||||
Effective tax rate |
13 |
% |
||||||||
Net income |
$ |
5,106 |
$ |
3,894 |
31 |
% |
||||
Diluted Earnings per Share (EPS) |
$ |
1.74 |
$ |
1.32 |
32 |
% |
• |
Daily active users (DAUs) – DAUs were 1.47 billion on average for June 2018, an increase of 11% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 2.23 billion as of June 30, 2018, an increase of 11% year-over-year.
|
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 91% of advertising revenue for the second quarter of 2018, up from approximately 87% of advertising revenue in the second quarter of 2017.
|
• |
Capital expenditures – Capital expenditures for the second quarter of 2018 were $3.46 billion.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $42.31 billion at the end of the second quarter of 2018.
|
• |
Headcount – Headcount was 30,275 as of June 30, 2018, 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 June 30, |
Six Months Ended June 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenue |
$ |
13,231 |
$ |
9,321 |
$ |
25,197 |
$ |
17,353 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
2,214 |
1,237 |
4,141 |
2,395 |
|||||||||||
Research and development |
2,523 |
1,919 |
4,761 |
3,753 |
|||||||||||
Marketing and sales |
1,855 |
1,124 |
3,450 |
2,181 |
|||||||||||
General and administrative |
776 |
640 |
1,532 |
1,295 |
|||||||||||
Total costs and expenses |
7,368 |
4,920 |
13,884 |
9,624 |
|||||||||||
Income from operations |
5,863 |
4,401 |
11,313 |
7,729 |
|||||||||||
Interest and other income, net |
5 |
87 |
165 |
168 |
|||||||||||
Income before provision for income taxes |
5,868 |
4,488 |
11,478 |
7,897 |
|||||||||||
Provision for income taxes |
762 |
594 |
1,385 |
938 |
|||||||||||
Net income |
$ |
5,106 |
$ |
3,894 |
$ |
10,093 |
$ |
6,959 |
|||||||
Less: Net income attributable to participating securities |
— |
4 |
1 |
10 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
5,106 |
$ |
3,890 |
$ |
10,092 |
$ |
6,949 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
1.76 |
$ |
1.34 |
$ |
3.48 |
$ |
2.40 |
|||||||
Diluted |
$ |
1.74 |
$ |
1.32 |
$ |
3.43 |
$ |
2.36 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,895 |
2,900 |
2,900 |
2,895 |
|||||||||||
Diluted |
2,930 |
2,951 |
2,939 |
2,950 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
74 |
$ |
47 |
$ |
130 |
$ |
81 |
|||||||
Research and development |
881 |
787 |
1,599 |
1,457 |
|||||||||||
Marketing and sales |
139 |
120 |
248 |
216 |
|||||||||||
General and administrative |
92 |
78 |
164 |
145 |
|||||||||||
Total share-based compensation expense |
$ |
1,186 |
$ |
1,032 |
$ |
2,141 |
$ |
1,899 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
June 30, 2018 |
December 31, 2017 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
11,552 |
$ |
8,079 |
|||||
Marketable securities |
30,757 |
33,632 |
|||||||
Accounts receivable, net of allowances of $198 and $189 as of June 30, 2018 and December 31, 2017, respectively |
5,590 |
5,832 |
|||||||
Prepaid expenses and other current assets |
1,934 |
1,020 |
|||||||
Total current assets |
49,833 |
48,563 |
|||||||
Property and equipment, net |
18,357 |
13,721 |
|||||||
Intangible assets, net |
1,573 |
1,884 |
|||||||
Goodwill |
18,263 |
18,221 |
|||||||
Other assets |
2,265 |
2,135 |
|||||||
Total assets |
$ |
90,291 |
$ |
84,524 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
419 |
$ |
380 |
|||||
Partners payable |
440 |
390 |
|||||||
Accrued expenses and other current liabilities |
3,720 |
2,892 |
|||||||
Deferred revenue and deposits |
91 |
98 |
|||||||
Total current liabilities |
4,670 |
3,760 |
|||||||
Other liabilities |
6,239 |
6,417 |
|||||||
Total liabilities |
10,909 |
10,177 |
|||||||
Commitments and contingencies |
|||||||||
Stockholders' equity: |
|||||||||
Common stock and additional paid-in capital |
41,832 |
40,584 |
|||||||
Accumulated other comprehensive loss |
(687 |
) |
(227 |
) |
|||||
Retained earnings |
38,237 |
33,990 |
|||||||
Total stockholders' equity |
79,382 |
74,347 |
|||||||
Total liabilities and stockholders' equity |
$ |
90,291 |
$ |
84,524 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2018 |
2017* |
2018 |
2017* |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
5,106 |
$ |
3,894 |
$ |
10,093 |
$ |
6,959 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
1,034 |
728 |
1,983 |
1,400 |
|||||||||||
Share-based compensation |
1,186 |
1,032 |
2,141 |
1,899 |
|||||||||||
Deferred income taxes |
101 |
26 |
54 |
(58 |
) |
||||||||||
Other |
10 |
8 |
18 |
12 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(627 |
) |
(386 |
) |
161 |
223 |
|||||||||
Prepaid expenses and other current assets |
(535 |
) |
(212 |
) |
(898 |
) |
(577 |
) |
|||||||
Other assets |
(77 |
) |
51 |
(59 |
) |
82 |
|||||||||
Accounts payable |
49 |
(28 |
) |
50 |
(38 |
) |
|||||||||
Partners payable |
51 |
(7 |
) |
53 |
(10 |
) |
|||||||||
Accrued expenses and other current liabilities |
(17 |
) |
96 |
690 |
157 |
||||||||||
Deferred revenue and deposits |
— |
6 |
(4 |
) |
(4 |
) |
|||||||||
Other liabilities |
18 |
152 |
(124 |
) |
373 |
||||||||||
Net cash provided by operating activities |
6,299 |
5,360 |
14,158 |
10,418 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(3,459 |
) |
(1,444 |
) |
(6,272 |
) |
(2,715 |
) |
|||||||
Purchases of marketable securities |
(4,261 |
) |
(7,145 |
) |
(8,283 |
) |
(14,137 |
) |
|||||||
Sales of marketable securities |
4,282 |
2,236 |
8,612 |
3,998 |
|||||||||||
Maturities of marketable securities |
1,071 |
899 |
2,338 |
1,498 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(16 |
) |
(8 |
) |
(65 |
) |
(8 |
) |
|||||||
Other investing activities, net |
— |
(4 |
) |
(1 |
) |
(22 |
) |
||||||||
Net cash used in investing activities |
(2,383 |
) |
(5,466 |
) |
(3,671 |
) |
(11,386 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement of equity awards |
(927 |
) |
(724 |
) |
(1,758 |
) |
(1,495 |
) |
|||||||
Repurchases of Class A common stock |
(3,349 |
) |
(150 |
) |
(5,123 |
) |
(378 |
) |
|||||||
Other financing activities, net |
4 |
5 |
7 |
12 |
|||||||||||
Net cash used in financing activities |
(4,272 |
) |
(869 |
) |
(6,874 |
) |
(1,861 |
) |
|||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(186 |
) |
94 |
(149 |
) |
122 |
|||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
(542 |
) |
(881 |
) |
3,464 |
(2,707 |
) |
||||||||
Cash, cash equivalents, and restricted cash at beginning of year |
12,210 |
7,283 |
8,204 |
9,109 |
|||||||||||
Cash, cash equivalents, and restricted cash at end of the period |
$ |
11,668 |
$ |
6,402 |
$ |
11,668 |
$ |
6,402 |
|||||||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets |
|||||||||||||||
Cash and cash equivalents |
$ |
11,552 |
$ |
6,252 |
$ |
11,552 |
$ |
6,252 |
|||||||
Restricted cash, included in prepaid expenses and other current assets |
11 |
59 |
11 |
59 |
|||||||||||
Restricted cash, included in other assets |
105 |
91 |
105 |
91 |
|||||||||||
Total cash, cash equivalents, and restricted cash |
$ |
11,668 |
$ |
6,402 |
$ |
11,668 |
$ |
6,402 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2018 |
2017* |
2018 |
2017* |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Income taxes, net |
$ |
1,545 |
$ |
695 |
$ |
2,281 |
$ |
1,359 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in prepaids and liabilities related to property and equipment additions |
$ |
(198 |
) |
$ |
170 |
$ |
231 |
$ |
240 |
||||||
Change in unsettled repurchases of Class A common stock |
$ |
(135 |
) |
$ |
30 |
$ |
6 |
$ |
30 |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
GAAP revenue |
$ |
13,231 |
$ |
9,321 |
$ |
25,197 |
$ |
17,353 |
|||||||
Foreign exchange effect on 2018 revenue using 2017 rates |
(373 |
) |
(908 |
) |
|||||||||||
Revenue excluding foreign exchange effect |
$ |
12,858 |
$ |
24,289 |
|||||||||||
GAAP revenue year-over-year change % |
42 |
% |
45 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
38 |
% |
40 |
% |
|||||||||||
GAAP advertising revenue |
$ |
13,038 |
$ |
9,164 |
$ |
24,833 |
$ |
17,021 |
|||||||
Foreign exchange effect on 2018 advertising revenue using 2017 rates |
(371 |
) |
(906 |
) |
|||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
12,667 |
$ |
23,927 |
|||||||||||
GAAP advertising revenue year-over-year change % |
42 |
% |
46 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
38 |
% |
41 |
% |
|||||||||||
Net cash provided by operating activities |
$ |
6,299 |
$ |
5,360 |
$ |
14,158 |
$ |
10,418 |
|||||||
Purchases of property and equipment |
(3,459 |
) |
(1,444 |
) |
(6,272 |
) |
(2,715 |
) |
|||||||
Free cash flow |
$ |
2,840 |
$ |
3,916 |
$ |
7,886 |
$ |
7,703 |