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Three Months Ended September 30, |
Year-over-Year % Change |
|||||||||
In millions, except percentages and per share amounts |
2018 |
2017 |
||||||||
Revenue: |
||||||||||
Advertising |
$ |
13,539 |
$ |
10,142 |
33 |
% |
||||
Payments and other fees |
188 |
186 |
1 |
% |
||||||
Total revenue |
13,727 |
10,328 |
33 |
% |
||||||
Total costs and expenses |
7,946 |
5,206 |
53 |
% |
||||||
Income from operations |
$ |
5,781 |
$ |
5,122 |
13 |
% |
||||
Operating margin |
42 |
% |
50 |
% |
||||||
Provision for income taxes |
$ |
775 |
||||||||
Effective tax rate |
13 |
% |
||||||||
Net income |
$ |
5,137 |
$ |
4,707 |
9 |
% |
||||
Diluted Earnings per Share (EPS) |
$ |
1.76 |
$ |
1.59 |
11 |
% |
• |
Daily active users (DAUs) – DAUs were 1.49 billion on average for September 2018, an increase of 9% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 2.27 billion as of September 30, 2018, an increase of 10% year-over-year.
|
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 92% of advertising revenue for the third quarter of 2018, up from approximately 88% of advertising revenue in the third quarter of 2017.
|
• |
Effective Tax Rate – Our effective tax rate was 13%, which was lower than expected primarily due to the withdrawal in August of an appellate court ruling in the case of Altera Corp. v. Commissioner.
|
• |
Capital expenditures – Capital expenditures for the third quarter of 2018 were $3.34 billion.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $41.21 billion at the end of the third quarter of 2018.
|
• |
Headcount – Headcount was 33,606 as of September 30, 2018, an increase of 45% 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, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenue |
$ |
13,727 |
$ |
10,328 |
$ |
38,924 |
$ |
27,681 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
2,418 |
1,448 |
6,559 |
3,843 |
|||||||||||
Research and development |
2,657 |
2,052 |
7,418 |
5,805 |
|||||||||||
Marketing and sales |
1,928 |
1,170 |
5,379 |
3,351 |
|||||||||||
General and administrative |
943 |
536 |
2,475 |
1,831 |
|||||||||||
Total costs and expenses |
7,946 |
5,206 |
21,831 |
14,830 |
|||||||||||
Income from operations |
5,781 |
5,122 |
17,093 |
12,851 |
|||||||||||
Interest and other income, net |
131 |
114 |
297 |
281 |
|||||||||||
Income before provision for income taxes |
5,912 |
5,236 |
17,390 |
13,132 |
|||||||||||
Provision for income taxes |
775 |
529 |
2,160 |
1,467 |
|||||||||||
Net income |
$ |
5,137 |
$ |
4,707 |
$ |
15,230 |
$ |
11,665 |
|||||||
Less: Net income attributable to participating securities |
— |
3 |
1 |
13 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
5,137 |
$ |
4,704 |
$ |
15,229 |
$ |
11,652 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
1.78 |
$ |
1.62 |
$ |
5.26 |
$ |
4.02 |
|||||||
Diluted |
$ |
1.76 |
$ |
1.59 |
$ |
5.20 |
$ |
3.95 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,885 |
2,904 |
2,895 |
2,898 |
|||||||||||
Diluted |
2,913 |
2,956 |
2,931 |
2,954 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
72 |
$ |
47 |
$ |
202 |
$ |
128 |
|||||||
Research and development |
748 |
776 |
2,347 |
2,233 |
|||||||||||
Marketing and sales |
133 |
114 |
380 |
330 |
|||||||||||
General and administrative |
87 |
73 |
251 |
218 |
|||||||||||
Total share-based compensation expense |
$ |
1,040 |
$ |
1,010 |
$ |
3,180 |
$ |
2,909 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2018 |
December 31, 2017 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
9,637 |
$ |
8,079 |
|||||
Marketable securities |
31,569 |
33,632 |
|||||||
Accounts receivable, net of allowances of $207 and $189 as of September 30, 2018 and December 31, 2017, respectively |
6,058 |
5,832 |
|||||||
Prepaid expenses and other current assets |
1,883 |
1,020 |
|||||||
Total current assets |
49,147 |
48,563 |
|||||||
Property and equipment, net |
21,112 |
13,721 |
|||||||
Intangible assets, net |
1,451 |
1,884 |
|||||||
Goodwill |
18,304 |
18,221 |
|||||||
Other assets |
2,438 |
2,135 |
|||||||
Total assets |
$ |
92,452 |
$ |
84,524 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
590 |
$ |
380 |
|||||
Partners payable |
502 |
390 |
|||||||
Accrued expenses and other current liabilities |
4,255 |
2,892 |
|||||||
Deferred revenue and deposits |
115 |
98 |
|||||||
Total current liabilities |
5,462 |
3,760 |
|||||||
Other liabilities |
6,648 |
6,417 |
|||||||
Total liabilities |
12,110 |
10,177 |
|||||||
Commitments and contingencies |
|||||||||
Stockholders' equity: |
|||||||||
Common stock and additional paid-in capital |
42,352 |
40,584 |
|||||||
Accumulated other comprehensive loss |
(777 |
) |
(227 |
) |
|||||
Retained earnings |
38,767 |
33,990 |
|||||||
Total stockholders' equity |
80,342 |
74,347 |
|||||||
Total liabilities and stockholders' equity |
$ |
92,452 |
$ |
84,524 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2018 |
2017* |
2018 |
2017* |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
5,137 |
$ |
4,707 |
$ |
15,230 |
$ |
11,665 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
1,107 |
773 |
3,090 |
2,172 |
|||||||||||
Share-based compensation |
1,040 |
1,010 |
3,180 |
2,909 |
|||||||||||
Deferred income taxes |
30 |
(94 |
) |
83 |
(152 |
) |
|||||||||
Other |
3 |
7 |
19 |
18 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(489 |
) |
(458 |
) |
(328 |
) |
(235 |
) |
|||||||
Prepaid expenses and other current assets |
8 |
(57 |
) |
(889 |
) |
(634 |
) |
||||||||
Other assets |
(40 |
) |
47 |
(99 |
) |
130 |
|||||||||
Accounts payable |
37 |
31 |
88 |
(7 |
) |
||||||||||
Partners payable |
63 |
32 |
116 |
22 |
|||||||||||
Accrued expenses and other current liabilities |
350 |
(62 |
) |
1,044 |
95 |
||||||||||
Deferred revenue and deposits |
24 |
16 |
20 |
12 |
|||||||||||
Other liabilities |
226 |
176 |
102 |
550 |
|||||||||||
Net cash provided by operating activities |
7,496 |
6,128 |
21,656 |
16,545 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(3,343 |
) |
(1,755 |
) |
(9,614 |
) |
(4,470 |
) |
|||||||
Purchases of marketable securities |
(4,375 |
) |
(6,273 |
) |
(12,658 |
) |
(20,410 |
) |
|||||||
Sales of marketable securities |
2,492 |
3,651 |
11,104 |
7,649 |
|||||||||||
Maturities of marketable securities |
1,053 |
730 |
3,391 |
2,228 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(72 |
) |
(98 |
) |
(137 |
) |
(106 |
) |
|||||||
Other investing activities, net |
(3 |
) |
16 |
(4 |
) |
(6 |
) |
||||||||
Net cash used in investing activities |
(4,248 |
) |
(3,729 |
) |
(7,918 |
) |
(15,115 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement of equity awards |
(905 |
) |
(866 |
) |
(2,663 |
) |
(2,360 |
) |
|||||||
Repurchases of Class A common stock |
(4,256 |
) |
(640 |
) |
(9,379 |
) |
(1,018 |
) |
|||||||
Other financing activities, net |
3 |
(26 |
) |
11 |
(14 |
) |
|||||||||
Net cash used in financing activities |
(5,158 |
) |
(1,532 |
) |
(12,031 |
) |
(3,392 |
) |
|||||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(14 |
) |
70 |
(167 |
) |
192 |
|||||||||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
(1,924 |
) |
937 |
1,540 |
(1,770 |
) |
|||||||||
Cash, cash equivalents, and restricted cash at beginning of the period |
11,668 |
6,402 |
8,204 |
9,109 |
|||||||||||
Cash, cash equivalents, and restricted cash at end of the period |
$ |
9,744 |
$ |
7,339 |
$ |
9,744 |
$ |
7,339 |
|||||||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets |
|||||||||||||||
Cash and cash equivalents |
$ |
9,637 |
$ |
7,201 |
$ |
9,637 |
$ |
7,201 |
|||||||
Restricted cash, included in prepaid expenses and other current assets |
7 |
41 |
7 |
41 |
|||||||||||
Restricted cash, included in other assets |
100 |
97 |
100 |
97 |
|||||||||||
Total cash, cash equivalents, and restricted cash |
$ |
9,744 |
$ |
7,339 |
$ |
9,744 |
$ |
7,339 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2018 |
2017* |
2018 |
2017* |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Income taxes, net |
$ |
447 |
$ |
434 |
$ |
2,728 |
$ |
1,793 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in prepaids and liabilities related to property and equipment additions |
$ |
382 |
$ |
300 |
$ |
613 |
$ |
540 |
|||||||
Settlement of acquisition-related contingent consideration liability |
$ |
— |
$ |
102 |
$ |
— |
$ |
102 |
|||||||
Change in unsettled repurchases of Class A common stock |
$ |
— |
$ |
(10 |
) |
$ |
6 |
$ |
20 |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
GAAP revenue |
$ |
13,727 |
$ |
10,328 |
$ |
38,924 |
$ |
27,681 |
|||||||
Foreign exchange effect on 2018 revenue using 2017 rates |
159 |
(749 |
) |
||||||||||||
Revenue excluding foreign exchange effect |
$ |
13,886 |
$ |
38,175 |
|||||||||||
GAAP revenue year-over-year change % |
33 |
% |
41 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
34 |
% |
38 |
% |
|||||||||||
GAAP advertising revenue |
$ |
13,539 |
$ |
10,142 |
$ |
38,373 |
$ |
27,163 |
|||||||
Foreign exchange effect on 2018 advertising revenue using 2017 rates |
159 |
(748 |
) |
||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
13,698 |
$ |
37,625 |
|||||||||||
GAAP advertising revenue year-over-year change % |
33 |
% |
41 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
35 |
% |
39 |
% |
|||||||||||
Net cash provided by operating activities |
$ |
7,496 |
$ |
6,128 |
$ |
21,656 |
$ |
16,545 |
|||||||
Purchases of property and equipment |
(3,343 |
) |
(1,755 |
) |
(9,614 |
) |
(4,470 |
) |
|||||||
Free cash flow |
$ |
4,153 |
$ |
4,373 |
$ |
12,042 |
$ |
12,075 |