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Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
In millions, except percentages and per share amounts |
2013 |
2014 |
2013 |
2014 |
|||||||||||
Revenue |
$ |
1,813 |
$ |
2,910 |
$ |
3,271 |
$ |
5,412 |
|||||||
Income from Operations |
|||||||||||||||
GAAP |
$ |
562 |
$ |
1,390 |
$ |
935 |
$ |
2,464 |
|||||||
Non-GAAP |
$ |
794 |
$ |
1,712 |
$ |
1,357 |
$ |
3,085 |
|||||||
Operating Margin |
|||||||||||||||
GAAP |
31 |
% |
48 |
% |
29 |
% |
46 |
% |
|||||||
Non-GAAP |
44 |
% |
59 |
% |
41 |
% |
57 |
% |
|||||||
Net Income |
|||||||||||||||
GAAP |
$ |
333 |
$ |
791 |
$ |
552 |
$ |
1,433 |
|||||||
Non-GAAP |
$ |
488 |
$ |
1,091 |
$ |
800 |
$ |
1,976 |
|||||||
Diluted Earnings per Share (EPS) |
|||||||||||||||
GAAP |
$ |
0.13 |
$ |
0.30 |
$ |
0.22 |
$ |
0.55 |
|||||||
Non-GAAP |
$ |
0.19 |
$ |
0.42 |
$ |
0.32 |
$ |
0.76 |
• |
Daily active users (DAUs) were 829 million on average for June 2014, an increase of 19% year-over-year.
|
• |
Mobile DAUs were 654 million on average for June 2014, an increase of 39% year-over-year.
|
• |
Monthly active users (MAUs) were 1.32 billion as of June 30, 2014, an increase of 14% year-over-year.
|
• |
Mobile MAUs were 1.07 billion as of June 30, 2014, an increase of 31% year-over-year.
|
• |
Revenue from advertising was $2.68 billion, a 67% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 65%.
|
• |
Mobile advertising revenue represented approximately 62% of advertising revenue for the second quarter of 2014, up from approximately 41% of advertising revenue in the second quarter of 2013.
|
• |
Payments and other fees revenue was $234 million, a 9% increase from the same quarter last 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, |
||||||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||||||
Revenue |
$ |
1,813 |
$ |
2,910 |
$ |
3,271 |
$ |
5,412 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
465 |
473 |
878 |
936 |
|||||||||||
Research and development |
344 |
492 |
637 |
947 |
|||||||||||
Marketing and sales |
269 |
358 |
472 |
681 |
|||||||||||
General and administrative |
173 |
197 |
349 |
384 |
|||||||||||
Total costs and expenses |
1,251 |
1,520 |
2,336 |
2,948 |
|||||||||||
Income from operations |
562 |
1,390 |
935 |
2,464 |
|||||||||||
Interest and other income/(expense), net |
(17 |
) |
(4 |
) |
(37 |
) |
(4 |
) |
|||||||
Income before provision for income taxes |
545 |
1,386 |
898 |
2,460 |
|||||||||||
Provision for income taxes |
212 |
595 |
346 |
1,027 |
|||||||||||
Net income |
$ |
333 |
$ |
791 |
$ |
552 |
$ |
1,433 |
|||||||
Less: Net income attributable to participating securities |
2 |
3 |
3 |
6 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
331 |
$ |
788 |
$ |
549 |
$ |
1,427 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.14 |
$ |
0.31 |
$ |
0.23 |
$ |
0.56 |
|||||||
Diluted |
$ |
0.13 |
$ |
0.30 |
$ |
0.22 |
$ |
0.55 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,407 |
2,560 |
2,397 |
2,552 |
|||||||||||
Diluted |
2,502 |
2,615 |
2,499 |
2,609 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
11 |
$ |
16 |
$ |
19 |
$ |
28 |
|||||||
Research and development |
151 |
219 |
268 |
400 |
|||||||||||
Marketing and sales |
33 |
50 |
57 |
93 |
|||||||||||
General and administrative |
29 |
29 |
50 |
67 |
|||||||||||
Total share-based compensation expense |
$ |
224 |
$ |
314 |
$ |
394 |
$ |
588 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
— |
$ |
— |
$ |
1 |
$ |
2 |
|||||||
Research and development |
7 |
6 |
18 |
21 |
|||||||||||
Marketing and sales |
1 |
2 |
5 |
6 |
|||||||||||
General and administrative |
— |
— |
4 |
4 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
8 |
$ |
8 |
$ |
28 |
$ |
33 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
December 31, 2013 |
June 30, 2014 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
3,323 |
$ |
4,384 |
|||||
Marketable securities |
8,126 |
9,572 |
|||||||
Accounts receivable |
1,109 |
1,190 |
|||||||
Prepaid expenses and other current assets |
512 |
411 |
|||||||
Total current assets |
13,070 |
15,557 |
|||||||
Property and equipment, net |
2,882 |
3,334 |
|||||||
Goodwill and intangible assets, net |
1,722 |
1,672 |
|||||||
Other assets |
221 |
206 |
|||||||
Total assets |
$ |
17,895 |
$ |
20,769 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
87 |
$ |
146 |
|||||
Developer partners payable |
181 |
176 |
|||||||
Accrued expenses and other current liabilities |
555 |
666 |
|||||||
Deferred revenue and deposits |
38 |
53 |
|||||||
Current portion of capital lease obligations |
239 |
173 |
|||||||
Total current liabilities |
1,100 |
1,214 |
|||||||
Capital lease obligations, less current portion |
237 |
153 |
|||||||
Other liabilities |
1,088 |
1,056 |
|||||||
Total liabilities |
2,425 |
2,423 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
12,297 |
13,759 |
|||||||
Accumulated other comprehensive income (loss) |
14 |
(5 |
) |
||||||
Retained earnings |
3,159 |
4,592 |
|||||||
Total stockholders' equity |
15,470 |
18,346 |
|||||||
Total liabilities and stockholders' equity |
$ |
17,895 |
$ |
20,769 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
333 |
$ |
791 |
$ |
552 |
$ |
1,433 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
230 |
257 |
463 |
521 |
|||||||||||
Lease abandonment |
57 |
(13 |
) |
65 |
(26 |
) |
|||||||||
Share-based compensation |
224 |
314 |
394 |
588 |
|||||||||||
Deferred income taxes |
26 |
(33 |
) |
19 |
(34 |
) |
|||||||||
Tax benefit from share-based award activity |
89 |
530 |
148 |
875 |
|||||||||||
Excess tax benefit from share-based award activity |
(93 |
) |
(535 |
) |
(155 |
) |
(883 |
) |
|||||||
Other |
11 |
(6 |
) |
20 |
3 |
||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(116 |
) |
(187 |
) |
(62 |
) |
(82 |
) |
|||||||
Prepaid expenses and other current assets |
429 |
14 |
428 |
10 |
|||||||||||
Other assets |
(8 |
) |
2 |
(44 |
) |
18 |
|||||||||
Accounts payable |
1 |
79 |
2 |
69 |
|||||||||||
Developer partners payable |
(18 |
) |
(12 |
) |
3 |
(5 |
) |
||||||||
Accrued expenses and other current liabilities |
42 |
102 |
9 |
75 |
|||||||||||
Deferred revenue and deposits |
2 |
15 |
2 |
15 |
|||||||||||
Other liabilities |
113 |
23 |
197 |
49 |
|||||||||||
Net cash provided by operating activities |
1,322 |
1,341 |
2,041 |
2,626 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(268 |
) |
(469 |
) |
(595 |
) |
(832 |
) |
|||||||
Purchases of marketable securities |
(1,952 |
) |
(1,508 |
) |
(3,460 |
) |
(4,482 |
) |
|||||||
Sales of marketable securities |
576 |
1,121 |
1,275 |
1,968 |
|||||||||||
Maturities of marketable securities |
1,271 |
455 |
2,174 |
1,074 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(122 |
) |
(19 |
) |
(221 |
) |
(19 |
) |
|||||||
Other investing activities, net |
(3 |
) |
(2 |
) |
3 |
(3 |
) |
||||||||
Net cash used in investing activities |
(498 |
) |
(422 |
) |
(824 |
) |
(2,294 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement of equity awards |
(153 |
) |
— |
(558 |
) |
(3 |
) |
||||||||
Proceeds from exercise of stock options |
2 |
1 |
10 |
2 |
|||||||||||
Principal payments on capital lease obligations |
(91 |
) |
(66 |
) |
(200 |
) |
(150 |
) |
|||||||
Excess tax benefit from share-based award activity |
93 |
535 |
155 |
883 |
|||||||||||
Net cash (used in) provided by financing activities |
(149 |
) |
470 |
(593 |
) |
732 |
|||||||||
Effect of exchange rate changes on cash and cash equivalents |
1 |
(3 |
) |
(7 |
) |
(3 |
) |
||||||||
Net increase in cash and cash equivalents |
676 |
1,386 |
617 |
1,061 |
|||||||||||
Cash and cash equivalents at beginning of period |
2,325 |
2,998 |
2,384 |
3,323 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
3,001 |
$ |
4,384 |
$ |
3,001 |
$ |
4,384 |
|||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
14 |
$ |
4 |
$ |
26 |
$ |
8 |
Income taxes |
$ |
9 |
$ |
24 |
$ |
18 |
$ |
61 |
|||||||
Cash received during the period for: |
|||||||||||||||
Refund of income taxes |
$ |
419 |
$ |
2 |
$ |
419 |
$ |
2 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions |
$ |
(52 |
) |
$ |
21 |
$ |
(5 |
) |
$ |
18 |
|||||
Property and equipment acquired under capital leases |
$ |
— |
$ |
— |
$ |
11 |
$ |
— |
|||||||
Fair value of shares issued related to acquisitions of businesses |
$ |
44 |
$ |
— |
$ |
77 |
$ |
— |
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, |
||||||||||||||
2013 |
2014 |
2013 |
2014 |
||||||||||||
GAAP revenue |
$ |
1,813 |
$ |
2,910 |
$ |
3,271 |
$ |
5,412 |
|||||||
Foreign exchange effect on 2014 revenue using 2013 rates |
(30 |
) |
(21 |
) |
|||||||||||
Revenue excluding foreign exchange effect |
$ |
2,880 |
$ |
5,391 |
|||||||||||
GAAP revenue year-over-year change % |
61 |
% |
65 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
59 |
% |
65 |
% |
|||||||||||
GAAP advertising revenue |
$ |
1,599 |
$ |
2,676 |
$ |
2,844 |
$ |
4,941 |
|||||||
Foreign exchange effect on 2014 advertising revenue using 2013 rates |
(30 |
) |
(21 |
) |
|||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
2,646 |
$ |
4,920 |
|||||||||||
GAAP advertising revenue year-over-year change % |
67 |
% |
74 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
65 |
% |
73 |
% |
|||||||||||
GAAP costs and expenses |
$ |
1,251 |
$ |
1,520 |
$ |
2,336 |
$ |
2,948 |
|||||||
Share-based compensation expense |
(224 |
) |
(314 |
) |
(394 |
) |
(588 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(8 |
) |
(8 |
) |
(28 |
) |
(33 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
1,019 |
$ |
1,198 |
$ |
1,914 |
$ |
2,327 |
|||||||
GAAP income from operations |
$ |
562 |
$ |
1,390 |
$ |
935 |
$ |
2,464 |
|||||||
Share-based compensation expense |
224 |
314 |
394 |
588 |
|||||||||||
Payroll tax expenses related to share-based compensation |
8 |
8 |
28 |
33 |
|||||||||||
Non-GAAP income from operations |
$ |
794 |
$ |
1,712 |
$ |
1,357 |
$ |
3,085 |
|||||||
GAAP net income |
$ |
333 |
$ |
791 |
$ |
552 |
$ |
1,433 |
|||||||
Share-based compensation expense |
224 |
314 |
394 |
588 |
|||||||||||
Payroll tax expenses related to share-based compensation |
8 |
8 |
28 |
33 |
|||||||||||
Income tax adjustments |
(77 |
) |
(22 |
) |
(174 |
) |
(78 |
) |
|||||||
Non-GAAP net income |
$ |
488 |
$ |
1,091 |
$ |
800 |
$ |
1,976 |
|||||||
GAAP and Non-GAAP diluted shares |
2,502 |
2,615 |
2,499 |
2,609 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.13 |
$ |
0.30 |
$ |
0.22 |
$ |
0.55 |
|||||||
Non-GAAP adjustments to net income |
0.06 |
0.12 |
0.10 |
0.21 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.19 |
$ |
0.42 |
$ |
0.32 |
$ |
0.76 |
|||||||
GAAP operating margin |
31 |
% |
48 |
% |
29 |
% |
46 |
% |
|||||||
Share-based compensation expense |
12 |
% |
11 |
% |
12 |
% |
11 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
— |
% |
1 |
% |
1 |
% |
|||||||
Non-GAAP operating margin |
44 |
% |
59 |
% |
41 |
% |
57 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
545 |
$ |
1,386 |
$ |
898 |
$ |
2,460 |
|||||||
GAAP provision for income taxes |
212 |
595 |
346 |
1,027 |
|||||||||||
GAAP effective tax rate |
39 |
% |
43 |
% |
39 |
% |
42 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
545 |
$ |
1,386 |
$ |
898 |
$ |
2,460 |
|||||||
Share-based compensation and related payroll tax expenses |
232 |
322 |
422 |
621 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
777 |
$ |
1,708 |
$ |
1,320 |
$ |
3,081 |
|||||||
Non-GAAP provision for income taxes |
289 |
617 |
520 |
1,105 |
|||||||||||
Non-GAAP effective tax rate |
37 |
% |
36 |
% |
39 |
% |
36 |
% |
|||||||
Net cash provided by operating activities |
$ |
1,322 |
$ |
1,341 |
$ |
2,041 |
$ |
2,626 |
|||||||
Purchases of property and equipment |
(268 |
) |
(469 |
) |
(595 |
) |
(832 |
) |
|||||||
Property and equipment acquired under capital leases |
— |
— |
(11 |
) |
— |
||||||||||
Free cash flow |
$ |
1,054 |
$ |
872 |
$ |
1,435 |
$ |
1,794 |