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Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
In millions, except percentages and per share amounts |
2014 |
2013 |
2014 |
2013 |
|||||||||||
Revenue |
$ |
3,851 |
$ |
2,585 |
$ |
12,466 |
$ |
7,872 |
|||||||
Income from Operations |
|||||||||||||||
GAAP |
$ |
1,133 |
$ |
1,133 |
$ |
4,994 |
$ |
2,804 |
|||||||
Non-GAAP* |
$ |
2,219 |
$ |
1,498 |
$ |
7,207 |
$ |
3,948 |
|||||||
Operating Margin |
|||||||||||||||
GAAP |
29 |
% |
44 |
% |
40 |
% |
36 |
% |
|||||||
Non-GAAP* |
58 |
% |
58 |
% |
58 |
% |
50 |
% |
|||||||
Net Income |
|||||||||||||||
GAAP |
$ |
701 |
$ |
523 |
$ |
2,940 |
$ |
1,500 |
|||||||
Non-GAAP* |
$ |
1,518 |
$ |
814 |
$ |
4,713 |
$ |
2,334 |
|||||||
Diluted Earnings per Share (EPS) |
|||||||||||||||
GAAP |
$ |
0.25 |
$ |
0.20 |
$ |
1.10 |
$ |
0.60 |
|||||||
Non-GAAP* |
$ |
0.54 |
$ |
0.32 |
$ |
1.77 |
$ |
0.93 |
• |
Revenue for the full year 2014 was $12.47 billion, an increase of 58% year-over-year.
|
• |
Income from operations for the full year 2014 was $4.99 billion.
|
• |
Net income for the full year 2014 was $2.94 billion.
|
• |
Free cash flow for the full year 2014 was $3.63 billion.
|
• |
Daily active users (DAUs) were 890 million on average for December 2014, an increase of 18% year-over-year.
|
• |
Mobile DAUs were 745 million on average for December 2014, an increase of 34% year-over-year.
|
• |
Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.
|
• |
Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.
|
• |
Revenue from advertising was $3.59 billion, a 53% 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 58%.
|
• |
Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
|
• |
Payments and other fees revenue was $257 million, a 7% 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 December 31, |
Year Ended December 31, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
Revenue |
$ |
3,851 |
$ |
2,585 |
$ |
12,466 |
$ |
7,872 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
653 |
491 |
2,153 |
1,875 |
|||||||||||
Research and development |
1,111 |
408 |
2,666 |
1,415 |
|||||||||||
Marketing and sales |
624 |
292 |
1,680 |
997 |
|||||||||||
General and administrative |
330 |
261 |
973 |
781 |
|||||||||||
Total costs and expenses |
2,718 |
1,452 |
7,472 |
5,068 |
|||||||||||
Income from operations |
1,133 |
1,133 |
4,994 |
2,804 |
|||||||||||
Interest and other income/(expense), net |
(19 |
) |
(3 |
) |
(84 |
) |
(50 |
) |
|||||||
Income before provision for income taxes |
1,114 |
1,130 |
4,910 |
2,754 |
|||||||||||
Provision for income taxes |
413 |
607 |
1,970 |
1,254 |
|||||||||||
Net income |
$ |
701 |
$ |
523 |
$ |
2,940 |
$ |
1,500 |
|||||||
Less: Net income attributable to participating securities |
5 |
3 |
15 |
9 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
696 |
$ |
520 |
$ |
2,925 |
$ |
1,491 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.25 |
$ |
0.21 |
$ |
1.12 |
$ |
0.62 |
|||||||
Diluted |
$ |
0.25 |
$ |
0.20 |
$ |
1.10 |
$ |
0.60 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,761 |
2,458 |
2,614 |
2,420 |
|||||||||||
Diluted |
2,816 |
2,558 |
2,664 |
2,517 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
18 |
$ |
11 |
$ |
62 |
$ |
42 |
|||||||
Research and development |
685 |
172 |
1,328 |
604 |
|||||||||||
Marketing and sales |
103 |
42 |
249 |
133 |
|||||||||||
General and administrative |
90 |
48 |
198 |
127 |
|||||||||||
Total share-based compensation expense |
$ |
896 |
$ |
273 |
$ |
1,837 |
$ |
906 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
— |
$ |
— |
$ |
3 |
$ |
1 |
|||||||
Research and development |
6 |
4 |
33 |
30 |
|||||||||||
Marketing and sales |
2 |
1 |
9 |
8 |
|||||||||||
General and administrative |
5 |
48 |
12 |
54 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
13 |
$ |
53 |
$ |
57 |
$ |
93 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
42 |
$ |
7 |
$ |
87 |
$ |
16 |
|||||||
Research and development |
10 |
8 |
33 |
36 |
|||||||||||
Marketing and sales |
102 |
1 |
105 |
4 |
|||||||||||
General and administrative |
23 |
23 |
94 |
89 |
|||||||||||
Total amortization of intangible assets |
$ |
177 |
$ |
39 |
$ |
319 |
$ |
145 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
December 31, 2014 |
December 31, 2013 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
4,315 |
$ |
3,323 |
|||||
Marketable securities |
6,884 |
8,126 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $39 and $38 as of December 31, 2014 and December 31, 2013, respectively |
1,678 |
1,109 |
|||||||
Prepaid expenses and other current assets |
793 |
512 |
|||||||
Total current assets |
13,670 |
13,070 |
|||||||
Property and equipment, net |
3,967 |
2,882 |
|||||||
Intangible assets, net |
3,929 |
883 |
|||||||
Goodwill |
17,981 |
839 |
|||||||
Other assets |
637 |
221 |
|||||||
Total assets |
$ |
40,184 |
$ |
17,895 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
176 |
$ |
87 |
|||||
Partners payable |
202 |
181 |
|||||||
Accrued expenses and other current liabilities |
866 |
555 |
|||||||
Deferred revenue and deposits |
66 |
38 |
|||||||
Current portion of capital lease obligations |
114 |
239 |
|||||||
Total current liabilities |
1,424 |
1,100 |
|||||||
Capital lease obligations, less current portion |
119 |
237 |
|||||||
Other liabilities |
2,545 |
1,088 |
|||||||
Total liabilities |
4,088 |
2,425 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
30,225 |
12,297 |
|||||||
Accumulated other comprehensive (loss) income |
(228 |
) |
14 |
||||||
Retained earnings |
6,099 |
3,159 |
|||||||
Total stockholders' equity |
36,096 |
15,470 |
|||||||
Total liabilities and stockholders' equity |
$ |
40,184 |
$ |
17,895 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
701 |
$ |
523 |
$ |
2,940 |
$ |
1,500 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
433 |
274 |
1,243 |
1,011 |
|||||||||||
Lease abandonment |
— |
9 |
(31 |
) |
117 |
||||||||||
Share-based compensation |
845 |
273 |
1,786 |
906 |
|||||||||||
Deferred income taxes |
(180 |
) |
(58 |
) |
(210 |
) |
(37 |
) |
|||||||
Tax benefit from share-based award activity |
499 |
325 |
1,853 |
602 |
|||||||||||
Excess tax benefit from share-based award activity |
(504 |
) |
(324 |
) |
(1,869 |
) |
(609 |
) |
|||||||
Other |
2 |
17 |
7 |
56 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(346 |
) |
(233 |
) |
(610 |
) |
(378 |
) |
|||||||
Prepaid expenses and other current assets |
(78 |
) |
(78 |
) |
(123 |
) |
355 |
||||||||
Other assets |
(58 |
) |
(107 |
) |
(216 |
) |
(142 |
) |
|||||||
Accounts payable |
19 |
43 |
31 |
26 |
|||||||||||
Partners payable |
(6 |
) |
10 |
(28 |
) |
12 |
|||||||||
Accrued expenses and other current liabilities |
130 |
67 |
328 |
(38 |
) |
||||||||||
Deferred revenue and deposits |
7 |
2 |
10 |
8 |
|||||||||||
Other liabilities |
119 |
488 |
346 |
833 |
|||||||||||
Net cash provided by operating activities |
1,583 |
1,231 |
5,457 |
4,222 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(517 |
) |
(483 |
) |
(1,831 |
) |
(1,362 |
) |
|||||||
Purchases of marketable securities |
(2,889 |
) |
(3,069 |
) |
(9,104 |
) |
(7,433 |
) |
|||||||
Sales of marketable securities |
1,047 |
555 |
8,438 |
2,988 |
|||||||||||
Maturities of marketable securities |
199 |
609 |
1,909 |
3,563 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(4,221 |
) |
(131 |
) |
(4,975 |
) |
(368 |
) |
|||||||
Change in restricted cash and deposits |
(235 |
) |
(15 |
) |
(348 |
) |
(11 |
) |
|||||||
Other investing activities, net |
— |
— |
(2 |
) |
(1 |
) |
|||||||||
Net cash used in investing activities |
(6,616 |
) |
(2,534 |
) |
(5,913 |
) |
(2,624 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Net proceeds from issuance of common stock |
— |
1,478 |
— |
1,478 |
|||||||||||
Taxes paid related to net share settlement |
(70 |
) |
(183 |
) |
(73 |
) |
(889 |
) |
|||||||
Proceeds from exercise of stock options |
11 |
6 |
18 |
26 |
|||||||||||
Repayment of long-term debt |
— |
— |
— |
(1,500 |
) |
||||||||||
Principal payments on capital lease obligations |
(44 |
) |
(100 |
) |
(243 |
) |
(391 |
) |
|||||||
Excess tax benefit from share-based award activity |
504 |
324 |
1,869 |
609 |
|||||||||||
Net cash provided by (used in) financing activities |
401 |
1,525 |
1,571 |
(667 |
) |
||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(52 |
) |
1 |
(123 |
) |
8 |
|||||||||
Net (decrease) increase in cash and cash equivalents |
(4,684 |
) |
223 |
992 |
939 |
||||||||||
Cash and cash equivalents at beginning of period |
8,999 |
3,100 |
3,323 |
2,384 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
4,315 |
$ |
3,323 |
$ |
4,315 |
$ |
3,323 |
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
3 |
$ |
5 |
$ |
14 |
$ |
38 |
|||||||
Income taxes |
$ |
77 |
$ |
21 |
$ |
184 |
$ |
82 |
|||||||
Cash received during the period for: |
|||||||||||||||
Income taxes |
$ |
— |
$ |
2 |
$ |
6 |
$ |
421 |
|||||||
Non-cash investing and financing activities: |
|||||||||||||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions |
$ |
53 |
$ |
22 |
$ |
91 |
$ |
53 |
|||||||
Property and equipment acquired under capital leases |
$ |
— |
$ |
— |
$ |
— |
$ |
11 |
|||||||
Fair value of shares issued related to acquisitions of businesses |
$ |
12,987 |
$ |
— |
$ |
14,344 |
$ |
77 |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures* | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
2014 |
2013 |
2014 |
2013 |
||||||||||||
GAAP revenue |
$ |
3,851 |
$ |
2,585 |
$ |
12,466 |
$ |
7,872 |
|||||||
Foreign exchange effect on 2014 revenue using 2013 rates |
(103 |
) |
(61 |
) |
|||||||||||
Revenue excluding foreign exchange effect |
$ |
3,954 |
$ |
12,527 |
|||||||||||
GAAP revenue year-over-year change % |
49 |
% |
58 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
53 |
% |
59 |
% |
|||||||||||
GAAP advertising revenue |
$ |
3,594 |
$ |
2,344 |
$ |
11,492 |
$ |
6,986 |
|||||||
Foreign exchange effect on 2014 advertising revenue using 2013 rates |
(103 |
) |
(61 |
) |
|||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
3,697 |
$ |
11,553 |
|||||||||||
GAAP advertising revenue year-over-year change % |
53 |
% |
65 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
58 |
% |
65 |
% |
|||||||||||
GAAP costs and expenses |
$ |
2,718 |
$ |
1,452 |
$ |
7,472 |
$ |
5,068 |
|||||||
Share-based compensation expense |
(896 |
) |
(273 |
) |
(1,837 |
) |
(906 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(13 |
) |
(53 |
) |
(57 |
) |
(93 |
) |
|||||||
Amortization of intangible assets |
(177 |
) |
(39 |
) |
(319 |
) |
(145 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
1,632 |
$ |
1,087 |
$ |
5,259 |
$ |
3,924 |
|||||||
GAAP income from operations |
$ |
1,133 |
$ |
1,133 |
$ |
4,994 |
$ |
2,804 |
|||||||
Share-based compensation expense |
896 |
273 |
1,837 |
906 |
|||||||||||
Payroll tax expenses related to share-based compensation |
13 |
53 |
57 |
93 |
|||||||||||
Amortization of intangible assets |
177 |
39 |
319 |
145 |
|||||||||||
Non-GAAP income from operations |
$ |
2,219 |
$ |
1,498 |
$ |
7,207 |
$ |
3,948 |
|||||||
GAAP net income |
$ |
701 |
$ |
523 |
$ |
2,940 |
$ |
1,500 |
|||||||
Share-based compensation expense |
896 |
273 |
1,837 |
906 |
|||||||||||
Payroll tax expenses related to share-based compensation |
13 |
53 |
57 |
93 |
|||||||||||
Amortization of intangible assets |
177 |
39 |
319 |
145 |
|||||||||||
Income tax adjustments |
(269 |
) |
(74 |
) |
(440 |
) |
(310 |
) |
|||||||
Non-GAAP net income |
$ |
1,518 |
$ |
814 |
$ |
4,713 |
$ |
2,334 |
|||||||
GAAP and Non-GAAP diluted shares |
2,816 |
2,558 |
2,664 |
2,517 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.25 |
$ |
0.20 |
$ |
1.10 |
$ |
0.60 |
|||||||
Net income attributable to participating securities |
— |
— |
(0.01 |
) |
— |
||||||||||
Non-GAAP adjustments to net income |
0.29 |
0.12 |
0.68 |
0.33 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.54 |
$ |
0.32 |
$ |
1.77 |
$ |
0.93 |
|||||||
GAAP operating margin |
29 |
% |
44 |
% |
40 |
% |
36 |
% |
|||||||
Share-based compensation expense |
23 |
% |
11 |
% |
15 |
% |
12 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
2 |
% |
— |
% |
1 |
% |
|||||||
Amortization of intangible assets |
5 |
% |
2 |
% |
3 |
% |
2 |
% |
|||||||
Non-GAAP operating margin |
58 |
% |
58 |
% |
58 |
% |
50 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,114 |
$ |
1,130 |
$ |
4,910 |
$ |
2,754 |
|||||||
GAAP provision for income taxes |
413 |
607 |
1,970 |
1,254 |
|||||||||||
GAAP effective tax rate |
37 |
% |
54 |
% |
40 |
% |
46 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,114 |
$ |
1,130 |
$ |
4,910 |
$ |
2,754 |
|||||||
Share-based compensation and related payroll tax expenses |
909 |
326 |
1,894 |
999 |
|||||||||||
Amortization of intangible assets |
177 |
39 |
319 |
145 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
2,200 |
$ |
1,495 |
$ |
7,123 |
$ |
3,898 |
Non-GAAP provision for income taxes |
682 |
681 |
2,410 |
1,564 |
|||||||||||
Non-GAAP effective tax rate |
31 |
% |
46 |
% |
34 |
% |
40 |
% |
|||||||
Net cash provided by operating activities |
$ |
1,583 |
$ |
1,231 |
$ |
5,457 |
$ |
4,222 |
|||||||
Purchases of property and equipment |
(517 |
) |
(483 |
) |
(1,831 |
) |
(1,362 |
) |
|||||||
Property and equipment acquired under capital leases |
— |
— |
— |
(11 |
) |
||||||||||
Free cash flow |
$ |
1,066 |
$ |
748 |
$ |
3,626 |
$ |
2,849 |