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Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
2015 |
2014 |
|||||||||||
Revenue |
$ |
4,501 |
$ |
3,203 |
$ |
12,087 |
$ |
8,615 |
|||||||
Income from Operations |
|||||||||||||||
GAAP |
$ |
1,459 |
$ |
1,397 |
$ |
3,665 |
$ |
3,861 |
|||||||
Non-GAAP* |
$ |
2,410 |
$ |
1,820 |
$ |
6,478 |
$ |
4,987 |
|||||||
Operating Margin |
|||||||||||||||
GAAP |
32 |
% |
44 |
% |
30 |
% |
45 |
% |
|||||||
Non-GAAP* |
54 |
% |
57 |
% |
54 |
% |
58 |
% |
|||||||
Net Income |
|||||||||||||||
GAAP |
$ |
896 |
$ |
806 |
$ |
2,127 |
$ |
2,239 |
|||||||
Non-GAAP* |
$ |
1,628 |
$ |
1,149 |
$ |
4,253 |
$ |
3,194 |
|||||||
Diluted Earnings per Share (EPS) |
|||||||||||||||
GAAP |
$ |
0.31 |
$ |
0.30 |
$ |
0.75 |
$ |
0.86 |
|||||||
Non-GAAP* |
$ |
0.57 |
$ |
0.43 |
$ |
1.50 |
$ |
1.22 |
• |
Daily active users (DAUs) – DAUs were 1.01 billion on average for September 2015, an increase of 17% year-over-year.
|
• |
Mobile DAUs – Mobile DAUs were 894 million on average for September 2015, an increase of 27% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 1.55 billion as of September 30, 2015, an increase of 14% year-over-year.
|
• |
Mobile MAUs – Mobile MAUs were 1.39 billion as of September 30, 2015, an increase of 23% year-over-year.
|
GAAP |
Year-over-Year % Change |
|||||||||
Three Months Ended September 30, |
||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
||||||||
Revenue: |
||||||||||
Advertising(1)
|
$ |
4,299 |
$ |
2,957 |
45 |
% |
||||
Payments and other fees |
202 |
246 |
(18 |
)% |
||||||
Total revenue(2)
|
4,501 |
3,203 |
41 |
% |
||||||
Total costs and expenses |
3,042 |
1,806 |
68 |
% |
||||||
Income from operations |
$ |
1,459 |
$ |
1,397 |
4 |
% |
||||
Operating margin |
32 |
% |
44 |
% |
||||||
Provision for income taxes |
536 |
|||||||||
Effective tax rate |
37 |
% |
||||||||
Net income |
$ |
896 |
$ |
806 |
11 |
% |
||||
Diluted EPS |
$ |
0.31 |
$ |
0.30 |
3 |
% |
NON-GAAP |
Year-over-Year % Change |
|||||||||
Three Months Ended September 30, |
||||||||||
In millions, except percentages and per share amounts |
2015 |
2014 |
||||||||
GAAP revenue |
$ |
4,501 |
$ |
3,203 |
41 |
% |
||||
Total costs and expenses |
2,091 |
1,383 |
51 |
% |
||||||
Income from operations |
$ |
2,410 |
$ |
1,820 |
32 |
% |
||||
Operating margin |
54 |
% |
57 |
% |
||||||
Effective tax rate |
32 |
% |
||||||||
Net income |
$ |
1,628 |
$ |
1,149 |
42 |
% |
||||
Diluted EPS |
$ |
0.57 |
$ |
0.43 |
33 |
% |
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 78% of advertising revenue for the third quarter of 2015, up from 66% of advertising revenue in the third quarter of 2014.
|
• |
Capital expenditures – Capital expenditures for the third quarter of 2015 were $780 million.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $15.83 billion at the end of the third quarter of 2015.
|
• |
Free cash flow – Free cash flow for the third quarter of 2015 was $1.41 billion.
|
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, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Revenue |
$ |
4,501 |
$ |
3,203 |
$ |
12,087 |
$ |
8,615 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
720 |
565 |
2,043 |
1,501 |
|||||||||||
Research and development |
1,271 |
608 |
3,502 |
1,555 |
|||||||||||
Marketing and sales |
706 |
374 |
1,953 |
1,055 |
|||||||||||
General and administrative |
345 |
259 |
924 |
643 |
|||||||||||
Total costs and expenses |
3,042 |
1,806 |
8,422 |
4,754 |
|||||||||||
Income from operations |
1,459 |
1,397 |
3,665 |
3,861 |
|||||||||||
Interest and other income/(expense), net |
(27 |
) |
(61 |
) |
(28 |
) |
(65 |
) |
|||||||
Income before provision for income taxes |
1,432 |
1,336 |
3,637 |
3,796 |
|||||||||||
Provision for income taxes |
536 |
530 |
1,510 |
1,557 |
|||||||||||
Net income |
$ |
896 |
$ |
806 |
$ |
2,127 |
$ |
2,239 |
|||||||
Less: Net income attributable to participating securities |
5 |
4 |
12 |
10 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
891 |
$ |
802 |
$ |
2,115 |
$ |
2,229 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.32 |
$ |
0.31 |
$ |
0.76 |
$ |
0.87 |
|||||||
Diluted |
$ |
0.31 |
$ |
0.30 |
$ |
0.75 |
$ |
0.86 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,808 |
2,587 |
2,796 |
2,565 |
|||||||||||
Diluted |
2,863 |
2,644 |
2,848 |
2,616 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
21 |
$ |
16 |
$ |
59 |
$ |
44 |
|||||||
Research and development |
598 |
243 |
1,767 |
643 |
|||||||||||
Marketing and sales |
82 |
53 |
236 |
146 |
|||||||||||
General and administrative |
56 |
41 |
161 |
108 |
|||||||||||
Total share-based compensation expense |
$ |
757 |
$ |
353 |
$ |
2,223 |
$ |
941 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
— |
$ |
1 |
$ |
2 |
$ |
3 |
|||||||
Research and development |
10 |
6 |
34 |
27 |
|||||||||||
Marketing and sales |
2 |
1 |
8 |
7 |
|||||||||||
General and administrative |
2 |
3 |
7 |
7 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
14 |
$ |
11 |
$ |
51 |
$ |
44 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
44 |
$ |
26 |
$ |
133 |
$ |
42 |
|||||||
Research and development |
10 |
9 |
29 |
25 |
|||||||||||
Marketing and sales |
102 |
1 |
307 |
3 |
|||||||||||
General and administrative |
24 |
23 |
70 |
71 |
|||||||||||
Total amortization of intangible assets |
$ |
180 |
$ |
59 |
$ |
539 |
$ |
141 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2015 |
December 31, 2014 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
4,308 |
$ |
4,315 |
|||||
Marketable securities |
11,526 |
6,884 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $55 and $39 as of September 30, 2015 and December 31, 2014, respectively |
2,010 |
1,678 |
|||||||
Prepaid expenses and other current assets |
1,295 |
793 |
|||||||
Total current assets |
19,139 |
13,670 |
|||||||
Property and equipment, net |
5,335 |
3,967 |
|||||||
Intangible assets, net |
3,437 |
3,929 |
|||||||
Goodwill |
18,024 |
17,981 |
|||||||
Other assets |
534 |
637 |
|||||||
Total assets |
$ |
46,469 |
$ |
40,184 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
149 |
$ |
176 |
|||||
Partners payable |
241 |
202 |
|||||||
Accrued expenses and other current liabilities |
1,338 |
866 |
|||||||
Deferred revenue and deposits |
47 |
66 |
|||||||
Current portion of capital lease obligations |
17 |
114 |
|||||||
Total current liabilities |
1,792 |
1,424 |
|||||||
Capital lease obligations, less current portion |
109 |
119 |
|||||||
Other liabilities |
3,148 |
2,545 |
|||||||
Total liabilities |
5,049 |
4,088 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
33,574 |
30,225 |
|||||||
Accumulated other comprehensive loss |
(380 |
) |
(228 |
) |
|||||
Retained earnings |
8,226 |
6,099 |
|||||||
Total stockholders' equity |
41,420 |
36,096 |
|||||||
Total liabilities and stockholders' equity |
$ |
46,469 |
$ |
40,184 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
896 |
$ |
806 |
$ |
2,127 |
$ |
2,239 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
486 |
289 |
1,402 |
810 |
|||||||||||
Share-based compensation |
757 |
353 |
2,214 |
941 |
|||||||||||
Deferred income taxes |
(383 |
) |
4 |
(672 |
) |
(30 |
) |
||||||||
Tax benefit from share-based award activity |
346 |
479 |
1,155 |
1,354 |
|||||||||||
Excess tax benefit from share-based award activity |
(346 |
) |
(482 |
) |
(1,155 |
) |
(1,365 |
) |
|||||||
Other |
6 |
(3 |
) |
13 |
(26 |
) |
|||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(207 |
) |
(182 |
) |
(405 |
) |
(264 |
) |
|||||||
Prepaid expenses and other current assets |
(55 |
) |
(55 |
) |
(145 |
) |
(45 |
) |
|||||||
Other assets |
29 |
(176 |
) |
4 |
(158 |
) |
|||||||||
Accounts payable |
(9 |
) |
(57 |
) |
7 |
12 |
|||||||||
Partners payable |
59 |
(17 |
) |
40 |
(22 |
) |
|||||||||
Accrued expenses and other current liabilities |
50 |
123 |
291 |
198 |
|||||||||||
Deferred revenue and deposits |
(1 |
) |
(12 |
) |
(18 |
) |
3 |
||||||||
Other liabilities |
564 |
178 |
914 |
227 |
|||||||||||
Net cash provided by operating activities |
2,192 |
1,248 |
5,772 |
3,874 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(780 |
) |
(482 |
) |
(1,831 |
) |
(1,314 |
) |
|||||||
Purchases of marketable securities |
(4,773 |
) |
(1,733 |
) |
(10,333 |
) |
(6,215 |
) |
|||||||
Sales of marketable securities |
1,399 |
5,423 |
4,125 |
7,391 |
|||||||||||
Maturities of marketable securities |
848 |
636 |
1,563 |
1,710 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(27 |
) |
(735 |
) |
(309 |
) |
(754 |
) |
|||||||
Change in restricted cash and deposits |
33 |
(111 |
) |
77 |
(113 |
) |
|||||||||
Other investing activities, net |
— |
(1 |
) |
— |
(2 |
) |
|||||||||
Net cash (used in) provided by investing activities |
(3,300 |
) |
2,997 |
(6,708 |
) |
703 |
|||||||||
Cash flows from financing activities |
|||||||||||||||
Taxes paid related to net share settlement |
(8 |
) |
— |
(20 |
) |
(3 |
) |
||||||||
Proceeds from exercise of stock options |
— |
5 |
— |
7 |
|||||||||||
Principal payments on capital lease obligations |
(23 |
) |
(49 |
) |
(107 |
) |
(199 |
) |
|||||||
Excess tax benefit from share-based award activity |
346 |
482 |
1,155 |
1,365 |
|||||||||||
Net cash provided by financing activities |
315 |
438 |
1,028 |
1,170 |
|||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(22 |
) |
(68 |
) |
(99 |
) |
(71 |
) |
|||||||
Net (decrease) increase in cash and cash equivalents |
(815 |
) |
4,615 |
(7 |
) |
5,676 |
|||||||||
Cash and cash equivalents at beginning of period |
5,123 |
4,384 |
4,315 |
3,323 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
4,308 |
$ |
8,999 |
$ |
4,308 |
$ |
8,999 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
3 |
$ |
3 |
$ |
8 |
$ |
11 |
|||||||
Income taxes, net |
$ |
40 |
$ |
42 |
$ |
199 |
$ |
101 |
|||||||
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 |
$ |
(87 |
) |
$ |
20 |
$ |
107 |
$ |
38 |
||||||
Fair value of shares issued related to acquisitions of businesses |
$ |
— |
$ |
1,368 |
$ |
— |
$ |
1,368 |
|||||||
Promissory note payable issued in connection with an acquisition |
$ |
— |
$ |
— |
$ |
198 |
$ |
— |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||
GAAP revenue |
$ |
4,501 |
$ |
3,203 |
$ |
12,087 |
$ |
8,615 |
|||||||
Foreign exchange effect on 2015 revenue using 2014 rates |
342 |
863 |
|||||||||||||
Revenue excluding foreign exchange effect |
$ |
4,843 |
$ |
12,950 |
|||||||||||
GAAP revenue year-over-year change % |
41 |
% |
40 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
51 |
% |
50 |
% |
|||||||||||
GAAP advertising revenue |
$ |
4,299 |
$ |
2,957 |
$ |
11,442 |
$ |
7,898 |
|||||||
Foreign exchange effect on 2015 advertising revenue using 2014 rates |
342 |
863 |
|||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
4,641 |
$ |
12,305 |
|||||||||||
GAAP advertising revenue year-over-year change % |
45 |
% |
45 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
57 |
% |
56 |
% |
|||||||||||
GAAP costs and expenses |
$ |
3,042 |
$ |
1,806 |
$ |
8,422 |
$ |
4,754 |
|||||||
Share-based compensation expense |
(757 |
) |
(353 |
) |
(2,223 |
) |
(941 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(14 |
) |
(11 |
) |
(51 |
) |
(44 |
) |
|||||||
Amortization of intangible assets |
(180 |
) |
(59 |
) |
(539 |
) |
(141 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
2,091 |
$ |
1,383 |
$ |
5,609 |
$ |
3,628 |
|||||||
GAAP income from operations |
$ |
1,459 |
$ |
1,397 |
$ |
3,665 |
$ |
3,861 |
|||||||
Share-based compensation expense |
757 |
353 |
2,223 |
941 |
|||||||||||
Payroll tax expenses related to share-based compensation |
14 |
11 |
51 |
44 |
|||||||||||
Amortization of intangible assets |
180 |
59 |
539 |
141 |
|||||||||||
Non-GAAP income from operations |
$ |
2,410 |
$ |
1,820 |
$ |
6,478 |
$ |
4,987 |
|||||||
GAAP net income |
$ |
896 |
$ |
806 |
$ |
2,127 |
$ |
2,239 |
|||||||
Share-based compensation expense |
757 |
353 |
2,223 |
941 |
|||||||||||
Payroll tax expenses related to share-based compensation |
14 |
11 |
51 |
44 |
|||||||||||
Amortization of intangible assets |
180 |
59 |
539 |
141 |
|||||||||||
Income tax adjustments |
(219 |
) |
(80 |
) |
(687 |
) |
(171 |
) |
|||||||
Non-GAAP net income |
$ |
1,628 |
$ |
1,149 |
$ |
4,253 |
$ |
3,194 |
|||||||
GAAP and Non-GAAP diluted shares |
2,863 |
2,644 |
2,848 |
2,616 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.31 |
$ |
0.30 |
$ |
0.75 |
$ |
0.86 |
|||||||
Net income attributable to participating securities |
— |
— |
— |
(0.01 |
) |
||||||||||
Non-GAAP adjustments to net income |
0.26 |
0.13 |
0.75 |
0.37 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.57 |
$ |
0.43 |
$ |
1.50 |
$ |
1.22 |
|||||||
GAAP operating margin |
32 |
% |
44 |
% |
30 |
% |
45 |
% |
|||||||
Share-based compensation expense |
17 |
% |
11 |
% |
18 |
% |
11 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
— |
% |
— |
% |
1 |
% |
|||||||
Amortization of intangible assets |
4 |
% |
2 |
% |
4 |
% |
2 |
% |
|||||||
Non-GAAP operating margin |
54 |
% |
57 |
% |
54 |
% |
58 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,432 |
$ |
1,336 |
$ |
3,637 |
$ |
3,796 |
|||||||
GAAP provision for income taxes |
536 |
530 |
1,510 |
1,557 |
|||||||||||
GAAP effective tax rate |
37 |
% |
40 |
% |
42 |
% |
41 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
1,432 |
$ |
1,336 |
$ |
3,637 |
$ |
3,796 |
Share-based compensation and related payroll tax expenses |
771 |
364 |
2,274 |
985 |
|||||||||||
Amortization of intangible assets |
180 |
59 |
539 |
141 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
2,383 |
$ |
1,759 |
$ |
6,450 |
$ |
4,922 |
|||||||
Non-GAAP provision for income taxes |
755 |
610 |
2,197 |
1,728 |
|||||||||||
Non-GAAP effective tax rate |
32 |
% |
35 |
% |
34 |
% |
35 |
% |
|||||||
Net cash provided by operating activities |
$ |
2,192 |
$ |
1,248 |
$ |
5,772 |
$ |
3,874 |
|||||||
Purchases of property and equipment |
(780 |
) |
(482 |
) |
(1,831 |
) |
(1,314 |
) |
|||||||
Free cash flow |
$ |
1,412 |
$ |
766 |
$ |
3,941 |
$ |
2,560 |