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Three Months Ended June 30, |
Year-over-Year % Change |
|||||||||
In millions, except percentages and per share amounts |
2016 |
2015 |
||||||||
Revenue: |
||||||||||
Advertising |
$ |
6,239 |
$ |
3,827 |
63 |
% |
||||
Payments and other fees |
197 |
215 |
(8 |
)% |
||||||
Total revenue |
6,436 |
4,042 |
59 |
% |
||||||
Total costs and expenses |
3,690 |
2,769 |
33 |
% |
||||||
Income from operations |
$ |
2,746 |
$ |
1,273 |
116 |
% |
||||
Operating margin |
43 |
% |
31 |
% |
||||||
Provision for income taxes |
711 |
|||||||||
Effective tax rate |
26 |
% |
||||||||
Net income |
$ |
2,055 |
$ |
719 |
186 |
% |
||||
Diluted Earnings per Share (EPS) |
$ |
0.71 |
$ |
0.25 |
184 |
% |
* |
The information in the Second Quarter 2016 Financial Highlights table is presented in accordance with generally accepted accounting principles in the United States (GAAP). For non-GAAP financial information, see the table below titled "Reconciliation of GAAP to Non-GAAP Results." |
• |
Daily active users (DAUs) – DAUs were 1.13 billion on average for June 2016, an increase of 17% year-over-year.
|
• |
Mobile DAUs – Mobile DAUs were 1.03 billion on average for June 2016, an increase of 22% year-over-year.
|
• |
Monthly active users (MAUs) – MAUs were 1.71 billion as of June 30, 2016, an increase of 15% year-over-year.
|
• |
Mobile MAUs – Mobile MAUs were 1.57 billion as of June 30, 2016, an increase of 20% year-over-year.
|
• |
Mobile advertising revenue – Mobile advertising revenue represented approximately 84% of advertising revenue for the second quarter of 2016, up from approximately 76% of advertising revenue in the second quarter of 2015.
|
• |
Capital expenditures – Capital expenditures for the second quarter of 2016 were $995 million.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $23.29 billion at the end of the second quarter of 2016.
|
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, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Revenue |
$ |
6,436 |
$ |
4,042 |
$ |
11,818 |
$ |
7,586 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenue |
916 |
668 |
1,754 |
1,323 |
|||||||||||
Research and development |
1,463 |
1,170 |
2,806 |
2,231 |
|||||||||||
Marketing and sales |
899 |
626 |
1,726 |
1,247 |
|||||||||||
General and administrative |
412 |
305 |
778 |
579 |
|||||||||||
Total costs and expenses |
3,690 |
2,769 |
7,064 |
5,380 |
|||||||||||
Income from operations |
2,746 |
1,273 |
4,754 |
2,206 |
|||||||||||
Interest and other income/(expense), net |
20 |
— |
78 |
(1 |
) |
||||||||||
Income before provision for income taxes |
2,766 |
1,273 |
4,832 |
2,205 |
|||||||||||
Provision for income taxes |
711 |
554 |
1,267 |
974 |
|||||||||||
Net income |
$ |
2,055 |
$ |
719 |
$ |
3,565 |
$ |
1,231 |
|||||||
Less: Net income attributable to participating securities |
7 |
4 |
12 |
7 |
|||||||||||
Net income attributable to Class A and Class B common stockholders |
$ |
2,048 |
$ |
715 |
$ |
3,553 |
$ |
1,224 |
|||||||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
$ |
0.72 |
$ |
0.26 |
$ |
1.25 |
$ |
0.44 |
|||||||
Diluted |
$ |
0.71 |
$ |
0.25 |
$ |
1.23 |
$ |
0.43 |
|||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||||||||||
Basic |
2,856 |
2,796 |
2,850 |
2,790 |
|||||||||||
Diluted |
2,904 |
2,850 |
2,896 |
2,844 |
|||||||||||
Share-based compensation expense included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
28 |
$ |
21 |
$ |
50 |
$ |
38 |
|||||||
Research and development |
623 |
603 |
1,209 |
1,169 |
|||||||||||
Marketing and sales |
93 |
82 |
175 |
154 |
|||||||||||
General and administrative |
61 |
57 |
118 |
105 |
|||||||||||
Total share-based compensation expense |
$ |
805 |
$ |
763 |
$ |
1,552 |
$ |
1,466 |
|||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
1 |
$ |
1 |
$ |
3 |
$ |
2 |
|||||||
Research and development |
14 |
7 |
43 |
24 |
|||||||||||
Marketing and sales |
2 |
2 |
7 |
6 |
|||||||||||
General and administrative |
3 |
2 |
8 |
5 |
|||||||||||
Total payroll tax expenses related to share-based compensation |
$ |
20 |
$ |
12 |
$ |
61 |
$ |
37 |
|||||||
Amortization of intangible assets included in costs and expenses: |
|||||||||||||||
Cost of revenue |
$ |
54 |
$ |
45 |
$ |
98 |
$ |
88 |
|||||||
Research and development |
9 |
10 |
18 |
20 |
|||||||||||
Marketing and sales |
108 |
102 |
212 |
204 |
|||||||||||
General and administrative |
22 |
23 |
45 |
47 |
|||||||||||
Total amortization of intangible assets |
$ |
193 |
$ |
180 |
$ |
373 |
$ |
359 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
June 30, 2016 |
December 31, 2015 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
5,108 |
$ |
4,907 |
|||||
Marketable securities |
18,185 |
13,527 |
|||||||
Accounts receivable, net of allowances for doubtful accounts of $67 and $68 as of June 30, 2016 and December 31, 2015, respectively |
2,801 |
2,559 |
|||||||
Prepaid expenses and other current assets |
916 |
659 |
|||||||
Total current assets |
27,010 |
21,652 |
|||||||
Property and equipment, net |
7,104 |
5,687 |
|||||||
Intangible assets, net |
2,879 |
3,246 |
|||||||
Goodwill |
18,043 |
18,026 |
|||||||
Other assets |
703 |
796 |
|||||||
Total assets |
$ |
55,739 |
$ |
49,407 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
130 |
$ |
196 |
|||||
Partners payable |
232 |
217 |
|||||||
Accrued expenses and other current liabilities |
1,770 |
1,449 |
|||||||
Deferred revenue and deposits |
79 |
56 |
|||||||
Current portion of capital lease obligations |
— |
7 |
|||||||
Total current liabilities |
2,211 |
1,925 |
|||||||
Capital lease obligations, less current portion |
— |
107 |
|||||||
Other liabilities |
3,145 |
3,157 |
|||||||
Total liabilities |
5,356 |
5,189 |
|||||||
Stockholders' equity |
|||||||||
Common stock and additional paid-in capital |
37,405 |
34,886 |
|||||||
Accumulated other comprehensive loss |
(374 |
) |
(455 |
) |
|||||
Retained earnings |
13,352 |
9,787 |
|||||||
Total stockholders' equity |
50,383 |
44,218 |
|||||||
Total liabilities and stockholders' equity |
$ |
55,739 |
$ |
49,407 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Cash flows from operating activities |
|||||||||||||||
Net income |
$ |
2,055 |
$ |
719 |
$ |
3,565 |
$ |
1,231 |
|||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
Depreciation and amortization |
585 |
459 |
1,137 |
916 |
|||||||||||
Share-based compensation |
805 |
763 |
1,552 |
1,457 |
|||||||||||
Deferred income taxes |
(77 |
) |
(66 |
) |
(142 |
) |
(289 |
) |
|||||||
Tax benefit from share-based award activity |
467 |
386 |
961 |
809 |
|||||||||||
Excess tax benefit from share-based award activity |
(467 |
) |
(386 |
) |
(961 |
) |
(809 |
) |
|||||||
Other |
6 |
1 |
19 |
7 |
|||||||||||
Changes in assets and liabilities: |
|||||||||||||||
Accounts receivable |
(492 |
) |
(282 |
) |
(225 |
) |
(198 |
) |
|||||||
Prepaid expenses and other current assets |
(154 |
) |
(47 |
) |
(260 |
) |
(90 |
) |
|||||||
Other assets |
(11 |
) |
7 |
4 |
(25 |
) |
|||||||||
Accounts payable |
(41 |
) |
31 |
(39 |
) |
16 |
|||||||||
Partners payable |
17 |
(6 |
) |
14 |
(19 |
) |
|||||||||
Accrued expenses and other current liabilities |
438 |
107 |
422 |
241 |
|||||||||||
Deferred revenue and deposits |
25 |
(7 |
) |
23 |
(17 |
) |
|||||||||
Other liabilities |
42 |
201 |
111 |
350 |
|||||||||||
Net cash provided by operating activities |
3,198 |
1,880 |
6,181 |
3,580 |
|||||||||||
Cash flows from investing activities |
|||||||||||||||
Purchases of property and equipment |
(995 |
) |
(549 |
) |
(2,127 |
) |
(1,051 |
) |
|||||||
Purchases of marketable securities |
(6,509 |
) |
(2,505 |
) |
(9,635 |
) |
(5,560 |
) |
|||||||
Sales of marketable securities |
2,145 |
2,118 |
4,158 |
2,726 |
|||||||||||
Maturities of marketable securities |
366 |
376 |
903 |
715 |
|||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(19 |
) |
(25 |
) |
(20 |
) |
(282 |
) |
|||||||
Change in restricted cash and deposits |
41 |
21 |
74 |
44 |
|||||||||||
Net cash used in investing activities |
(4,971 |
) |
(564 |
) |
(6,647 |
) |
(3,408 |
) |
|||||||
Cash flows from financing activities |
|||||||||||||||
Principal payments on capital lease and other financing obligations |
— |
(37 |
) |
(312 |
) |
(84 |
) |
||||||||
Excess tax benefit from share-based award activity |
467 |
386 |
961 |
809 |
|||||||||||
Other financing activities, net |
4 |
(7 |
) |
6 |
(12 |
) |
|||||||||
Net cash provided by financing activities |
471 |
342 |
655 |
713 |
|||||||||||
Effect of exchange rate changes on cash and cash equivalents |
(46 |
) |
46 |
12 |
(77 |
) |
|||||||||
Net (decrease) increase in cash and cash equivalents |
(1,348 |
) |
1,704 |
201 |
808 |
||||||||||
Cash and cash equivalents at beginning of period |
6,456 |
3,419 |
4,907 |
4,315 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
5,108 |
$ |
5,123 |
$ |
5,108 |
$ |
5,123 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
Supplemental cash flow data |
|||||||||||||||
Cash paid during the period for: |
|||||||||||||||
Interest |
$ |
— |
$ |
2 |
$ |
11 |
$ |
5 |
|||||||
Income taxes, net |
$ |
237 |
$ |
40 |
$ |
407 |
$ |
159 |
|||||||
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 |
$ |
37 |
$ |
8 |
$ |
89 |
$ |
194 |
|||||||
Promissory note payable issued in connection with an acquisition |
$ |
— |
$ |
— |
$ |
— |
$ |
198 |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages and per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
2016 |
2015 |
2016 |
2015 |
||||||||||||
GAAP revenue |
$ |
6,436 |
$ |
4,042 |
$ |
11,818 |
$ |
7,586 |
|||||||
Foreign exchange effect on 2016 revenue using 2015 rates |
1 |
203 |
|||||||||||||
Revenue excluding foreign exchange effect |
$ |
6,437 |
$ |
12,021 |
|||||||||||
GAAP revenue year-over-year change % |
59 |
% |
56 |
% |
|||||||||||
Revenue excluding foreign exchange effect year-over-year change % |
59 |
% |
58 |
% |
|||||||||||
GAAP advertising revenue |
$ |
6,239 |
$ |
3,827 |
$ |
11,440 |
$ |
7,144 |
|||||||
Foreign exchange effect on 2016 advertising revenue using 2015 rates |
1 |
203 |
|||||||||||||
Advertising revenue excluding foreign exchange effect |
$ |
6,240 |
$ |
11,643 |
|||||||||||
GAAP advertising revenue year-over-year change % |
63 |
% |
60 |
% |
|||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
63 |
% |
63 |
% |
|||||||||||
GAAP costs and expenses |
$ |
3,690 |
$ |
2,769 |
$ |
7,064 |
$ |
5,380 |
|||||||
Share-based compensation expense |
(805 |
) |
(763 |
) |
(1,552 |
) |
(1,466 |
) |
|||||||
Payroll tax expenses related to share-based compensation |
(20 |
) |
(12 |
) |
(61 |
) |
(37 |
) |
|||||||
Amortization of intangible assets |
(193 |
) |
(180 |
) |
(373 |
) |
(359 |
) |
|||||||
Non-GAAP costs and expenses |
$ |
2,672 |
$ |
1,814 |
$ |
5,078 |
$ |
3,518 |
|||||||
GAAP income from operations |
$ |
2,746 |
$ |
1,273 |
$ |
4,754 |
$ |
2,206 |
|||||||
Share-based compensation expense |
805 |
763 |
1,552 |
1,466 |
|||||||||||
Payroll tax expenses related to share-based compensation |
20 |
12 |
61 |
37 |
|||||||||||
Amortization of intangible assets |
193 |
180 |
373 |
359 |
|||||||||||
Non-GAAP income from operations |
$ |
3,764 |
$ |
2,228 |
$ |
6,740 |
$ |
4,068 |
|||||||
GAAP net income |
$ |
2,055 |
$ |
719 |
$ |
3,565 |
$ |
1,231 |
|||||||
Share-based compensation expense |
805 |
763 |
1,552 |
1,466 |
|||||||||||
Payroll tax expenses related to share-based compensation |
20 |
12 |
61 |
37 |
|||||||||||
Amortization of intangible assets |
193 |
180 |
373 |
359 |
|||||||||||
Income tax adjustments |
(252 |
) |
(237 |
) |
(501 |
) |
(467 |
) |
|||||||
Non-GAAP net income |
$ |
2,821 |
$ |
1,437 |
$ |
5,050 |
$ |
2,626 |
|||||||
GAAP and Non-GAAP diluted shares |
2,904 |
2,850 |
2,896 |
2,844 |
|||||||||||
GAAP diluted earnings per share |
$ |
0.71 |
$ |
0.25 |
$ |
1.23 |
$ |
0.43 |
|||||||
Non-GAAP adjustments to net income |
0.26 |
0.25 |
0.51 |
0.49 |
|||||||||||
Non-GAAP diluted earnings per share |
$ |
0.97 |
$ |
0.50 |
$ |
1.74 |
$ |
0.92 |
|||||||
GAAP operating margin |
43 |
% |
31 |
% |
40 |
% |
29 |
% |
|||||||
Share-based compensation expense |
13 |
% |
19 |
% |
13 |
% |
19 |
% |
|||||||
Payroll tax expenses related to share-based compensation |
— |
% |
— |
% |
1 |
% |
— |
% |
|||||||
Amortization of intangible assets |
3 |
% |
4 |
% |
3 |
% |
5 |
% |
|||||||
Non-GAAP operating margin |
58 |
% |
55 |
% |
57 |
% |
54 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
2,766 |
$ |
1,273 |
$ |
4,832 |
$ |
2,205 |
|||||||
GAAP provision for income taxes |
711 |
554 |
1,267 |
974 |
|||||||||||
GAAP effective tax rate |
26 |
% |
44 |
% |
26 |
% |
44 |
% |
|||||||
GAAP income before provision for income taxes |
$ |
2,766 |
$ |
1,273 |
$ |
4,832 |
$ |
2,205 |
|||||||
Share-based compensation and related payroll tax expenses |
825 |
775 |
1,613 |
1,503 |
Amortization of intangible assets |
193 |
180 |
373 |
359 |
|||||||||||
Non-GAAP income before provision for income taxes |
$ |
3,784 |
$ |
2,228 |
$ |
6,818 |
$ |
4,067 |
|||||||
Non-GAAP provision for income taxes |
963 |
791 |
1,768 |
1,441 |
|||||||||||
Non-GAAP effective tax rate |
25 |
% |
36 |
% |
26 |
% |
35 |
% |
|||||||
Net cash provided by operating activities |
$ |
3,198 |
$ |
1,880 |
$ |
6,181 |
$ |
3,580 |
|||||||
Purchases of property and equipment |
(995 |
) |
(549 |
) |
(2,127 |
) |
(1,051 |
) |
|||||||
Free cash flow |
$ |
2,203 |
$ |
1,331 |
$ |
4,054 |
$ |
2,529 |