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Three Months Ended March 31, |
Year-over-Year % Change |
||||||||
In millions, except percentages and per share amounts |
2020 |
2019 (1)
|
|||||||
Revenue: |
|||||||||
Advertising |
$ |
17,440 |
$ |
14,912 |
17% |
||||
Other |
297 |
165 |
80% |
||||||
Total revenue |
17,737 |
15,077 |
18% |
||||||
Total costs and expenses |
11,844 |
11,760 |
1% |
||||||
Income from operations |
$ |
5,893 |
$ |
3,317 |
78% |
||||
Operating margin |
33 |
% |
22 |
% |
|||||
Provision for income taxes |
$ |
959 |
$ |
1,053 |
(9)% |
||||
Effective tax rate |
16 |
% |
30 |
% |
|||||
Net income |
$ |
4,902 |
$ |
2,429 |
102% |
||||
Diluted earnings per share (EPS) |
$ |
1.71 |
$ |
0.85 |
101% |
• |
Facebook daily active users (DAUs) – DAUs were 1.73 billion on average for March 2020, an increase of 11% year-over-year.
|
• |
Facebook monthly active users (MAUs) – MAUs were 2.60 billion as of March 31, 2020, an increase of 10% year-over-year.
|
• |
Family daily active people (DAP) – DAP was 2.36 billion on average for March 2020, an increase of 12% year-over-year.
|
• |
Family monthly active people (MAP) – MAP was 2.99 billion as of March 31, 2020, an increase of 11% year-over-year.
|
• |
Capital expenditures – Capital expenditures, including principal payments on finance leases, were $3.66 billion for the first quarter of 2020.
|
• |
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $60.29 billion as of March 31, 2020. Following the end of the quarter, we entered into an agreement to invest in Jio Platforms Limited, a subsidiary of Reliance Industries Limited, for approximately $5.7 billion, and we paid the $5.0 billion settlement amount due under our modified consent order with the FTC, which took effect in April 2020.
|
• |
Headcount – Headcount was 48,268 as of March 31, 2020, an increase of 28% year-over-year.
|
• |
Engagement – Our community metrics, including Facebook DAUs and MAUs and Family MAP and DAP, reflect increased engagement as people around the world sheltered in place and used our products to connect with the people and organizations they care about. We expect that we will lose at least some of this increased engagement when various shelter-in-place restrictions are relaxed in the future.
|
• |
Revenue – We experienced a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020. Due to the increasing uncertainty in our business outlook, we are not providing specific revenue guidance for the second quarter or full-year 2020, but rather a snapshot on revenue performance in the second quarter thus far. After the initial steep decrease in advertising revenue in March, we have seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago, down from the 17% year-over-year growth in the first quarter of 2020. The April trends reflect weakness across all of our user geographies as most of our major countries have had some sort of shelter-in-place guidelines in effect.
|
• |
Total expenses – We expect to realize operational expense savings in certain areas such as travel, events, and marketing as well as from slower headcount growth in our business functions. However, we plan to continue to invest in product development and to recruit technical talent. In addition, we have committed over $300 million to date in investments to help our broader community during the crisis, which will have an impact on our financial performance this year. As a result, we expect total expenses in 2020 to be between $52-56 billion, down from the prior range of $54-59 billion. While this reflects a moderate reduction in the planned growth rate of total expenses, our overall expense growth in the face of expected revenue weakness will have a negative impact on 2020 operating margins.
|
• |
Capital expenditures – Our significant investments in infrastructure over the past four years have served us well during this period of high user engagement. We plan to continue to grow our capex investments to enhance and expand our global infrastructure footprint over the long term. In 2020, we expect capital expenditures to be approximately $14-16 billion, down from the prior range of $17-19 billion. This reduction reflects a significant decrease in our construction efforts globally related to shelter-in-place orders. Given the strong engagement growth and related demands on our infrastructure, this year's capex reduction should be viewed as a deferral into 2021 rather than savings.
|
• |
Tax rates – We expect our full-year 2020 tax rate will be in the high-teens, although we may see fluctuations in our quarterly rate depending on our financial results.
|
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In millions, except for per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, |
|||||||
2020 |
2019 (1)
|
||||||
Revenue |
$ |
17,737 |
$ |
15,077 |
|||
Costs and expenses: |
|||||||
Cost of revenue |
3,459 |
2,816 |
|||||
Research and development |
4,015 |
2,860 |
|||||
Marketing and sales |
2,787 |
2,020 |
|||||
General and administrative |
1,583 |
4,064 |
|||||
Total costs and expenses |
11,844 |
11,760 |
|||||
Income from operations |
5,893 |
3,317 |
|||||
Interest and other income (expense), net |
(32 |
) |
165 |
||||
Income before provision for income taxes |
5,861 |
3,482 |
|||||
Provision for income taxes |
959 |
1,053 |
|||||
Net income |
$ |
4,902 |
$ |
2,429 |
|||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||
Basic |
$ |
1.72 |
$ |
0.85 |
|||
Diluted |
$ |
1.71 |
$ |
0.85 |
|||
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||
Basic |
2,851 |
2,856 |
|||||
Diluted |
2,868 |
2,869 |
|||||
Share-based compensation expense included in costs and expenses: |
|||||||
Cost of revenue |
$ |
94 |
$ |
87 |
|||
Research and development |
999 |
723 |
|||||
Marketing and sales |
149 |
113 |
|||||
General and administrative |
93 |
87 |
|||||
Total share-based compensation expense |
$ |
1,335 |
$ |
1,010 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
March 31, 2020 |
December 31, 2019 |
||||||||
Assets |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ |
23,618 |
$ |
19,079 |
|||||
Marketable securities |
36,671 |
35,776 |
|||||||
Accounts receivable, net of allowances of $370 and $206 as of March 31, 2020 and December 31, 2019, respectively |
7,289 |
9,518 |
|||||||
Prepaid expenses and other current assets |
1,771 |
1,852 |
|||||||
Total current assets |
69,349 |
66,225 |
|||||||
Property and equipment, net |
37,127 |
35,323 |
|||||||
Operating lease right-of-use assets, net |
9,359 |
9,460 |
|||||||
Intangible assets, net |
838 |
894 |
|||||||
Goodwill |
18,811 |
18,715 |
|||||||
Other assets |
2,887 |
2,759 |
|||||||
Total assets |
$ |
138,371 |
$ |
133,376 |
|||||
Liabilities and stockholders' equity |
|||||||||
Current liabilities: |
|||||||||
Accounts payable |
$ |
829 |
$ |
1,363 |
|||||
Partners payable |
712 |
886 |
|||||||
Operating lease liabilities, current |
835 |
800 |
|||||||
Accrued expenses and other current liabilities |
12,446 |
11,735 |
|||||||
Deferred revenue and deposits |
247 |
269 |
|||||||
Total current liabilities |
15,069 |
15,053 |
|||||||
Operating lease liabilities, non-current |
9,509 |
9,524 |
|||||||
Other liabilities |
8,489 |
7,745 |
|||||||
Total liabilities |
33,067 |
32,322 |
|||||||
Commitments and contingencies |
|||||||||
Stockholders' equity: |
|||||||||
Common stock and additional paid-in capital |
46,688 |
45,851 |
|||||||
Accumulated other comprehensive loss |
(544 |
) |
(489 |
) |
|||||
Retained earnings |
59,160 |
55,692 |
|||||||
Total stockholders' equity |
105,304 |
101,054 |
|||||||
Total liabilities and stockholders' equity |
$ |
138,371 |
$ |
133,376 |
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, |
|||||||
2020 |
2019 |
||||||
Cash flows from operating activities |
|||||||
Net income |
$ |
4,902 |
$ |
2,429 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
1,597 |
1,355 |
|||||
Share-based compensation |
1,335 |
1,010 |
|||||
Deferred income taxes |
477 |
183 |
|||||
Other |
6 |
6 |
|||||
Changes in assets and liabilities: |
|||||||
Accounts receivable |
2,046 |
1,070 |
|||||
Prepaid expenses and other current assets |
(29 |
) |
84 |
||||
Other assets |
(16 |
) |
41 |
||||
Accounts payable |
(44 |
) |
(96 |
) |
|||
Partners payable |
(169 |
) |
(1 |
) |
|||
Accrued expenses and other current liabilities |
980 |
3,154 |
|||||
Deferred revenue and deposits |
(16 |
) |
(4 |
) |
|||
Other liabilities |
(68 |
) |
77 |
||||
Net cash provided by operating activities |
11,001 |
9,308 |
|||||
Cash flows from investing activities |
|||||||
Purchases of property and equipment, net |
(3,558 |
) |
(3,837 |
) |
|||
Purchases of marketable securities |
(7,884 |
) |
(6,603 |
) |
|||
Sales of marketable securities |
2,764 |
1,512 |
|||||
Maturities of marketable securities |
4,644 |
2,210 |
|||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(33 |
) |
(50 |
) |
|||
Other investing activities, net |
(42 |
) |
— |
||||
Net cash used in investing activities |
(4,109 |
) |
(6,768 |
) |
|||
Cash flows from financing activities |
|||||||
Taxes paid related to net share settlement of equity awards |
(690 |
) |
(512 |
) |
|||
Repurchases of Class A common stock |
(1,250 |
) |
(613 |
) |
|||
Principal payments on finance leases |
(100 |
) |
(125 |
) |
|||
Net change in overdraft in cash pooling entities |
(80 |
) |
(177 |
) |
|||
Other financing activities, net |
98 |
4 |
|||||
Net cash used in financing activities |
(2,022 |
) |
(1,423 |
) |
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(222 |
) |
(44 |
) |
|||
Net increase in cash, cash equivalents, and restricted cash |
4,648 |
1,073 |
|||||
Cash, cash equivalents, and restricted cash at beginning of the period |
19,279 |
10,124 |
|||||
Cash, cash equivalents, and restricted cash at end of the period |
$ |
23,927 |
$ |
11,197 |
|||
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets |
|||||||
Cash and cash equivalents |
$ |
23,618 |
$ |
11,076 |
|||
Restricted cash, included in prepaid expenses and other current assets |
137 |
10 |
|||||
Restricted cash, included in other assets |
172 |
111 |
|||||
Total cash, cash equivalents, and restricted cash |
$ |
23,927 |
$ |
11,197 |
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, |
|||||||
2020 |
2019 |
||||||
Supplemental cash flow data |
|||||||
Cash paid for income taxes, net |
$ |
209 |
$ |
682 |
|||
Non-cash investing activities: |
|||||||
Acquisition of businesses in accrued expenses and other liabilities |
$ |
148 |
$ |
— |
|||
Property and equipment in accounts payable and accrued liabilities |
$ |
1,603 |
$ |
1,617 |
Reconciliation of GAAP to Non-GAAP Results | |||||||
(In millions, except percentages) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, |
|||||||
2020 |
2019 |
||||||
GAAP revenue |
$ |
17,737 |
$ |
15,077 |
|||
Foreign exchange effect on 2020 revenue using 2019 rates |
275 |
||||||
Revenue excluding foreign exchange effect |
$ |
18,012 |
|||||
GAAP revenue year-over-year change % |
18 |
% |
|||||
Revenue excluding foreign exchange effect year-over-year change % |
19 |
% |
|||||
GAAP advertising revenue |
$ |
17,440 |
$ |
14,912 |
|||
Foreign exchange effect on 2020 advertising revenue using 2019 rates |
274 |
||||||
Advertising revenue excluding foreign exchange effect |
$ |
17,714 |
|||||
GAAP advertising revenue year-over-year change % |
17 |
% |
|||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
19 |
% |
|||||
Net cash provided by operating activities |
$ |
11,001 |
$ |
9,308 |
|||
Purchases of property and equipment, net |
(3,558 |
) |
(3,837 |
) |
|||
Principal payments on finance leases |
(100 |
) |
(125 |
) |
|||
Free cash flow |
$ |
7,343 |
$ |
5,346 |