MENLO PARK, Calif.,
April 23, 2014 /PRNewswire/ -- Facebook, Inc. (NASDAQ: FB)
today reported financial results for the quarter ended
March 31, 2014.
"Facebook's business is strong and growing, and this quarter was
a great start to 2014," said Mark
Zuckerberg, Facebook founder and CEO. "We've made some long
term bets on the future while staying focused on executing and
improving our core products and business. We're in great position
to continue making progress towards our mission."
First Quarter 2014 Financial Summary
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
In millions,
except percentages and per share amounts
|
|
|
2013
|
|
2014
|
Revenue
|
|
|
$
1,458
|
|
$
2,502
|
Income from
Operations
|
|
|
|
|
|
GAAP
|
|
|
$
373
|
|
$
1,075
|
Non-GAAP
|
|
|
$
563
|
|
$
1,374
|
Operating
Margin
|
|
|
|
|
|
GAAP
|
|
|
26 %
|
|
43 %
|
Non-GAAP
|
|
|
39 %
|
|
55 %
|
Net
Income
|
|
|
|
|
|
GAAP
|
|
|
$
219
|
|
$
642
|
Non-GAAP
|
|
|
$
312
|
|
$
885
|
Diluted Earnings
per Share (EPS)
|
|
|
|
|
|
GAAP
|
|
|
$
0.09
|
|
$
0.25
|
Non-GAAP
|
|
|
$
0.12
|
|
$
0.34
|
First Quarter 2014 Operational Highlights
- Daily active users (DAUs) were 802 million on average for
March 2014, an increase of 21%
year-over-year.
- Mobile DAUs were 609 million on average for March 2014, an increase of 43%
year-over-year.
- Monthly active users (MAUs) were 1.28 billion as of
March 31, 2014, an increase of 15% year-over-year.
- Mobile MAUs were 1.01 billion as of March 31, 2014, an
increase of 34% year-over-year.
First Quarter 2014 Financial Highlights
Revenue – Revenue for the first quarter of 2014 totaled
$2.50 billion, an increase of 72%,
compared with $1.46 billion in the
first quarter of 2013.
- Revenue from advertising was $2.27
billion, an 82% increase from the same quarter last
year.
- Mobile advertising revenue represented approximately 59% of
advertising revenue for the first quarter of 2014, up from
approximately 30% of advertising revenue in the first quarter of
2013.
- Payments and other fees revenue was $237
million for the first quarter of 2014.
Costs and expenses – GAAP costs and expenses for the
first quarter of 2014 were $1.43
billion, an increase of 32% from the first quarter of 2013,
driven primarily by increased headcount and infrastructure expense.
Excluding share-based compensation and related payroll tax
expenses, non-GAAP costs and expenses were $1.13 billion in the first quarter of 2014, up
26% compared to $895 million for the
first quarter of 2013.
Income from operations – For the first quarter of 2014,
GAAP income from operations was $1.08
billion, up 188% compared to $373
million in the first quarter of 2013. Excluding share-based
compensation and related payroll tax expenses, non-GAAP income from
operations for the first quarter of 2014 was $1.37 billion, up 144% compared to $563 million for the first quarter of 2013.
Operating margin – GAAP operating margin was 43% for the
first quarter of 2014, compared to 26% in the first quarter of
2013. Excluding share-based compensation and related payroll tax
expenses, non-GAAP operating margin was 55% for the first quarter
of 2014, compared to 39% for the first quarter of 2013.
Provision for income taxes – GAAP income tax expense for
the first quarter of 2014 was $433
million, representing a 40% effective tax rate. Excluding
share-based compensation and related payroll tax expenses, the
non-GAAP effective tax rate would have been approximately 36%.
Net income and EPS – For the first quarter of 2014, GAAP
net income was $642 million, up 193%
compared to $219 million for the
first quarter of 2013. Excluding share-based compensation and
related payroll tax expenses and income tax adjustments, non-GAAP
net income for the first quarter of 2014 was $885 million, up 184% compared to $312 million for the first quarter of 2013. GAAP
diluted EPS was $0.25 in the first
quarter of 2014, up 178% compared to $0.09 in the first quarter of 2013. Excluding
share-based compensation and related payroll tax expenses and
income tax adjustments, non-GAAP diluted EPS for the first quarter
of 2014 was $0.34, up 183% compared
to $0.12 in the first quarter of
2013.
Capital expenditures – Capital expenditures for the first
quarter of 2014 were $363
million.
Cash and marketable securities – Cash and marketable
securities were $12.63 billion at the
end of the first quarter of 2014.
Free cash flow – Free cash flow for the first quarter of
2014 was $922 million.
CFO Transition – Facebook today also announced that
David Ebersman has informed the
company of his intention to step down as chief financial officer
after serving in the position for almost five years. On
June 1, 2014, he will be succeeded as
CFO by David Wehner, currently
Facebook's Vice President, Corporate Finance and Business Planning.
Ebersman will remain with the company through September to ensure a
seamless transition of his responsibilities.
Wehner joined Facebook in November
2012 from Zynga, where he served as CFO. Earlier, he spent
nine years at Allen & Company where he was a managing director.
Wehner has a B.S. in Chemistry from Georgetown
University, and an M.S. in Applied Physics from Stanford University.
"David has been a great partner in building Facebook, and I'm
grateful for everything he's done to help make the world more open
and connected," said Zuckerberg. "David set us up to operate
efficiently and make the long term investments we need, and built
an incredibly strong team including Dave
Wehner, our next CFO. I look forward to working with Dave in
his new role."
"This has been a tough decision because Facebook is such a great
company and has such a bright future ahead, but I've decided to
move back into healthcare where I spent my career before Facebook,"
Ebersman said. "It's been a privilege working at Facebook and being
part of such a great team. We have an incredibly talented finance
organization, and I have complete confidence in Dave Wehner and his ability to lead the team
going forward."
Webcast and Conference Call Information
Facebook will host a conference call to discuss the results at
2 p.m. PT / 5
p.m. ET today. The live webcast can be accessed at the
Facebook Investor Relations website at investor.fb.com, along with
the company's earnings press release, financial tables and slide
presentation. Facebook uses the investor.fb.com website, and
intends to also use Mark
Zuckerberg's Facebook Page (https://www.facebook.com/zuck),
as a means of disclosing material non-public information and for
complying with its disclosure obligations under Regulation FD.
Following the call, a replay will be available at the same
website. A telephonic replay will be available for one week
following the conference call at + 1 (404) 537-3406 or + 1 (855)
859-2056, conference ID 11218209.
About Facebook
Founded in 2004, Facebook's mission is to give people the power
to share and make the world more open and connected. People use
Facebook to stay connected with friends and family, to discover
what's going on in the world, and to share and express what matters
to them.
Contacts
Investors:
Deborah Crawford
investor@fb.com / investor.fb.com
Press:
Vanessa Chan
press@fb.com / newsroom.fb.com
Forward Looking Statements
This press release contains forward-looking statements regarding
our future business expectations, which are subject to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are only predictions and
may differ materially from actual results due to a variety of
factors including: our ability to retain or increase users and
engagement levels; our reliance on advertising revenue; our ability
to continue to monetize our mobile products; risks associated with
new product development and their introduction as well as other new
business initiatives; our emphasis on user growth and engagement
and the user experience over short-term financial results;
competition; litigation; privacy and regulatory concerns; risks
associated with acquisitions; security breaches; and our ability to
manage growth and geographically-dispersed operations. These and
other potential risks and uncertainties that could cause actual
results to differ from the results predicted are more fully
detailed under the caption "Risk Factors" in our Annual Report on
Form 10-K filed with the SEC on January 31,
2014, which is available on our Investor Relations website
at investor.fb.com and on the SEC website at www.sec.gov.
Additional information will also be set forth in our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2014. In
addition, please note that the date of this press release is
April 23, 2014, and any forward-looking statements contained
herein are based on assumptions that we believe to be reasonable as
of this date. We undertake no obligation to update these statements
as a result of new information or future events.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: revenue excluding foreign
exchange effect and advertising revenue excluding foreign exchange
effect; non-GAAP costs and expenses; non-GAAP income from
operations; non-GAAP net income; non-GAAP diluted shares; non-GAAP
diluted earnings per share; non-GAAP operating margin; non-GAAP
effective tax rate; and free cash flow. The presentation of these
financial measures is not intended to be considered in isolation or
as a substitute for, or superior to, financial information prepared
and presented in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP
financial measures as an analytical tool. In particular, many of
the adjustments to our GAAP financial measures reflect the
exclusion of items, specifically share-based compensation expense
and payroll tax related to share-based compensation expense, and
the related income tax effects, that are recurring and will be
reflected in our financial results for the foreseeable future. In
addition, these measures may be different from non-GAAP financial
measures used by other companies, limiting their usefulness for
comparison purposes. We compensate for these limitations by
providing specific information regarding the GAAP amounts excluded
from these non-GAAP financial measures.
We believe these non-GAAP financial measures provide investors
with useful supplemental information about the financial
performance of our business, enable comparison of financial results
between periods where certain items may vary independent of
business performance, and allow for greater transparency with
respect to key metrics used by management in operating our
business.
We exclude the following items from one or more of our non-GAAP
financial measures:
Share-based compensation expense. We exclude share-based
compensation expense because we believe that the non-GAAP financial
measures excluding this item provide meaningful supplemental
information regarding operational performance. In particular,
because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use
under FASB ASC Topic 718, we believe that providing non-GAAP
financial measures that exclude this expense allows investors the
ability to make more meaningful comparisons between our operating
results and those of other companies. Accordingly, we believe that
excluding this expense provides investors and management with
greater visibility to the underlying performance of our business
operations, facilitates comparison of our results with other
periods, and may also facilitate comparison with the results of
other companies in our industry.
Payroll tax expense related to share-based compensation.
We exclude payroll tax expense related to share-based compensation
expense because, without excluding these tax expenses, investors
would not see the full effect that excluding share-based
compensation expense had on our operating results. These expenses
are tied to the exercise or vesting of underlying equity awards and
the price of our common stock at the time of vesting or exercise,
which factors may vary from period to period independent of the
operating performance of our business. Similar to share-based
compensation expense, we believe that excluding this payroll tax
expense provides investors and management with greater visibility
to the underlying performance of our business operations and
facilitates comparison with other periods as well as the results of
other companies.
Income tax effect of share-based compensation and related
payroll tax expenses. We believe excluding the income tax
effect of non-GAAP adjustments assists investors and management in
understanding the tax provision related to those adjustments and
provides useful supplemental information regarding the underlying
performance of our business operations.
Foreign exchange effect on revenue. We translate revenue
for the three months ended March 31,
2014 using prior year exchange rates for our settlement
currencies, which we believe is a useful metric that facilitates
comparison to our historical performance.
Purchases of property and equipment; Property and equipment
acquired under capital leases. We subtract both purchases of
property and equipment and property and equipment acquired under
capital leases in our calculation of free cash flow because we
believe that these two items collectively represent the amount of
property and equipment we need to procure to support our business,
regardless of whether we finance such property or equipment with a
capital lease. We believe that this methodology can provide useful
supplemental information to help investors better understand
underlying trends in our business.
For more information on our non-GAAP financial measures and a
reconciliation of such measures to the nearest GAAP measure, please
see the "Reconciliation of Non-GAAP Results to Nearest GAAP
Measures" table in this press release.
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(In millions,
except for per share amounts)
|
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
2013
|
|
2014
|
Revenue
|
$
1,458
|
|
$
2,502
|
Costs and
expenses:
|
|
|
|
Cost of
revenue
|
413
|
|
462
|
Research and
development
|
293
|
|
455
|
Marketing and
sales
|
203
|
|
323
|
General and
administrative
|
176
|
|
187
|
Total
costs and expenses
|
1,085
|
|
1,427
|
Income from
operations
|
373
|
|
1,075
|
Interest and other
income/(expense), net
|
(20)
|
|
—
|
Income before
provision for income taxes
|
353
|
|
1,075
|
Provision for income
taxes
|
134
|
|
433
|
Net
income
|
$
219
|
|
$
642
|
Less: Net income
attributable to participating securities
|
2
|
|
3
|
|
Net income
attributable to Class A and Class B common
stockholders
|
$
217
|
|
$
639
|
Earnings per share
attributable to Class A and Class B common
stockholders:
|
|
|
|
Basic
|
$
0.09
|
|
$
0.25
|
Diluted
|
$
0.09
|
|
$
0.25
|
Weighted average
shares used to compute earnings per share attributable to
Class A and Class B common stockholders:
|
|
|
|
Basic
|
2,386
|
|
2,545
|
Diluted
|
2,499
|
|
2,609
|
Share-based
compensation expense included in costs and expenses:
|
|
|
|
Cost of
revenue
|
$
8
|
|
$
12
|
Research and
development
|
117
|
|
181
|
Marketing and
sales
|
24
|
|
43
|
General and
administrative
|
21
|
|
38
|
Total
share-based compensation expense
|
$
170
|
|
$
274
|
Payroll tax
expenses related to share-based compensation included in costs and
expenses:
|
|
|
|
Cost of
revenue
|
$
1
|
|
$
2
|
Research and
development
|
11
|
|
15
|
Marketing and
sales
|
4
|
|
4
|
General and
administrative
|
4
|
|
4
|
Total
payroll tax expenses related to share-based compensation
|
$
20
|
|
$
25
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
December 31,
2013
|
|
March 31,
2014
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
3,323
|
|
$
2,998
|
|
Marketable
securities
|
8,126
|
|
9,631
|
|
Accounts
receivable
|
1,109
|
|
1,006
|
|
Prepaid expenses and
other current assets
|
512
|
|
425
|
|
|
Total current
assets
|
13,070
|
|
14,060
|
Property and
equipment, net
|
2,882
|
|
3,074
|
Goodwill and
intangible assets, net
|
1,722
|
|
1,682
|
Other
assets
|
221
|
|
212
|
Total
assets
|
$
17,895
|
|
$
19,028
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
87
|
|
$
85
|
|
Developer partners
payable
|
181
|
|
188
|
|
Accrued expenses and
other current liabilities
|
555
|
|
525
|
|
Deferred revenue and
deposits
|
38
|
|
38
|
|
Current portion of
capital lease obligations
|
239
|
|
201
|
|
|
Total current
liabilities
|
1,100
|
|
1,037
|
|
|
|
|
|
|
Capital lease
obligations, less current portion
|
237
|
|
191
|
Other
liabilities
|
1,088
|
|
1,063
|
|
|
Total
liabilities
|
2,425
|
|
2,291
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock and
additional paid-in capital
|
12,297
|
|
12,921
|
|
Accumulated other
comprehensive income
|
14
|
|
15
|
|
Retained
earnings
|
3,159
|
|
3,801
|
|
|
Total stockholders'
equity
|
15,470
|
|
16,737
|
Total liabilities
and stockholders' equity
|
$
17,895
|
|
$
19,028
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
2013
|
|
2014
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
219
|
|
$
642
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
233
|
|
264
|
Lease
abandonment
|
8
|
|
(13)
|
Share-based
compensation
|
170
|
|
274
|
Deferred income
taxes
|
(7)
|
|
(1)
|
Tax benefit from
share-based award activity
|
59
|
|
345
|
Excess tax benefit
from share-based award activity
|
(62)
|
|
(348)
|
Other
|
9
|
|
9
|
Changes in
assets and liabilities:
|
|
|
|
Accounts
receivable
|
54
|
|
105
|
Prepaid expenses and
other current assets
|
(1)
|
|
(4)
|
Other
assets
|
(36)
|
|
16
|
Accounts
payable
|
1
|
|
(10)
|
Developer partners
payable
|
21
|
|
7
|
Accrued expenses and
other current liabilities
|
(33)
|
|
(27)
|
Other
liabilities
|
84
|
|
26
|
Net cash
provided by operating activities
|
719
|
|
1,285
|
Cash flows from
investing activities
|
|
|
|
Purchases of
property and equipment
|
(327)
|
|
(363)
|
Purchases of
marketable securities
|
(1,508)
|
|
(2,974)
|
Sales of
marketable securities
|
699
|
|
847
|
Maturities of
marketable securities
|
903
|
|
619
|
Acquisitions
of businesses, net of cash acquired, and purchases of intangible
assets
|
(99)
|
|
—
|
Other
investing activities, net
|
6
|
|
(1)
|
Net cash
used in investing activities
|
(326)
|
|
(1,872)
|
Cash flows from
financing activities
|
|
|
|
Taxes paid
related to net share settlement of equity awards
|
(405)
|
|
(3)
|
Proceeds from
exercise of stock options
|
8
|
|
1
|
Principal
payments on capital lease obligations
|
(109)
|
|
(84)
|
Excess tax
benefit from share-based award activity
|
62
|
|
348
|
Net cash
(used in) provided by financing activities
|
(444)
|
|
262
|
Effect of exchange
rate changes on cash and cash equivalents
|
(8)
|
|
—
|
Net decrease in cash
and cash equivalents
|
(59)
|
|
(325)
|
Cash and cash
equivalents at beginning of period
|
2,384
|
|
3,323
|
Cash and cash
equivalents at end of period
|
$
2,325
|
|
$
2,998
|
Supplemental cash
flow data
|
|
|
|
Cash paid
during the period for:
|
|
|
|
Interest
|
$
12
|
|
$
4
|
Income
taxes
|
$
9
|
|
$
37
|
Non-cash
investing and financing activities:
|
|
|
|
Net change in
accounts payable and accrued expenses and other current liabilities
related to property and equipment additions
|
$
47
|
|
$
(3)
|
Property and
equipment acquired under capital leases
|
$
11
|
|
$
—
|
Fair value of shares
issued related to acquisitions of businesses and other
assets
|
$
33
|
|
$
—
|
Reconciliation of
Non-GAAP Results to Nearest GAAP Measures
|
(In millions,
except percentages and per share amounts)
|
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
2013
|
|
2014
|
GAAP
revenue
|
$
1,458
|
|
$
2,502
|
Foreign exchange effect
on 2014 revenue using 2013 rates
|
|
|
9
|
Revenue excluding
foreign exchange effect
|
|
|
$
2,511
|
GAAP revenue
year-over-year change %
|
|
|
72 %
|
Revenue excluding
foreign exchange effect year-over-year change %
|
|
|
72 %
|
GAAP advertising
revenue
|
$
1,245
|
|
$
2,265
|
Foreign exchange effect
on 2014 advertising revenue using 2013 rates
|
|
|
9
|
Advertising revenue
excluding foreign exchange effect
|
|
|
$
2,274
|
GAAP advertising
revenue year-over-year change %
|
|
|
82 %
|
Advertising revenue
excluding foreign exchange effect year-over-year change
%
|
|
|
83 %
|
GAAP costs and
expenses
|
$
1,085
|
|
$
1,427
|
Share-based
compensation expense
|
(170)
|
|
(274)
|
Payroll tax expenses
related to share-based compensation
|
(20)
|
|
(25)
|
Non-GAAP costs and
expenses
|
$
895
|
|
$
1,128
|
GAAP income from
operations
|
$
373
|
|
$
1,075
|
Share-based
compensation expense
|
170
|
|
274
|
Payroll tax expenses
related to share-based compensation
|
20
|
|
25
|
Non-GAAP income from
operations
|
$
563
|
|
$
1,374
|
GAAP net
income
|
$
219
|
|
$
642
|
Share-based
compensation expense
|
170
|
|
274
|
Payroll tax expenses
related to share-based compensation
|
20
|
|
25
|
Income tax
adjustments
|
(97)
|
|
(56)
|
Non-GAAP net
income
|
$
312
|
|
$
885
|
GAAP and Non-GAAP
diluted shares
|
2,499
|
|
2,609
|
GAAP diluted earnings
per share
|
0.09
|
|
0.25
|
Non-GAAP adjustments to
net income
|
0.03
|
|
0.09
|
Non-GAAP diluted
earnings per share
|
0.12
|
|
0.34
|
GAAP operating
margin
|
26 %
|
|
43 %
|
Share-based
compensation expense
|
12 %
|
|
11 %
|
Payroll tax expenses
related to share-based compensation
|
1 %
|
|
1 %
|
Non-GAAP operating
margin
|
39 %
|
|
55 %
|
GAAP income before
provision for income taxes
|
$
353
|
|
$
1,075
|
GAAP provision for
income taxes
|
134
|
|
433
|
GAAP effective tax
rate
|
38 %
|
|
40 %
|
GAAP income before
provision for income taxes
|
$
353
|
|
$
1,075
|
Share-based
compensation and related payroll tax expenses
|
190
|
|
299
|
Non-GAAP income
before provision for income taxes
|
$
543
|
|
$
1,374
|
Non-GAAP provision
for income taxes
|
231
|
|
489
|
Non-GAAP effective
tax rate
|
43 %
|
|
36 %
|
Net cash provided by
operating activities
|
$
719
|
|
$
1,285
|
Purchases of property
and equipment
|
(327)
|
|
(363)
|
Property and equipment
acquired under capital leases
|
(11)
|
|
—
|
Free cash
flow
|
$
381
|
|
$
922
|
SOURCE Facebook, Inc.