MENLO PARK, Calif.,
Oct. 28, 2014 /PRNewswire/
-- Facebook, Inc. (NASDAQ: FB) today reported financial
results for the quarter ended September 30, 2014.
"This has been a good quarter with strong results," said
Mark Zuckerberg, Facebook founder
and CEO. "We continue to focus on serving our community well and
continue to invest in connecting the world over the next
decade."
Third Quarter 2014
Financial Summary
|
|
|
Three Months Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
In millions,
except percentages and per share amounts
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenue
|
$
|
3,203
|
|
$
|
2,016
|
|
$
|
8,615
|
|
$
|
5,286
|
Income from
Operations
|
|
|
|
|
|
|
|
GAAP
|
$
|
1,397
|
|
$
|
736
|
|
$
|
3,861
|
|
$
|
1,672
|
Non-GAAP*
|
$
|
1,820
|
|
$
|
1,024
|
|
$
|
4,987
|
|
$
|
2,451
|
Operating
Margin
|
|
|
|
|
|
|
|
GAAP
|
44%
|
|
37%
|
|
45%
|
|
32%
|
Non-GAAP*
|
57%
|
|
51%
|
|
58%
|
|
46%
|
Net
Income
|
|
|
|
|
|
|
|
GAAP
|
$
|
806
|
|
$
|
425
|
|
$
|
2,239
|
|
$
|
977
|
Non-GAAP*
|
$
|
1,149
|
|
$
|
666
|
|
$
|
3,194
|
|
$
|
1,520
|
Diluted Earnings
per Share (EPS)
|
|
|
|
|
|
|
|
GAAP
|
$
|
0.30
|
|
$
|
0.17
|
|
$
|
0.86
|
|
$
|
0.39
|
Non-GAAP*
|
$
|
0.43
|
|
$
|
0.27
|
|
$
|
1.22
|
|
$
|
0.61
|
|
* Non-GAAP
information for the three and nine months ended September 30, 2013
has been updated to exclude amortization of intangible assets to
conform to our current period presentation. See the table below
titled "Reconciliation of Non-GAAP Results to Nearest GAAP
Measures."
|
Third Quarter 2014 Operational Highlights
- Daily active users (DAUs) were 864 million on average for
September 2014, an increase of 19%
year-over-year.
- Mobile DAUs were 703 million on average for September 2014, an increase of 39%
year-over-year.
- Monthly active users (MAUs) were 1.35 billion as of
September 30, 2014, an increase of 14% year-over-year.
- Mobile MAUs were 1.12 billion as of September 30, 2014, an
increase of 29% year-over-year.
Third Quarter 2014 Financial Highlights
Revenue – Revenue for the third quarter of 2014 totaled
$3.20 billion, an increase of 59%,
compared with $2.02 billion in the
third quarter of 2013. Excluding the impact of year-over-year
changes in foreign exchange rates, revenue would have increased by
58%.
- Revenue from advertising was $2.96
billion, a 64% 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 63%.
- Mobile advertising revenue represented approximately 66% of
advertising revenue for the third quarter of 2014, up from
approximately 49% of advertising revenue in the third quarter of
2013.
- Payments and other fees revenue was $246
million, a 13% increase from the same quarter last
year.
Costs and expenses – GAAP costs and expenses for the
third quarter of 2014 were $1.81
billion, an increase of 41% from the third quarter of 2013.
Non-GAAP information for 2013 has been updated to exclude
amortization of intangible assets to conform to our current period
presentation. Excluding amortization of intangible assets,
share-based compensation and related payroll tax expenses, non-GAAP
costs and expenses were $1.38 billion
in the third quarter of 2014, up 39% compared to $992 million for the third quarter of 2013.
Income from operations – GAAP income from operations for
the third quarter of 2014 was $1.40
billion, up 90% compared to $736
million in the third quarter of 2013. Excluding amortization
of intangible assets, share-based compensation and related payroll
tax expenses, non-GAAP income from operations for the third quarter
of 2014 was $1.82 billion, up 78%
compared to $1.02 billion for the
third quarter of 2013.
Operating margin – GAAP operating margin was 44% for the
third quarter of 2014, compared to 37% in the third quarter of
2013. Excluding amortization of intangible assets, share-based
compensation and related payroll tax expenses, non-GAAP operating
margin was 57% for the third quarter of 2014, compared to 51% for
the third quarter of 2013.
Provision for income taxes – GAAP income tax expense for
the third quarter of 2014 was $530
million, representing a 40% effective tax rate. Excluding
amortization of intangible assets, share-based compensation and
related payroll tax expenses, the non-GAAP effective tax rate would
have been approximately 35%.
Net income and EPS – GAAP net income for the third
quarter of 2014 was $806 million, up
90% compared to $425 million for the
third quarter of 2013. Excluding amortization of intangible assets,
share-based compensation and related payroll tax expenses, and
income tax adjustments, non-GAAP net income for the third quarter
of 2014 was $1.15 billion, up 73%
compared to $666 million for the
third quarter of 2013. GAAP diluted EPS was $0.30 in the third quarter of 2014, up 76%
compared to $0.17 in the third
quarter of 2013. Excluding amortization of intangible assets,
share-based compensation and related payroll tax expenses, and
income tax adjustments, non-GAAP diluted EPS for the third quarter
of 2014 was $0.43, up 59% compared to
$0.27 in the third quarter of
2013.
Capital expenditures – Capital expenditures for the third
quarter of 2014 were $482
million.
Cash and cash equivalents and marketable securities –
Cash and cash equivalents and marketable securities were
$14.25 billion at the end of the
third quarter of 2014.
Free cash flow – Free cash flow for the third quarter of
2014 was $766 million.
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 of Facebook's earnings
release call can be accessed at investor.fb.com, along with the
earnings press release, financial tables and slide presentation.
Facebook uses the investor.fb.com website and Mark Zuckerberg's Facebook Page
(https://www.facebook.com/zuck) as 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 11108302.
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 Quarterly Report
on Form 10-Q filed with the SEC on July 24,
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 September 30, 2014.
In addition, please note that the date of this press release is
October 28, 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 amortization of intangible assets,
share-based compensation expense, and payroll tax related to
share-based compensation expense, and the related income tax
effects of the aforementioned exclusions, 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:
Amortization of intangible assets. We amortize intangible
assets acquired in connection with acquisitions. We exclude these
amortization expenses because we do not believe these expenses are
reflective of ongoing operating results in the period. These
amounts arise from our prior acquisitions and have no direct
correlation to the operation of our business.
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 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 amortization of intangible assets,
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 and nine months ended September 30, 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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenue
|
$
|
3,203
|
|
|
$
|
2,016
|
|
|
$
|
8,615
|
|
|
$
|
5,286
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
565
|
|
|
507
|
|
|
1,501
|
|
|
1,384
|
|
Research and
development
|
608
|
|
|
369
|
|
|
1,555
|
|
|
1,006
|
|
Marketing and
sales
|
374
|
|
|
233
|
|
|
1,055
|
|
|
704
|
|
General and
administrative
|
259
|
|
|
171
|
|
|
643
|
|
|
520
|
|
Total costs
and expenses
|
1,806
|
|
|
1,280
|
|
|
4,754
|
|
|
3,614
|
|
Income from
operations
|
1,397
|
|
|
736
|
|
|
3,861
|
|
|
1,672
|
|
Interest and other
income/(expense), net
|
(61)
|
|
|
(10)
|
|
|
(65)
|
|
|
(48)
|
|
Income before
provision for income taxes
|
1,336
|
|
|
726
|
|
|
3,796
|
|
|
1,624
|
|
Provision for income
taxes
|
530
|
|
|
301
|
|
|
1,557
|
|
|
647
|
|
Net
income
|
$
|
806
|
|
|
$
|
425
|
|
|
$
|
2,239
|
|
|
$
|
977
|
|
Less: Net income
attributable to participating securities
|
4
|
|
|
3
|
|
|
10
|
|
|
6
|
|
Net income
attributable to Class A and Class B common
stockholders
|
$
|
802
|
|
|
$
|
422
|
|
|
$
|
2,229
|
|
|
$
|
971
|
|
Earnings per share
attributable to Class A and Class B common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.31
|
|
|
$
|
0.17
|
|
|
$
|
0.87
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.17
|
|
|
$
|
0.86
|
|
|
$
|
0.39
|
|
Weighted average
shares used to compute earnings per share attributable to
Class A and Class B common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
2,587
|
|
|
2,430
|
|
|
2,565
|
|
|
2,408
|
|
Diluted
|
2,644
|
|
|
2,528
|
|
|
2,616
|
|
|
2,504
|
|
Share-based
compensation expense included in costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
31
|
|
Research and
development
|
243
|
|
|
164
|
|
|
643
|
|
|
432
|
|
Marketing and
sales
|
53
|
|
|
34
|
|
|
146
|
|
|
91
|
|
General and
administrative
|
41
|
|
|
29
|
|
|
108
|
|
|
79
|
|
Total
share-based compensation expense
|
$
|
353
|
|
|
$
|
239
|
|
|
$
|
941
|
|
|
$
|
633
|
|
Payroll tax
expenses related to share-based compensation included in costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
1
|
|
Research and
development
|
6
|
|
|
8
|
|
|
27
|
|
|
26
|
|
Marketing and
sales
|
1
|
|
|
2
|
|
|
7
|
|
|
7
|
|
General and
administrative
|
3
|
|
|
2
|
|
|
7
|
|
|
6
|
|
Total payroll
tax expenses related to share-based compensation
|
$
|
11
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
40
|
|
Amortization of
intangible assets included in costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
26
|
|
|
$
|
5
|
|
|
$
|
42
|
|
|
$
|
9
|
|
Research and
development
|
9
|
|
|
9
|
|
|
25
|
|
|
28
|
|
Marketing and
sales
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
General and
administrative
|
23
|
|
|
22
|
|
|
71
|
|
|
66
|
|
Total
amortization of intangible assets
|
$
|
59
|
|
|
$
|
37
|
|
|
$
|
141
|
|
|
$
|
106
|
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
September
30,
2014
|
|
December
31,
2013
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
8,999
|
|
|
$
|
3,323
|
|
|
Marketable
securities
|
5,251
|
|
|
8,126
|
|
|
Accounts
receivable
|
1,363
|
|
|
1,109
|
|
|
Prepaid expenses and
other current assets
|
502
|
|
|
512
|
|
|
|
Total current
assets
|
16,115
|
|
|
13,070
|
|
Property and
equipment, net
|
3,703
|
|
|
2,882
|
|
Intangible assets,
net
|
1,317
|
|
|
883
|
|
Goodwill
|
2,612
|
|
|
839
|
|
Other
assets
|
441
|
|
|
221
|
|
Total
assets
|
$
|
24,188
|
|
|
$
|
17,895
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
$
|
120
|
|
|
$
|
87
|
|
|
Partners
payable
|
208
|
|
|
181
|
|
|
Accrued expenses and
other current liabilities
|
709
|
|
|
555
|
|
|
Deferred revenue and
deposits
|
48
|
|
|
38
|
|
|
Current portion of
capital lease obligations
|
149
|
|
|
239
|
|
|
|
Total current
liabilities
|
1,234
|
|
|
1,100
|
|
|
|
|
|
|
|
|
|
Capital lease
obligations, less current portion
|
129
|
|
|
237
|
|
Other
liabilities
|
1,587
|
|
|
1,088
|
|
|
|
Total
liabilities
|
2,950
|
|
|
2,425
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Common stock and
additional paid-in capital
|
15,949
|
|
|
12,297
|
|
|
Accumulated other
comprehensive (loss) income
|
(109)
|
|
|
14
|
|
|
Retained
earnings
|
5,398
|
|
|
3,159
|
|
|
|
Total stockholders'
equity
|
21,238
|
|
|
15,470
|
|
Total liabilities
and stockholders' equity
|
$
|
24,188
|
|
|
$
|
17,895
|
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Three Months Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
$
|
806
|
|
$
|
425
|
|
$
|
2,239
|
|
$
|
977
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
289
|
|
274
|
|
810
|
|
737
|
Lease
abandonment
|
(5)
|
|
43
|
|
(31)
|
|
108
|
Share-based
compensation
|
353
|
|
239
|
|
941
|
|
633
|
Deferred income
taxes
|
4
|
|
2
|
|
(30)
|
|
21
|
Tax benefit from
share-based award activity
|
479
|
|
129
|
|
1,354
|
|
277
|
Excess tax benefit
from share-based award activity
|
(482)
|
|
(130)
|
|
(1,365)
|
|
(285)
|
Other
|
2
|
|
19
|
|
5
|
|
39
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(182)
|
|
(83)
|
|
(264)
|
|
(145)
|
Prepaid expenses and
other current assets
|
(55)
|
|
5
|
|
(45)
|
|
433
|
Other
assets
|
(176)
|
|
9
|
|
(158)
|
|
(35)
|
Accounts
payable
|
(57)
|
|
(19)
|
|
12
|
|
(17)
|
Partners
payable
|
(17)
|
|
(1)
|
|
(22)
|
|
2
|
Accrued expenses and
other current liabilities
|
123
|
|
(114)
|
|
198
|
|
(105)
|
Deferred revenue and
deposits
|
(12)
|
|
4
|
|
3
|
|
6
|
Other
liabilities
|
178
|
|
148
|
|
227
|
|
345
|
Net cash provided
by operating activities
|
1,248
|
|
950
|
|
3,874
|
|
2,991
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(482)
|
|
(284)
|
|
(1,314)
|
|
(879)
|
Purchases of
marketable securities
|
(1,733)
|
|
(904)
|
|
(6,215)
|
|
(4,364)
|
Sales of marketable
securities
|
5,423
|
|
1,158
|
|
7,391
|
|
2,433
|
Maturities of
marketable securities
|
636
|
|
780
|
|
1,710
|
|
2,954
|
Acquisitions of
businesses, net of cash acquired, and purchases of intangible
assets
|
(735)
|
|
(16)
|
|
(754)
|
|
(237)
|
Change in restricted
cash and deposits
|
(111)
|
|
—
|
|
(113)
|
|
4
|
Other investing
activities, net
|
(1)
|
|
—
|
|
(2)
|
|
(1)
|
Net cash provided
by (used in) investing activities
|
2,997
|
|
734
|
|
703
|
|
(90)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Taxes paid related to
net share settlement of equity awards
|
—
|
|
(148)
|
|
(3)
|
|
(706)
|
Proceeds from
exercise of stock options
|
5
|
|
10
|
|
7
|
|
20
|
Repayment of
long-term debt
|
—
|
|
(1,500)
|
|
—
|
|
(1,500)
|
Principal payments on
capital lease obligations
|
(49)
|
|
(91)
|
|
(199)
|
|
(291)
|
Excess tax benefit
from share-based award activity
|
482
|
|
130
|
|
1,365
|
|
285
|
Net cash provided
by (used in) financing activities
|
438
|
|
(1,599)
|
|
1,170
|
|
(2,192)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(68)
|
|
14
|
|
(71)
|
|
7
|
Net increase in cash
and cash equivalents
|
4,615
|
|
99
|
|
5,676
|
|
716
|
Cash and cash
equivalents at beginning of period
|
4,384
|
|
3,001
|
|
3,323
|
|
2,384
|
Cash and cash
equivalents at end of period
|
$
|
8,999
|
|
$
|
3,100
|
|
$
|
8,999
|
|
$
|
3,100
|
Supplemental cash
flow data
|
|
|
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
|
|
|
|
Interest
|
$
|
3
|
|
$
|
7
|
|
$
|
11
|
|
$
|
33
|
Income
taxes
|
$
|
46
|
|
$
|
43
|
|
$
|
107
|
|
$
|
61
|
Cash received during
the period for:
|
|
|
|
|
|
|
|
Income
taxes
|
$
|
4
|
|
$
|
—
|
|
$
|
6
|
|
$
|
419
|
|
|
|
|
|
|
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
Net change in
accounts payable and accrued expenses and other current liabilities
related to property and equipment additions
|
$
|
20
|
|
$
|
36
|
|
$
|
38
|
|
$
|
31
|
Property and
equipment acquired under capital leases
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
11
|
Fair value of shares
issued related to acquisitions of businesses
|
$
|
1,368
|
|
$
|
—
|
|
$
|
1,368
|
|
$
|
77
|
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,
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
GAAP
revenue
|
$
|
3,203
|
|
$
|
2,016
|
|
|
$
|
8,615
|
|
$
|
5,286
|
Foreign exchange
effect on 2014 revenue using 2013 rates
|
21
|
|
|
|
|
42
|
|
|
Revenue excluding
foreign exchange effect
|
$
|
3,182
|
|
|
|
|
$
|
8,573
|
|
|
GAAP revenue
year-over-year change %
|
59%
|
|
|
|
|
63%
|
|
|
Revenue excluding
foreign exchange effect year-over-year change %
|
58%
|
|
|
|
|
62%
|
|
|
GAAP advertising
revenue
|
$
|
2,957
|
|
$
|
1,798
|
|
|
$
|
7,898
|
|
$
|
4,641
|
Foreign exchange
effect on 2014 advertising revenue using 2013 rates
|
21
|
|
|
|
|
42
|
|
|
Advertising revenue
excluding foreign exchange effect
|
$
|
2,936
|
|
|
|
|
$
|
7,856
|
|
|
GAAP advertising
revenue year-over-year change %
|
64%
|
|
|
|
|
70%
|
|
|
Advertising revenue
excluding foreign exchange effect year-over-year change
%
|
63%
|
|
|
|
|
69%
|
|
|
GAAP costs and
expenses
|
$
|
1,806
|
|
$
|
1,280
|
|
|
$
|
4,754
|
|
$
|
3,614
|
Share-based
compensation expense
|
(353)
|
|
(239)
|
|
|
(941)
|
|
(633)
|
Payroll tax expenses
related to share-based compensation
|
(11)
|
|
(12)
|
|
|
(44)
|
|
(40)
|
Amortization of
intangible assets
|
(59)
|
|
(37)
|
|
|
(141)
|
|
(106)
|
Non-GAAP costs and
expenses
|
$
|
1,383
|
|
$
|
992
|
|
|
$
|
3,628
|
|
$
|
2,835
|
GAAP income from
operations
|
$
|
1,397
|
|
$
|
736
|
|
|
$
|
3,861
|
|
$
|
1,672
|
Share-based
compensation expense
|
353
|
|
239
|
|
|
941
|
|
633
|
Payroll tax expenses
related to share-based compensation
|
11
|
|
12
|
|
|
44
|
|
40
|
Amortization of
intangible assets
|
59
|
|
37
|
|
|
141
|
|
106
|
Non-GAAP income from
operations
|
$
|
1,820
|
|
$
|
1,024
|
|
|
$
|
4,987
|
|
$
|
2,451
|
GAAP net
income
|
$
|
806
|
|
$
|
425
|
|
|
$
|
2,239
|
|
$
|
977
|
Share-based
compensation expense
|
353
|
|
239
|
|
|
941
|
|
633
|
Payroll tax expenses
related to share-based compensation
|
11
|
|
12
|
|
|
44
|
|
40
|
Amortization of
intangible assets
|
59
|
|
37
|
|
|
141
|
|
106
|
Income tax
adjustments
|
(80)
|
|
(47)
|
|
|
(171)
|
|
(236)
|
Non-GAAP net
income
|
$
|
1,149
|
|
$
|
666
|
|
|
$
|
3,194
|
|
$
|
1,520
|
GAAP and Non-GAAP
diluted shares
|
2,644
|
|
2,528
|
|
|
2,616
|
|
2,504
|
GAAP diluted earnings
per share
|
$
|
0.30
|
|
$
|
0.17
|
|
|
$
|
0.86
|
|
$
|
0.39
|
Net income
attributable to participating securities
|
—
|
|
—
|
|
|
(0.01)
|
|
—
|
Non-GAAP adjustments
to net income
|
0.13
|
|
0.10
|
|
|
0.37
|
|
0.22
|
Non-GAAP diluted
earnings per share
|
$
|
0.43
|
|
$
|
0.27
|
|
|
$
|
1.22
|
|
$
|
0.61
|
GAAP operating
margin
|
44%
|
|
37%
|
|
|
45%
|
|
32%
|
Share-based
compensation expense
|
11%
|
|
12%
|
|
|
11%
|
|
12%
|
Payroll tax expenses
related to share-based compensation
|
—%
|
|
1%
|
|
|
1%
|
|
1%
|
Amortization of
intangible assets
|
2%
|
|
2%
|
|
|
2%
|
|
2%
|
Non-GAAP operating
margin
|
57%
|
|
51%
|
|
|
58%
|
|
46%
|
GAAP income before
provision for income taxes
|
$
|
1,336
|
|
$
|
726
|
|
|
$
|
3,796
|
|
$
|
1,624
|
GAAP provision for
income taxes
|
530
|
|
301
|
|
|
1,557
|
|
647
|
GAAP effective tax
rate
|
40%
|
|
41%
|
|
|
41%
|
|
40%
|
GAAP income before
provision for income taxes
|
$
|
1,336
|
|
$
|
726
|
|
|
$
|
3,796
|
|
$
|
1,624
|
Share-based
compensation and related payroll tax expenses
|
364
|
|
251
|
|
|
985
|
|
673
|
Amortization of
intangible assets
|
59
|
|
37
|
|
|
141
|
|
106
|
Non-GAAP income
before provision for income taxes
|
$
|
1,759
|
|
$
|
1,014
|
|
|
$
|
4,922
|
|
$
|
2,403
|
Non-GAAP provision
for income taxes
|
610
|
|
348
|
|
|
1,728
|
|
883
|
Non-GAAP effective
tax rate
|
35%
|
|
34%
|
|
|
35%
|
|
37%
|
Net cash provided by
operating activities
|
$
|
1,248
|
|
$
|
950
|
|
|
$
|
3,874
|
|
$
|
2,991
|
Purchases of property
and equipment
|
(482)
|
|
(284)
|
|
|
(1,314)
|
|
(879)
|
Property and
equipment acquired under capital leases
|
—
|
|
—
|
|
|
—
|
|
(11)
|
Free cash
flow
|
$
|
766
|
|
$
|
666
|
|
|
$
|
2,560
|
|
$
|
2,101
|
|
* Non-GAAP
information for the three and nine months ended September 30, 2013
has been updated to exclude amortization of intangible assets to
conform to our current period presentation.
|
SOURCE Facebook, Inc.