MENLO PARK, Calif.,
Nov. 1, 2017 /PRNewswire/
-- Facebook, Inc. (NASDAQ: FB) today reported financial
results for the quarter ended September 30, 2017.
"Our community continues to grow and our business is doing
well," said Mark Zuckerberg,
Facebook founder and CEO. "But none of that matters if our services
are used in ways that don't bring people closer together. We're
serious about preventing abuse on our platforms. We're investing so
much in security that it will impact our profitability. Protecting
our community is more important than maximizing our profits."
Third Quarter 2017 Financial Highlights
|
Three Months Ended
September 30,
|
|
Year-over-
Year % Change
|
In millions,
except percentages and per share amounts
|
2017
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
Advertising
|
$
|
10,142
|
|
|
$
|
6,816
|
|
|
49
|
%
|
Payments
and other fees
|
186
|
|
|
195
|
|
|
(5)
|
%
|
Total
revenue
|
10,328
|
|
|
7,011
|
|
|
47
|
%
|
Total costs and
expenses(1)
|
5,206
|
|
|
3,894
|
|
|
34
|
%
|
Income from
operations(1)
|
$
|
5,122
|
|
|
$
|
3,117
|
|
|
64
|
%
|
Operating
margin(1)
|
50
|
%
|
|
44
|
%
|
|
|
Provision for income
taxes
|
$
|
529
|
|
|
|
|
|
Effective tax
rate
|
10
|
%
|
|
|
|
|
Net
income(1)
|
$
|
4,707
|
|
|
$
|
2,627
|
|
|
79
|
%
|
Diluted Earnings per
Share (EPS)(1)
|
$
|
1.59
|
|
|
$
|
0.90
|
|
|
77
|
%
|
|
|
(1)
|
In the fourth quarter
of 2016, we elected to early adopt Accounting Standards Update No.
2016-09, Compensation - Stock Compensation (Topic 718):
Improvement to Employee Share-based Payment Accounting (ASU
2016-09). We were required to reflect any adoption adjustments as
of January 1, 2016, the beginning of the annual period that
included the interim period of adoption. As such, certain financial
highlights data for the three months ended September 30, 2016 had
been adjusted to reflect the impact of ASU 2016-09 adoption. See
Note 1 — Summary of Significant Accounting Policies (Note 1) in the
notes to our consolidated financial statements in our Annual Report
on Form 10-K for the year ended December 31, 2016 for detailed
adoption information.
|
Third Quarter 2017 Operational and Other Financial
Highlights
- Daily active users (DAUs) – DAUs were 1.37 billion on
average for September 2017, an
increase of 16% year-over-year.
- Monthly active users (MAUs) – MAUs were 2.07 billion as
of September 30, 2017, an increase of 16% year-over-year.
- Mobile advertising revenue – Mobile advertising revenue
represented approximately 88% of advertising revenue for the third
quarter of 2017, up from approximately 84% of advertising revenue
in the third quarter of 2016.
- Capital expenditures – Capital expenditures for the
third quarter of 2017 were $1.76
billion.
- Cash and cash equivalents and marketable securities –
Cash and cash equivalents and marketable securities were
$38.29 billion at the end of the
third quarter of 2017.
- Headcount – Headcount was 23,165 as of
September 30, 2017, an increase of 47% year-over-year.
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
conference 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 and newsroom.fb.com websites as
well as 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 81859774.
About Facebook
Founded in 2004, Facebook's mission is to give people the power
to build community and bring the world closer together. 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
dependency on mobile operating systems, networks, and standards
that we do not control; 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 27, 2017, 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, 2017. In
addition, please note that the date of this press release is
November 1, 2017, 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 condensed consolidated financial statements,
which are prepared and presented in accordance with generally
accepted accounting principles in the
United States (GAAP), we use the following non-GAAP
financial measures: revenue excluding foreign exchange effect,
advertising revenue excluding foreign exchange effect 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 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 our non-GAAP financial
measures:
Foreign exchange effect on revenue. We translated revenue
for the three and nine months ended September 30, 2017 using
the prior year's monthly exchange rates for our settlement
currencies other than the U.S. dollar, which we believe is a useful
metric that facilitates comparison to our historical
performance.
Purchases of property and equipment. We subtract
purchases of property and equipment in our calculation of free cash
flow because we believe that this methodology can provide useful
supplemental information to help investors better understand
underlying trends in our business. Free cash flow is not intended
to represent our residual cash flow available for discretionary
expenditures.
For more information on our non-GAAP financial measures and a
reconciliation of GAAP to non-GAAP measures, please see the
"Reconciliation of GAAP to Non-GAAP Results" 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,
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
Revenue
|
$
|
10,328
|
|
|
$
|
7,011
|
|
|
$
|
27,681
|
|
|
$
|
18,829
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
revenue
|
1,448
|
|
|
987
|
|
|
3,843
|
|
|
2,742
|
|
Research and
development
|
2,052
|
|
|
1,542
|
|
|
5,805
|
|
|
4,356
|
|
Marketing and
sales
|
1,170
|
|
|
926
|
|
|
3,351
|
|
|
2,654
|
|
General and
administrative
|
536
|
|
|
439
|
|
|
1,831
|
|
|
1,217
|
|
Total costs and
expenses
|
5,206
|
|
|
3,894
|
|
|
14,830
|
|
|
10,969
|
|
Income from
operations
|
5,122
|
|
|
3,117
|
|
|
12,851
|
|
|
7,860
|
|
Interest and other
income, net
|
114
|
|
|
47
|
|
|
281
|
|
|
125
|
|
Income before
provision for income taxes
|
5,236
|
|
|
3,164
|
|
|
13,132
|
|
|
7,985
|
|
Provision for income
taxes
|
529
|
|
|
537
|
|
|
1,467
|
|
|
1,337
|
|
Net
income
|
$
|
4,707
|
|
|
$
|
2,627
|
|
|
$
|
11,665
|
|
|
$
|
6,648
|
|
Less: Net income
attributable to participating securities
|
3
|
|
|
7
|
|
|
13
|
|
|
20
|
|
Net income
attributable to Class A and Class B common
|
|
|
|
|
|
|
|
|
|
|
|
|
stockholders
|
$
|
4,704
|
|
|
$
|
2,620
|
|
|
$
|
11,652
|
|
|
$
|
6,628
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Class A and Class B common
|
|
|
|
|
|
|
|
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.62
|
|
|
$
|
0.91
|
|
|
$
|
4.02
|
|
|
$
|
2.32
|
|
Diluted
|
$
|
1.59
|
|
|
$
|
0.90
|
|
|
$
|
3.95
|
|
|
$
|
2.28
|
|
Weighted average
shares used to compute earnings per share
attributable
|
|
|
|
|
|
|
|
to Class A
and Class B common stockholders:
|
|
|
|
|
|
|
|
Basic
|
2,904
|
|
|
2,871
|
|
|
2,898
|
|
|
2,857
|
|
Diluted
|
2,956
|
|
|
2,931
|
|
|
2,954
|
|
|
2,918
|
|
Share-based
compensation expense included in costs and expenses:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
47
|
|
|
$
|
30
|
|
|
$
|
128
|
|
|
$
|
81
|
|
Research and
development
|
776
|
|
|
636
|
|
|
2,233
|
|
|
1,853
|
|
Marketing and
sales
|
114
|
|
|
95
|
|
|
330
|
|
|
272
|
|
General and
administrative
|
73
|
|
|
63
|
|
|
218
|
|
|
181
|
|
Total share-based
compensation expense
|
$
|
1,010
|
|
|
$
|
824
|
|
|
$
|
2,909
|
|
|
$
|
2,387
|
|
|
|
(1)
|
We elected to early
adopt ASU 2016-09 in the fourth quarter of 2016. Our condensed
consolidated statements of income for the three and nine months
ended September 30, 2016 had been adjusted to reflect the impact of
ASU 2016-09 adoption. See Note 1 in the notes to our consolidated
financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2016 for detailed adoption
information.
|
FACEBOOK,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
7,201
|
|
|
$
|
8,903
|
|
|
|
Marketable
securities
|
31,088
|
|
|
20,546
|
|
|
|
Accounts receivable,
net of allowances for doubtful accounts of $103 and $94 as of
September 30,
|
|
|
|
|
|
|
|
2017 and December 31,
2016, respectively
|
4,424
|
|
|
3,993
|
|
|
|
Prepaid expenses and
other current assets
|
1,490
|
|
|
959
|
|
|
|
Total current
assets
|
44,203
|
|
|
34,401
|
|
|
Property and
equipment, net
|
12,158
|
|
|
8,591
|
|
|
Intangible assets,
net
|
2,050
|
|
|
2,535
|
|
|
Goodwill
|
18,213
|
|
|
18,122
|
|
|
Other
assets
|
2,374
|
|
|
1,312
|
|
|
Total
assets
|
$
|
78,998
|
|
|
$
|
64,961
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
383
|
|
|
$
|
302
|
|
|
|
Partners
payable
|
314
|
|
|
280
|
|
|
|
Accrued expenses and
other current liabilities
|
2,503
|
|
|
2,203
|
|
|
|
Deferred revenue and
deposits
|
105
|
|
|
90
|
|
|
|
Total current
liabilities
|
3,305
|
|
|
2,875
|
|
|
Other
liabilities
|
4,485
|
|
|
2,892
|
|
|
|
Total
liabilities
|
7,790
|
|
|
5,767
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock and
additional paid-in capital
|
40,199
|
|
|
38,227
|
|
|
|
Accumulated other
comprehensive loss
|
(200)
|
|
|
(703)
|
|
|
|
Retained
earnings
|
31,209
|
|
|
21,670
|
|
|
|
Total stockholders'
equity
|
71,208
|
|
|
59,194
|
|
|
Total liabilities
and stockholders' equity
|
$
|
78,998
|
|
|
$
|
64,961
|
|
|
FACEBOOK,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income
|
$
|
4,707
|
|
|
$
|
2,627
|
|
|
$
|
11,665
|
|
|
$
|
6,648
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
|
|
|
|
|
|
|
|
|
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
773
|
|
|
591
|
|
|
2,172
|
|
|
1,728
|
|
|
Share-based
compensation
|
1,010
|
|
|
824
|
|
|
2,909
|
|
|
2,387
|
|
|
Deferred income
taxes
|
(94)
|
|
|
(23)
|
|
|
(152)
|
|
|
(201)
|
|
|
Other
|
7
|
|
|
4
|
|
|
18
|
|
|
23
|
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(458)
|
|
|
(253)
|
|
|
(235)
|
|
|
(478)
|
|
|
Prepaid expenses and
other current assets
|
(57)
|
|
|
(57)
|
|
|
(634)
|
|
|
(314)
|
|
|
Other
assets
|
47
|
|
|
42
|
|
|
130
|
|
|
46
|
|
|
Accounts
payable
|
31
|
|
|
18
|
|
|
(7)
|
|
|
(21)
|
|
|
Partners
payable
|
32
|
|
|
6
|
|
|
22
|
|
|
20
|
|
|
Accrued expenses and
other current liabilities
|
(62)
|
|
|
228
|
|
|
95
|
|
|
642
|
|
|
Deferred revenue and
deposits
|
16
|
|
|
(2)
|
|
|
12
|
|
|
21
|
|
|
Other
liabilities
|
176
|
|
|
31
|
|
|
550
|
|
|
677
|
|
|
Net cash provided
by operating activities
|
6,128
|
|
|
4,036
|
|
|
16,545
|
|
|
11,178
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(1,755)
|
|
|
(1,095)
|
|
|
(4,470)
|
|
|
(3,222)
|
|
|
Purchases of
marketable securities
|
(6,273)
|
|
|
(7,733)
|
|
|
(20,410)
|
|
|
(17,368)
|
|
|
Sales of marketable
securities
|
3,651
|
|
|
5,633
|
|
|
7,649
|
|
|
9,791
|
|
|
Maturities of
marketable securities
|
730
|
|
|
131
|
|
|
2,228
|
|
|
1,034
|
|
|
Acquisitions of
businesses, net of cash acquired, and purchases of
|
|
|
|
|
|
|
|
|
|
|
|
|
intangible
assets
|
(98)
|
|
|
(61)
|
|
|
(106)
|
|
|
(81)
|
|
|
Change in restricted
cash and deposits
|
31
|
|
|
8
|
|
|
64
|
|
|
82
|
|
|
Net cash used in
investing activities
|
(3,714)
|
|
|
(3,117)
|
|
|
(15,045)
|
|
|
(9,764)
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Taxes paid related to
net share settlement of equity awards
|
(866)
|
|
|
(6)
|
|
|
(2,360)
|
|
|
(6)
|
|
|
Principal payments on
capital lease and other financing obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
(312)
|
|
|
Repurchases of Class
A common stock
|
(640)
|
|
|
—
|
|
|
(1,018)
|
|
|
—
|
|
|
Other financing
activities, net
|
(26)
|
|
|
(2)
|
|
|
(14)
|
|
|
4
|
|
|
Net cash used in
financing activities
|
(1,532)
|
|
|
(8)
|
|
|
(3,392)
|
|
|
(314)
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
67
|
|
|
19
|
|
|
190
|
|
|
31
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
949
|
|
|
930
|
|
|
(1,702)
|
|
|
1,131
|
|
|
Cash and cash
equivalents at beginning of period
|
6,252
|
|
|
5,108
|
|
|
8,903
|
|
|
4,907
|
|
|
Cash and cash
equivalents at end of period
|
$
|
7,201
|
|
|
$
|
6,038
|
|
|
$
|
7,201
|
|
|
$
|
6,038
|
|
|
FACEBOOK,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In
millions)
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2017
|
|
2016(1)
|
|
2017
|
|
2016(1)
|
|
Supplemental cash
flow data
|
|
|
|
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
|
|
|
|
|
Interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
Income taxes,
net
|
$
|
434
|
|
|
$
|
357
|
|
|
$
|
1,793
|
|
|
$
|
764
|
|
|
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
|
$
|
285
|
|
|
$
|
230
|
|
|
$
|
441
|
|
|
$
|
319
|
|
|
Settlement of
acquisition-related contingent consideration liability
|
$
|
102
|
|
|
$
|
33
|
|
|
$
|
102
|
|
|
$
|
33
|
|
|
Change in unsettled
repurchases of Class A common stock
|
$
|
(10)
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
|
|
(1)
|
We elected to early
adopt ASU 2016-09 in the fourth quarter of 2016. Our condensed
consolidated statements of cash flows for the three and nine months
ended September 30, 2016 had been adjusted to reflect the impact of
ASU 2016-09 adoption. See Note 1 in the notes to our consolidated
financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2016 for detailed adoption
information.
|
Reconciliation of
GAAP to Non-GAAP Results
|
|
(In millions,
except percentages)
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
GAAP
revenue
|
$
|
10,328
|
|
|
$
|
7,011
|
|
|
$
|
27,681
|
|
|
$
|
18,829
|
|
|
Foreign
exchange effect on 2017 revenue using 2016 rates
|
(128)
|
|
|
|
|
36
|
|
|
|
|
Revenue excluding
foreign exchange effect
|
$
|
10,200
|
|
|
|
|
$
|
27,717
|
|
|
|
|
GAAP revenue
year-over-year change %
|
47
|
%
|
|
|
|
47
|
%
|
|
|
|
Revenue excluding
foreign exchange effect year-over-year change %
|
45
|
%
|
|
|
|
47
|
%
|
|
|
|
GAAP advertising
revenue
|
$
|
10,142
|
|
|
$
|
6,816
|
|
|
$
|
27,163
|
|
|
$
|
18,256
|
|
|
Foreign
exchange effect on 2017 advertising revenue using 2016
rates
|
(128)
|
|
|
|
|
35
|
|
|
|
|
Advertising revenue
excluding foreign exchange effect
|
$
|
10,014
|
|
|
|
|
$
|
27,198
|
|
|
|
|
GAAP advertising
revenue year-over-year change %
|
49
|
%
|
|
|
|
49
|
%
|
|
|
|
Advertising revenue
excluding foreign exchange effect year-over-
|
|
|
|
|
|
|
|
|
|
|
year change
%
|
47
|
%
|
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities(1)
|
$
|
6,128
|
|
|
$
|
4,036
|
|
|
$
|
16,545
|
|
|
$
|
11,178
|
|
|
Purchases of property and equipment
|
(1,755)
|
|
|
(1,095)
|
|
|
(4,470)
|
|
|
(3,222)
|
|
|
Free cash
flow(1)
|
$
|
4,373
|
|
|
$
|
2,941
|
|
|
$
|
12,075
|
|
|
$
|
7,956
|
|
|
|
|
(1)
|
We elected to early
adopt ASU 2016-09 in the fourth quarter of 2016. Net cash provided
by operating activities and free cash flow for the three and nine
months ended September 30, 2016 had been adjusted to reflect the
impact of ASU 2016-09 adoption. See Note 1 in the notes to our
consolidated financial statements in our Annual Report on Form 10-K
for the year ended December 31, 2016 for detailed adoption
information.
|
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