MENLO PARK, Calif.,
Jan. 31, 2018 /PRNewswire/ -- Facebook, Inc. (NASDAQ: FB)
today reported financial results for the quarter and full year
ended December 31, 2017.
"2017 was a strong year for Facebook, but it was also a hard
one," said Mark Zuckerberg, Facebook
founder and CEO. "In 2018, we're focused on making sure Facebook
isn't just fun to use, but also good for people's well-being and
for society. We're doing this by encouraging meaningful connections
between people rather than passive consumption of content. Already
last quarter, we made changes to show fewer viral videos to make
sure people's time is well spent. In total, we made changes that
reduced time spent on Facebook by roughly 50 million hours every
day. By focusing on meaningful connections, our community and
business will be stronger over the long term."
Fourth Quarter and Full Year 2017 Financial
Highlights
|
Three Months
Ended
December 31,
|
|
Year-
over-Year
|
|
Year Ended
December 31,
|
|
Year-
over-Year
|
2017
|
|
2016
|
|
%
Change
|
|
2017
|
|
2016
|
|
%
Change
|
In millions,
except percentages and per share amounts
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
$
|
12,779
|
|
|
$
|
8,629
|
|
|
48
|
%
|
|
$
|
39,942
|
|
|
$
|
26,885
|
|
|
49
|
%
|
Payments
and other fees
|
193
|
|
|
180
|
|
|
7
|
%
|
|
711
|
|
|
753
|
|
|
(6)
|
%
|
Total
revenue
|
12,972
|
|
|
8,809
|
|
|
47
|
%
|
|
40,653
|
|
|
27,638
|
|
|
47
|
%
|
Total costs and
expenses
|
5,620
|
|
|
4,243
|
|
|
32
|
%
|
|
20,450
|
|
|
15,211
|
|
|
34
|
%
|
Income from
operations
|
$
|
7,352
|
|
|
$
|
4,566
|
|
|
61
|
%
|
|
$
|
20,203
|
|
|
$
|
12,427
|
|
|
63
|
%
|
Operating
margin
|
57
|
%
|
|
52
|
%
|
|
|
|
50
|
%
|
|
45
|
%
|
|
|
Provision for income
taxes(1)
|
$
|
3,194
|
|
|
|
|
|
|
$
|
4,660
|
|
|
|
|
|
Effective tax
rate(1)
|
43
|
%
|
|
|
|
|
|
23
|
%
|
|
|
|
|
Net
income(1)
|
$
|
4,268
|
|
|
$
|
3,568
|
|
|
20
|
%
|
|
$
|
15,934
|
|
|
$
|
10,217
|
|
|
56
|
%
|
Diluted Earnings per
Share (EPS)(1)
|
$
|
1.44
|
|
|
$
|
1.21
|
|
|
19
|
%
|
|
$
|
5.39
|
|
|
$
|
3.49
|
|
|
54
|
%
|
|
|
(1)
|
In December 2017, the
2017 Tax Cuts and Jobs Act was enacted and significantly impacted
U.S. tax law. As a result of this legislation, our fourth quarter
and full year 2017 provision for income taxes increased by $2.27
billion, which impacted our effective tax rate, net income and
diluted EPS for such periods. Our diluted EPS decreased by $0.77
for both the fourth quarter and full year 2017. See "2017 Tax Cuts
and Jobs Act" below for additional information.
|
Fourth Quarter and Full Year 2017 Operational and Other
Financial Highlights
- Daily active users (DAUs) – DAUs were 1.40 billion on
average for December 2017, an
increase of 14% year-over-year.
- Monthly active users (MAUs) – MAUs were 2.13 billion as
of December 31, 2017, an increase of
14% year-over-year.
- Mobile advertising revenue – Mobile advertising revenue
represented approximately 89% of advertising revenue for the fourth
quarter of 2017, up from approximately 84% of advertising revenue
in the fourth quarter of 2016.
- Capital expenditures – Capital expenditures were
$2.26 billion and $6.73 billion for the fourth quarter and full
year 2017, respectively.
- Cash and cash equivalents and marketable securities –
Cash and cash equivalents and marketable securities were
$41.71 billion at the end of the
fourth quarter of 2017.
- Headcount – Headcount was 25,105 as of December 31, 2017, an increase of 47%
year-over-year.
2017 Tax Cuts and Jobs Act
On December 22, 2017, the 2017 Tax
Cuts and Jobs Act (the Tax Act) was enacted into law and the new
legislation contains several key tax provisions that affected us,
including a one-time mandatory transition tax on accumulated
foreign earnings and a reduction of the corporate income tax rate
to 21% effective January 1, 2018,
among others. We are required to recognize the effect of the tax
law changes in the period of enactment, such as determining the
transition tax, remeasuring our U.S. deferred tax assets and
liabilities, and reassessing the net realizability of our deferred
tax assets and liabilities. In December
2017, the Securities and Exchange Commission (SEC) staff
issued Staff Accounting Bulletin No. 118, Income Tax Accounting
Implications of the Tax Cuts and Jobs Act (SAB 118), which
allows us to record provisional amounts during a measurement period
not to extend beyond one year of the enactment date. As a result,
our provision for income taxes increased by $2.27 billion and our diluted EPS decreased by
$0.77 for both the fourth quarter and
full year 2017. Since the Tax Act was passed late in the fourth
quarter of 2017, and ongoing guidance and accounting interpretation
are expected over the next 12 months, we consider the accounting of
the transition tax, deferred tax re-measurements, and other items
to be provisional due to the forthcoming guidance and our ongoing
analysis of final year-end data and tax positions. We expect to
complete our analysis within the measurement period in accordance
with SAB 118.
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 1279727.
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 November 2, 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 Annual Report on Form
10-K for the year ended December 31, 2017. In addition, please
note that the date of this press release is January 31, 2018,
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 months and year ended December 31, 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
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
$
|
12,972
|
|
|
$
|
8,809
|
|
|
$
|
40,653
|
|
|
$
|
27,638
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of
revenue
|
1,611
|
|
|
1,047
|
|
|
5,454
|
|
|
3,789
|
|
Research and
development
|
1,949
|
|
|
1,563
|
|
|
7,754
|
|
|
5,919
|
|
Marketing and
sales
|
1,374
|
|
|
1,118
|
|
|
4,725
|
|
|
3,772
|
|
General and
administrative
|
686
|
|
|
515
|
|
|
2,517
|
|
|
1,731
|
|
Total costs
and expenses
|
5,620
|
|
|
4,243
|
|
|
20,450
|
|
|
15,211
|
|
Income from
operations
|
7,352
|
|
|
4,566
|
|
|
20,203
|
|
|
12,427
|
|
Interest and other
income (expense), net
|
110
|
|
|
(33)
|
|
|
391
|
|
|
91
|
|
Income before
provision for income taxes
|
7,462
|
|
|
4,533
|
|
|
20,594
|
|
|
12,518
|
|
Provision for income
taxes
|
3,194
|
|
|
965
|
|
|
4,660
|
|
|
2,301
|
|
Net
income
|
$
|
4,268
|
|
|
$
|
3,568
|
|
|
$
|
15,934
|
|
|
$
|
10,217
|
|
Less: Net income
attributable to participating securities
|
2
|
|
|
7
|
|
|
14
|
|
|
29
|
|
Net income
attributable to Class A and Class B common
stockholders
|
$
|
4,266
|
|
|
$
|
3,561
|
|
|
$
|
15,920
|
|
|
$
|
10,188
|
|
Earnings per share
attributable to Class A and Class B common
|
|
|
|
|
|
|
|
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.47
|
|
|
$
|
1.24
|
|
|
$
|
5.49
|
|
|
$
|
3.56
|
|
Diluted
|
$
|
1.44
|
|
|
$
|
1.21
|
|
|
$
|
5.39
|
|
|
$
|
3.49
|
|
Weighted average
shares used to compute earnings per share attributable
|
|
|
|
|
|
|
|
to
Class A and Class B common stockholders:
|
|
|
|
|
|
|
|
Basic
|
2,907
|
|
|
2,882
|
|
|
2,901
|
|
|
2,863
|
|
Diluted
|
2,954
|
|
|
2,938
|
|
|
2,956
|
|
|
2,925
|
|
Share-based
compensation expense included in costs and expenses:
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
50
|
|
|
$
|
32
|
|
|
$
|
178
|
|
|
$
|
113
|
|
Research and
development
|
587
|
|
|
641
|
|
|
2,820
|
|
|
2,494
|
|
Marketing and
sales
|
106
|
|
|
96
|
|
|
436
|
|
|
368
|
|
General and
administrative
|
71
|
|
|
62
|
|
|
289
|
|
|
243
|
|
Total
share-based compensation expense
|
$
|
814
|
|
|
$
|
831
|
|
|
$
|
3,723
|
|
|
$
|
3,218
|
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
8,079
|
|
|
$
|
8,903
|
|
|
Marketable
securities
|
33,632
|
|
|
20,546
|
|
|
Accounts receivable,
net of allowances of $189 and $94 as of December 31,
|
|
|
|
|
|
|
2017 and 2016,
respectively
|
5,832
|
|
|
3,993
|
|
|
Prepaid expenses and
other current assets
|
1,020
|
|
|
959
|
|
|
Total current assets
|
48,563
|
|
|
34,401
|
|
Property and
equipment, net
|
13,721
|
|
|
8,591
|
|
Intangible assets,
net
|
1,884
|
|
|
2,535
|
|
Goodwill
|
18,221
|
|
|
18,122
|
|
Other
assets
|
2,135
|
|
|
1,312
|
|
Total
assets
|
$
|
84,524
|
|
|
$
|
64,961
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
380
|
|
|
$
|
302
|
|
|
Partners
payable
|
390
|
|
|
280
|
|
|
Accrued expenses and
other current liabilities
|
2,892
|
|
|
2,203
|
|
|
Deferred revenue and
deposits
|
98
|
|
|
90
|
|
|
Total current liabilities
|
3,760
|
|
|
2,875
|
|
Other
liabilities
|
6,417
|
|
|
2,892
|
|
|
Total liabilities
|
10,177
|
|
|
5,767
|
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock and
additional paid-in capital
|
40,584
|
|
|
38,227
|
|
|
Accumulated other
comprehensive loss
|
(227)
|
|
|
(703)
|
|
|
Retained
earnings
|
33,990
|
|
|
21,670
|
|
|
Total stockholders' equity
|
74,347
|
|
|
59,194
|
|
Total liabilities
and stockholders' equity
|
$
|
84,524
|
|
|
$
|
64,961
|
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
$
|
4,268
|
|
|
$
|
3,568
|
|
|
$
|
15,934
|
|
|
$
|
10,217
|
|
Adjustments to
reconcile net income to net cash provided by operating
|
|
|
|
|
|
|
|
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
853
|
|
|
614
|
|
|
3,025
|
|
|
2,342
|
|
Share-based
compensation
|
814
|
|
|
831
|
|
|
3,723
|
|
|
3,218
|
|
Deferred income
taxes
|
(225)
|
|
|
(256)
|
|
|
(377)
|
|
|
(457)
|
|
Other
|
5
|
|
|
7
|
|
|
24
|
|
|
30
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(1,374)
|
|
|
(1,011)
|
|
|
(1,609)
|
|
|
(1,489)
|
|
Prepaid expenses and
other current assets
|
441
|
|
|
155
|
|
|
(192)
|
|
|
(159)
|
|
Other
assets
|
26
|
|
|
(32)
|
|
|
154
|
|
|
14
|
|
Accounts
payable
|
50
|
|
|
35
|
|
|
43
|
|
|
14
|
|
Partners
payable
|
73
|
|
|
47
|
|
|
95
|
|
|
67
|
|
Accrued expenses and
other current liabilities
|
215
|
|
|
372
|
|
|
309
|
|
|
1,014
|
|
Deferred revenue and
deposits
|
(7)
|
|
|
14
|
|
|
4
|
|
|
35
|
|
Other
liabilities
|
2,531
|
|
|
586
|
|
|
3,083
|
|
|
1,262
|
|
Net cash provided
by operating activities
|
7,670
|
|
|
4,930
|
|
|
24,216
|
|
|
16,108
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(2,262)
|
|
|
(1,269)
|
|
|
(6,733)
|
|
|
(4,491)
|
|
Purchases of
marketable securities
|
(5,272)
|
|
|
(4,974)
|
|
|
(25,682)
|
|
|
(22,341)
|
|
Sales of marketable
securities
|
1,795
|
|
|
4,103
|
|
|
9,444
|
|
|
13,894
|
|
Maturities of
marketable securities
|
760
|
|
|
227
|
|
|
2,988
|
|
|
1,261
|
|
Acquisitions of
businesses, net of cash acquired, and purchases of
|
|
|
|
|
|
|
|
|
|
|
|
intangible
assets
|
(17)
|
|
|
(41)
|
|
|
(122)
|
|
|
(123)
|
|
Change in restricted
cash and deposits
|
3
|
|
|
(21)
|
|
|
67
|
|
|
61
|
|
Net cash used in
investing activities
|
(4,993)
|
|
|
(1,975)
|
|
|
(20,038)
|
|
|
(11,739)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Taxes paid related to
net share settlement of equity awards
|
(885)
|
|
|
—
|
|
|
(3,246)
|
|
|
(6)
|
|
Principal payments on
capital lease and other financing obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
(312)
|
|
Repurchases of Class
A common stock
|
(958)
|
|
|
—
|
|
|
(1,976)
|
|
|
—
|
|
Other financing
activities, net
|
1
|
|
|
4
|
|
|
(13)
|
|
|
8
|
|
Net cash (used in)
provided by financing activities
|
(1,842)
|
|
|
4
|
|
|
(5,235)
|
|
|
(310)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
43
|
|
|
(94)
|
|
|
233
|
|
|
(63)
|
|
Net increase
(decrease) in cash and cash equivalents
|
878
|
|
|
2,865
|
|
|
(824)
|
|
|
3,996
|
|
Cash and cash
equivalents at beginning of period
|
7,201
|
|
|
6,038
|
|
|
8,903
|
|
|
4,907
|
|
Cash and cash
equivalents at end of period
|
$
|
8,079
|
|
|
$
|
8,903
|
|
|
$
|
8,079
|
|
|
$
|
8,903
|
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Supplemental cash
flow data
|
|
|
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
|
|
|
|
Interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
Income taxes,
net
|
$
|
324
|
|
|
$
|
446
|
|
|
$
|
2,117
|
|
|
$
|
1,210
|
|
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
|
$
|
(77)
|
|
|
$
|
(47)
|
|
|
$
|
363
|
|
|
$
|
272
|
|
Settlement of
acquisition-related contingent consideration liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
33
|
|
Change in unsettled
repurchases of Class A common stock
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
—
|
|
Reconciliation of
GAAP to Non-GAAP Results
|
(In millions,
except percentages)
|
(Unaudited)
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP
revenue
|
$
|
12,972
|
|
|
$
|
8,809
|
|
|
$
|
40,653
|
|
|
$
|
27,638
|
|
Foreign
exchange effect on 2017 revenue using 2016 rates
|
(329)
|
|
|
|
|
(293)
|
|
|
|
Revenue excluding
foreign exchange effect
|
$
|
12,643
|
|
|
|
|
$
|
40,360
|
|
|
|
GAAP revenue
year-over-year change %
|
47
|
%
|
|
|
|
47
|
%
|
|
|
Revenue excluding
foreign exchange effect year-over-year change %
|
44
|
%
|
|
|
|
46
|
%
|
|
|
GAAP advertising
revenue
|
$
|
12,779
|
|
|
$
|
8,629
|
|
|
$
|
39,942
|
|
|
$
|
26,885
|
|
Foreign
exchange effect on 2017 advertising revenue using 2016
rates
|
(327)
|
|
|
|
|
(292)
|
|
|
|
Advertising revenue
excluding foreign exchange effect
|
$
|
12,452
|
|
|
|
|
$
|
39,650
|
|
|
|
GAAP advertising
revenue year-over-year change %
|
48
|
%
|
|
|
|
49
|
%
|
|
|
Advertising revenue
excluding foreign exchange effect year-over-year
|
|
|
|
|
|
|
|
|
|
change %
|
44
|
%
|
|
|
|
47
|
%
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
7,670
|
|
|
$
|
4,930
|
|
|
$
|
24,216
|
|
|
$
|
16,108
|
|
Purchases of
property and equipment
|
(2,262)
|
|
|
(1,269)
|
|
|
(6,733)
|
|
|
(4,491)
|
|
Free cash
flow
|
$
|
5,408
|
|
|
$
|
3,661
|
|
|
$
|
17,483
|
|
|
$
|
11,617
|
|
View original
content:http://www.prnewswire.com/news-releases/facebook-reports-fourth-quarter-and-full-year-2017-results-300591468.html
SOURCE Facebook