Delaware | 001- 35551 | 20-1665019 | ||
(State or Other Jurisdiction | (Commission | (IRS Employer | ||
of Incorporation) | File Number) | Identification No.) |
1601 Willow Road | ||
Menlo Park, California | 94025 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Exhibit Title or Description | |
99.1 | Press release dated July 24, 2013 |
FACEBOOK, INC. | |||
Date: July 24, 2013 | By: | /s/ Colin S. Stretch | |
Name: Colin S. Stretch | |||
Title: Vice President, General Counsel, and Secretary |
Exhibit Number | Exhibit Title or Description | |
99.1 | Press release dated July 24, 2013 |
In millions, except percentages and per share amounts | Q2'12 | Q2'13 | YTD'12 | YTD'13 | |||||||||||
Revenue | $ | 1,184 | $ | 1,813 | $ | 2,242 | $ | 3,271 | |||||||
Income (Loss) from Operations | |||||||||||||||
GAAP | $ | (743 | ) | $ | 562 | $ | (362 | ) | $ | 935 | |||||
Non-GAAP | $ | 515 | $ | 794 | $ | 1,000 | $ | 1,357 | |||||||
Operating Margin | |||||||||||||||
GAAP | (63 | )% | 31 | % | (16 | )% | 29 | % | |||||||
Non-GAAP | 43 | % | 44 | % | 45 | % | 41 | % | |||||||
Net Income (Loss) | |||||||||||||||
GAAP | $ | (157 | ) | $ | 333 | $ | 48 | $ | 552 | ||||||
Non-GAAP | $ | 295 | $ | 488 | $ | 582 | $ | 800 | |||||||
Diluted Earnings (Loss) per Share (EPS) | |||||||||||||||
GAAP | $ | (0.08 | ) | $ | 0.13 | $ | 0.02 | $ | 0.22 | ||||||
Non-GAAP | $ | 0.12 | $ | 0.19 | $ | 0.24 | $ | 0.32 |
• | Daily active users (DAUs) were 699 million on average for June 2013, an increase of 27% year-over-year. |
• | Monthly active users (MAUs) were 1.15 billion as of June 30, 2013, an increase of 21% year-over-year. |
• | Mobile MAUs were 819 million as of June 30, 2013, an increase of 51% year-over-year. Mobile DAUs were 469 million on average for June 2013. |
• | Surpassed 1 million active advertisers on Facebook, driven by significant growth in local businesses. |
• | Introduced video for Instagram and saw 5 million videos uploaded in the first 24 hours. |
• | Facebook for Every Phone has now passed 100 million monthly active users. In just two years, Facebook for Every Phone has successfully put Facebook into the hands of millions of people around the world with limited access to the Internet, giving them the power to connect and share. |
• | Launched products including Verified Pages, hashtags and embedded posts to help people on Facebook connect with their friends about what’s taking place all over the world. |
• | Announced that there have now been over 100,000 apps built on Parse, a cloud-based platform that provides scalable cross-platform services and tools for developers to enable them to build apps that span mobile platforms and devices. |
• | Facebook's data center in Luleå, Sweden, began serving live user traffic around the world using Facebook's Open Compute Project designs and renewable energy. |
• | Revenue from advertising was $1.60 billion, representing 88% of total revenue and a 61% increase from the same quarter last year. |
• | Mobile advertising revenue represented approximately 41% of advertising revenue for the second quarter of 2013. |
• | Payments and other fees revenue was $214 million for the second quarter of 2013, an increase of 11% from the same quarter last year. |
FACEBOOK, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
(In millions, except for per share amounts) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||||
Revenue | $ | 1,184 | $ | 1,813 | $ | 2,242 | $ | 3,271 | |||||||||
Costs and expenses: | |||||||||||||||||
Cost of revenue | 367 | 465 | 644 | 878 | |||||||||||||
Research and development | 705 | 344 | 858 | 637 | |||||||||||||
Marketing and sales | 392 | 269 | 535 | 472 | |||||||||||||
General and administrative | 463 | 173 | 567 | 349 | |||||||||||||
Total costs and expenses | 1,927 | 1,251 | 2,604 | 2,336 | |||||||||||||
Income (loss) from operations | (743 | ) | 562 | (362 | ) | 935 | |||||||||||
Interest and other (expense) income, net: | |||||||||||||||||
Interest expense | (10 | ) | (14 | ) | (24 | ) | (29 | ) | |||||||||
Other (expense) income, net | (12 | ) | (3 | ) | 3 | (8 | ) | ||||||||||
Income (loss) before provision for income taxes | (765 | ) | 545 | (383 | ) | 898 | |||||||||||
(Provision for) benefit from income taxes | 608 | (212 | ) | 431 | (346 | ) | |||||||||||
Net income (loss) | $ | (157 | ) | $ | 333 | $ | 48 | $ | 552 | ||||||||
Less: Net income attributable to participating securities | — | 2 | 21 | 3 | |||||||||||||
Net income (loss) attributable to Class A and Class B common stockholders | $ | (157 | ) | $ | 331 | $ | 27 | $ | 549 | ||||||||
Earnings (loss) per share attributable to Class A and Class B | |||||||||||||||||
common stockholders: | |||||||||||||||||
Basic | $ | (0.08 | ) | $ | 0.14 | $ | 0.02 | $ | 0.23 | ||||||||
Diluted | $ | (0.08 | ) | $ | 0.13 | $ | 0.02 | $ | 0.22 | ||||||||
Weighted-average shares used to compute earnings (loss) per share | |||||||||||||||||
attributable to Class A and Class B common stockholders: | |||||||||||||||||
Basic | 1,879 | 2,407 | 1,613 | 2,397 | |||||||||||||
Diluted | 1,879 | 2,502 | 1,792 | 2,499 | |||||||||||||
Share-based compensation expense included in costs and expenses: | |||||||||||||||||
Cost of revenue | $ | 66 | $ | 11 | $ | 71 | $ | 19 | |||||||||
Research and development | 545 | 151 | 605 | 268 | |||||||||||||
Marketing and sales | 232 | 33 | 251 | 57 | |||||||||||||
General and administrative | 263 | 29 | 282 | 50 | |||||||||||||
Total share-based compensation expense | $ | 1,106 | $ | 224 | $ | 1,209 | $ | 394 | |||||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: | |||||||||||||||||
Cost of revenue | $ | 6 | $ | — | $ | 6 | $ | 1 | |||||||||
Research and development | 48 | 7 | 49 | 18 | |||||||||||||
Marketing and sales | 25 | 1 | 25 | 5 | |||||||||||||
General and administrative | 73 | — | 73 | 4 | |||||||||||||
Total payroll tax expenses related to share-based compensation | $ | 152 | $ | 8 | $ | 153 | $ | 28 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
December 31, | June 30, | ||||||||
2012 | 2013 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 2,384 | $ | 3,001 | |||||
Marketable securities | 7,242 | 7,251 | |||||||
Accounts receivable | 719 | 775 | |||||||
Income tax refundable | 451 | 7 | |||||||
Prepaid expenses and other current assets | 471 | 387 | |||||||
Total current assets | 11,267 | 11,421 | |||||||
Property and equipment, net | 2,391 | 2,577 | |||||||
Goodwill and intangible assets, net | 1,388 | 1,631 | |||||||
Other assets | 57 | 95 | |||||||
Total assets | $ | 15,103 | $ | 15,724 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 65 | $ | 55 | |||||
Platform partners payable | 169 | 172 | |||||||
Accrued expenses and other current liabilities | 423 | 505 | |||||||
Deferred revenue and deposits | 30 | 32 | |||||||
Current portion of capital lease obligations | 365 | 316 | |||||||
Total current liabilities | 1,052 | 1,080 | |||||||
Capital lease obligations, less current portion | 491 | 351 | |||||||
Long-term debt | 1,500 | 1,500 | |||||||
Other liabilities | 305 | 444 | |||||||
Total liabilities | 3,348 | 3,375 | |||||||
Stockholders' equity | |||||||||
Common stock and additional paid-in capital | 10,094 | 10,167 | |||||||
Accumulated other comprehensive income (loss) | 2 | (29 | ) | ||||||
Retained earnings | 1,659 | 2,211 | |||||||
Total stockholders' equity | 11,755 | 12,349 | |||||||
Total liabilities and stockholders' equity | $ | 15,103 | $ | 15,724 |
FACEBOOK, INC. | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(In millions) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||||
Cash flows from operating activities | |||||||||||||||||
Net income (loss) | $ | (157 | ) | $ | 333 | $ | 48 | $ | 552 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||
Depreciation and amortization | 139 | 230 | 249 | 463 | |||||||||||||
Lease abandonment expense | 3 | 57 | 3 | 65 | |||||||||||||
Loss on disposal or write-off of equipment | 3 | 11 | 4 | 20 | |||||||||||||
Share-based compensation | 1,106 | 224 | 1,209 | 394 | |||||||||||||
Deferred income taxes | (350 | ) | 26 | (374 | ) | 19 | |||||||||||
Tax benefit from share-based award activity | 327 | 89 | 381 | 148 | |||||||||||||
Excess tax benefit from share-based award activity | (327 | ) | (93 | ) | (381 | ) | (155 | ) | |||||||||
Changes in assets and liabilities: | |||||||||||||||||
Accounts receivable | (105 | ) | (116 | ) | (40 | ) | (62 | ) | |||||||||
Income tax refundable | (567 | ) | 419 | (567 | ) | 444 | |||||||||||
Prepaid expenses and other current assets | 26 | 10 | (7 | ) | (16 | ) | |||||||||||
Other assets | (3 | ) | (8 | ) | (9 | ) | (44 | ) | |||||||||
Accounts payable | (5 | ) | 1 | (8 | ) | 2 | |||||||||||
Platform partners payable | (22 | ) | (18 | ) | (15 | ) | 3 | ||||||||||
Accrued expenses and other current liabilities | 184 | 42 | 186 | 9 | |||||||||||||
Deferred revenue and deposits | (8 | ) | 2 | (5 | ) | 2 | |||||||||||
Other liabilities | (4 | ) | 113 | 7 | 197 | ||||||||||||
Net cash provided by operating activities | 240 | 1,322 | 681 | 2,041 | |||||||||||||
Cash flows from investing activities | |||||||||||||||||
Purchases of property and equipment | (413 | ) | (268 | ) | (866 | ) | (595 | ) | |||||||||
Purchases of marketable securities | (6,081 | ) | (1,952 | ) | (6,957 | ) | (3,460 | ) | |||||||||
Sales of marketable securities | 59 | 576 | 128 | 1,275 | |||||||||||||
Maturities of marketable securities | 539 | 1,271 | 1,106 | 2,174 | |||||||||||||
Investments in non-marketable equity securities | (2 | ) | (1 | ) | (3 | ) | (1 | ) | |||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets | (550 | ) | (122 | ) | (575 | ) | (221 | ) | |||||||||
Changes in restricted cash and deposits | (2 | ) | (2 | ) | (3 | ) | 4 | ||||||||||
Net cash used in investing activities | (6,450 | ) | (498 | ) | (7,170 | ) | (824 | ) | |||||||||
Cash flows from financing activities | |||||||||||||||||
Net proceeds from issuance of common stock | 6,761 | — | 6,761 | — | |||||||||||||
Taxes paid related to net share settlement of equity awards | — | (153 | ) | — | (558 | ) | |||||||||||
Proceeds from exercise of stock options | 4 | 2 | 9 | 10 | |||||||||||||
Proceeds from sale and lease-back transactions | 20 | — | 82 | — | |||||||||||||
Principal payments on capital lease obligations | (72 | ) | (91 | ) | (143 | ) | (200 | ) | |||||||||
Excess tax benefit from share-based award activity | 327 | 93 | 381 | 155 | |||||||||||||
Net cash provided by (used in) financing activities | 7,040 | (149 | ) | 7,090 | (593 | ) |
Effect of exchange rate changes on cash and cash equivalents | (14 | ) | 1 | (15 | ) | (7 | ) | ||||||||||
Net increase in cash and cash equivalents | 816 | 676 | 586 | 617 | |||||||||||||
Cash and cash equivalents at beginning of period | 1,282 | 2,325 | 1,512 | 2,384 | |||||||||||||
Cash and cash equivalents at end of period | $ | 2,098 | $ | 3,001 | $ | 2,098 | $ | 3,001 | |||||||||
Supplemental cash flow data | |||||||||||||||||
Cash paid during the period for: | |||||||||||||||||
Interest | $ | 10 | $ | 14 | $ | 19 | $ | 26 | |||||||||
Income taxes | $ | 8 | $ | 9 | $ | 182 | $ | 18 | |||||||||
Cash received during the period for: | |||||||||||||||||
Income taxes | $ | — | $ | 419 | $ | — | $ | 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 | $ | (169 | ) | $ | (52 | ) | $ | (59 | ) | $ | (5 | ) | |||||
Property and equipment acquired under capital leases | $ | 52 | $ | — | $ | 90 | $ | 11 | |||||||||
Fair value of shares issued related to acquisitions of businesses and other assets | $ | 18 | $ | 44 | $ | 25 | $ | 77 |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures | |||||||||||||||||
(In millions, except for number of shares) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||||
GAAP revenue | $ | 1,184 | $ | 1,813 | $ | 2,242 | $ | 3,271 | |||||||||
Foreign exchange effect on 2013 revenue using 2012 rates | 13 | 17 | |||||||||||||||
Revenue excluding foreign exchange effect | $ | 1,826 | $ | 3,288 | |||||||||||||
GAAP revenue year-over-year change % | 53 | % | 46 | % | |||||||||||||
Revenue excluding foreign exchange effect year-over-year change % | 54 | % | 47 | % | |||||||||||||
GAAP advertising revenue | $ | 992 | $ | 1,599 | $ | 1,864 | $ | 2,844 | |||||||||
Foreign exchange effect on 2013 advertising revenue using 2012 rates | 13 | 16 | |||||||||||||||
Advertising revenue excluding foreign exchange effect | $ | 1,612 | $ | 2,860 | |||||||||||||
GAAP advertising revenue year-over-year change % | 61 | % | 53 | % | |||||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 63 | % | 53 | % | |||||||||||||
GAAP costs and expenses | $ | 1,927 | $ | 1,251 | $ | 2,604 | $ | 2,336 | |||||||||
Share-based compensation expense | (1,106 | ) | (224 | ) | (1,209 | ) | (394 | ) | |||||||||
Payroll tax expenses related to share-based compensation | (152 | ) | (8 | ) | (153 | ) | (28 | ) | |||||||||
Non-GAAP costs and expenses | $ | 669 | $ | 1,019 | $ | 1,242 | $ | 1,914 | |||||||||
GAAP income (loss) from operations | $ | (743 | ) | $ | 562 | $ | (362 | ) | $ | 935 | |||||||
Share-based compensation expense | 1,106 | 224 | 1,209 | 394 | |||||||||||||
Payroll tax expenses related to share-based compensation | 152 | 8 | 153 | 28 | |||||||||||||
Non-GAAP income from operations | $ | 515 | $ | 794 | $ | 1,000 | $ | 1,357 | |||||||||
GAAP net income (loss) | $ | (157 | ) | $ | 333 | $ | 48 | $ | 552 | ||||||||
Share-based compensation expense | 1,106 | 224 | 1,209 | 394 | |||||||||||||
Payroll tax expenses related to share-based compensation | 152 | 8 | 153 | 28 | |||||||||||||
Income tax adjustments | (806 | ) | (77 | ) | (828 | ) | (174 | ) | |||||||||
Non-GAAP net income | $ | 295 | $ | 488 | $ | 582 | $ | 800 | |||||||||
GAAP diluted shares | 1,879 | 2,502 | 1,792 | 2,499 | |||||||||||||
Assumed preferred stock conversion1 | 273 | — | 409 | — | |||||||||||||
Dilutive securities excluded due to net loss | 177 | — | — | — | |||||||||||||
Dilutive equity awards excluded from GAAP1 | 122 | — | 185 | — | |||||||||||||
Non-GAAP diluted shares | 2,451 | 2,502 | 2,386 | 2,499 | |||||||||||||
GAAP diluted earnings (loss) per share | $ | (0.08 | ) | $ | 0.13 | $ | 0.02 | $ | 0.22 | ||||||||
Net income attributable to participating securities | — | — | 0.01 | — | |||||||||||||
Non-GAAP adjustments to net (loss) income | 0.24 | 0.06 | 0.29 | 0.10 | |||||||||||||
Non-GAAP adjustments to diluted shares | (0.04 | ) | — | (0.08 | ) | — | |||||||||||
Non-GAAP diluted earnings per share | $ | 0.12 | $ | 0.19 | $ | 0.24 | $ | 0.32 | |||||||||
GAAP operating margin | (63 | )% | 31 | % | (16 | )% | 29 | % | |||||||||
Share-based compensation expense | 93 | % | 12 | % | 54 | % | 12 | % | |||||||||
Payroll tax expenses related to share-based compensation | 13 | % | — | % | 7 | % | 1 | % | |||||||||
Non-GAAP operating margin | 43 | % | 44 | % | 45 | % | 41 | % | |||||||||
GAAP income (loss) before (provision for) benefit from income taxes | $ | (765 | ) | $ | 545 | $ | (383 | ) | $ | 898 | |||||||
GAAP (provision for) benefit from income taxes | 608 | (212 | ) | 431 | (346 | ) |
GAAP effective tax rate | 79 | % | 39 | % | 113 | % | 39 | % | |||||||||
GAAP income (loss) before (provision for) benefit from income taxes | $ | (765 | ) | $ | 545 | $ | (383 | ) | $ | 898 | |||||||
Share-based compensation and related payroll tax expenses | 1,258 | 232 | 1,362 | 422 | |||||||||||||
Non-GAAP income before provision for income taxes | $ | 493 | $ | 777 | $ | 979 | $ | 1,320 | |||||||||
Non-GAAP provision for income taxes | 198 | 289 | 397 | 520 | |||||||||||||
Non-GAAP effective tax rate | 40 | % | 37 | % | 41 | % | 39 | % | |||||||||
Net cash provided by operating activities | $ | 240 | $ | 1,322 | $ | 681 | $ | 2,041 | |||||||||
Purchases of property and equipment | (413 | ) | (268 | ) | (866 | ) | (595 | ) | |||||||||
Property and equipment acquired under capital leases | (52 | ) | — | (90 | ) | (11 | ) | ||||||||||
Free cash flow | $ | (225 | ) | $ | 1,054 | $ | (275 | ) | $ | 1,435 | |||||||
1Gives effect to assumed preferred stock conversion and other dilutive equity awards prior to our IPO for comparability |