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 October 30, 2013 |
FACEBOOK, INC. | ||||
Date: | October 30, 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 October 30, 2013 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
In millions, except percentages and per share amounts | 2012 | 2013 | 2012 | 2013 | |||||||||||
Revenue | $ | 1,262 | $ | 2,016 | $ | 3,504 | $ | 5,286 | |||||||
Income from Operations | |||||||||||||||
GAAP | $ | 377 | $ | 736 | $ | 15 | $ | 1,672 | |||||||
Non-GAAP | $ | 525 | $ | 987 | $ | 1,525 | $ | 2,345 | |||||||
Operating Margin | |||||||||||||||
GAAP | 30 | % | 37 | % | — | % | 32 | % | |||||||
Non-GAAP | 42 | % | 49 | % | 44 | % | 44 | % | |||||||
Net Income (Loss) | |||||||||||||||
GAAP | $ | (59 | ) | $ | 425 | $ | (11 | ) | $ | 977 | |||||
Non-GAAP | $ | 311 | $ | 621 | $ | 890 | $ | 1,421 | |||||||
Diluted Earnings (Loss) per Share (EPS) | |||||||||||||||
GAAP | $ | (0.02 | ) | $ | 0.17 | $ | (0.01 | ) | $ | 0.39 | |||||
Non-GAAP | $ | 0.12 | $ | 0.25 | $ | 0.36 | $ | 0.57 |
• | Daily active users (DAUs) were 728 million on average for September 2013, an increase of 25% year-over-year. |
• | Monthly active users (MAUs) were 1.19 billion as of September 30, 2013, an increase of 18% year-over-year. |
• | Mobile MAUs were 874 million as of September 30, 2013, an increase of 45% year-over-year. Mobile DAUs were 507 million on average for September 2013. |
• | Revenue from advertising was $1.80 billion, a 66% increase from the same quarter last year. |
• | Mobile advertising revenue represented approximately 49% of advertising revenue for the third quarter of 2013. |
• | Payments and other fees revenue was $218 million for the third quarter of 2013. |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(In millions, except for per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Revenue | $ | 1,262 | $ | 2,016 | $ | 3,504 | $ | 5,286 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue | 322 | 507 | 967 | 1,384 | |||||||||||
Research and development | 244 | 369 | 1,102 | 1,006 | |||||||||||
Marketing and sales | 168 | 233 | 703 | 704 | |||||||||||
General and administrative | 151 | 171 | 717 | 520 | |||||||||||
Total costs and expenses | 885 | 1,280 | 3,489 | 3,614 | |||||||||||
Income from operations | 377 | 736 | 15 | 1,672 | |||||||||||
Interest and other income (expense), net: | |||||||||||||||
Interest expense | (11 | ) | (21 | ) | (35 | ) | (50 | ) | |||||||
Other income, net | 6 | 11 | 9 | 2 | |||||||||||
Income (loss) before provision for income taxes | 372 | 726 | (11 | ) | 1,624 | ||||||||||
Provision for income taxes | 431 | 301 | — | 647 | |||||||||||
Net income (loss) | $ | (59 | ) | $ | 425 | $ | (11 | ) | $ | 977 | |||||
Less: Net income attributable to participating securities | — | 3 | — | 6 | |||||||||||
Net income (loss) attributable to Class A and Class B common stockholders | $ | (59 | ) | $ | 422 | $ | (11 | ) | $ | 971 | |||||
Earnings (loss) per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | $ | (0.02 | ) | $ | 0.17 | $ | (0.01 | ) | $ | 0.40 | |||||
Diluted | $ | (0.02 | ) | $ | 0.17 | $ | (0.01 | ) | $ | 0.39 | |||||
Weighted average shares used to compute earnings (loss) per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | 2,420 | 2,430 | 1,884 | 2,408 | |||||||||||
Diluted | 2,420 | 2,528 | 1,884 | 2,504 | |||||||||||
Share-based compensation expense included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | 8 | $ | 12 | $ | 79 | $ | 31 | |||||||
Research and development | 114 | 164 | 719 | 432 | |||||||||||
Marketing and sales | 28 | 34 | 279 | 91 | |||||||||||
General and administrative | 29 | 29 | 311 | 79 | |||||||||||
Total share-based compensation expense | $ | 179 | $ | 239 | $ | 1,388 | $ | 633 | |||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | (3 | ) | $ | — | $ | 3 | $ | 1 | ||||||
Research and development | (12 | ) | 8 | 36 | 26 | ||||||||||
Marketing and sales | (9 | ) | 2 | 16 | 7 | ||||||||||
General and administrative | (7 | ) | 2 | 67 | 6 | ||||||||||
Total payroll tax expenses related to share-based compensation | $ | (31 | ) | $ | 12 | $ | 122 | $ | 40 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
December 31, 2012 | September 30, 2013 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 2,384 | $ | 3,100 | |||||
Marketable securities | 7,242 | 6,228 | |||||||
Accounts receivable | 719 | 872 | |||||||
Income tax refundable | 451 | 7 | |||||||
Prepaid expenses and other current assets | 471 | 342 | |||||||
Total current assets | 11,267 | 10,549 | |||||||
Property and equipment, net | 2,391 | 2,685 | |||||||
Goodwill and intangible assets, net | 1,388 | 1,609 | |||||||
Other assets | 57 | 90 | |||||||
Total assets | $ | 15,103 | $ | 14,933 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 65 | $ | 36 | |||||
Platform partners payable | 169 | 171 | |||||||
Accrued expenses and other current liabilities | 423 | 453 | |||||||
Deferred revenue and deposits | 30 | 36 | |||||||
Current portion of capital lease obligations | 365 | 288 | |||||||
Total current liabilities | 1,052 | 984 | |||||||
Capital lease obligations, less current portion | 491 | 287 | |||||||
Long-term debt | 1,500 | — | |||||||
Other liabilities | 305 | 614 | |||||||
Total liabilities | 3,348 | 1,885 | |||||||
Stockholders' equity | |||||||||
Common stock and additional paid-in capital | 10,094 | 10,399 | |||||||
Accumulated other comprehensive income | 2 | 13 | |||||||
Retained earnings | 1,659 | 2,636 | |||||||
Total stockholders' equity | 11,755 | 13,048 | |||||||
Total liabilities and stockholders' equity | $ | 15,103 | $ | 14,933 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income (loss) | $ | (59 | ) | $ | 425 | $ | (11 | ) | $ | 977 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 176 | 274 | 425 | 737 | |||||||||||
Lease abandonment expense | 4 | 43 | 7 | 108 | |||||||||||
Loss on disposal or write-off of equipment | 4 | 19 | 8 | 39 | |||||||||||
Share-based compensation | 179 | 239 | 1,388 | 633 | |||||||||||
Deferred income taxes | (60 | ) | 2 | (434 | ) | 21 | |||||||||
Tax benefit from share-based award activity | 473 | 129 | 854 | 277 | |||||||||||
Excess tax benefit from share-based award activity | (473 | ) | (130 | ) | (854 | ) | (285 | ) | |||||||
Changes in assets and liabilities: | |||||||||||||||
Accounts receivable | (50 | ) | (83 | ) | (90 | ) | (145 | ) | |||||||
Income tax refundable | — | — | (567 | ) | 444 | ||||||||||
Prepaid expenses and other current assets | 31 | 5 | 24 | (11 | ) | ||||||||||
Other assets | 9 | 9 | — | (35 | ) | ||||||||||
Accounts payable | 28 | (19 | ) | 20 | (17 | ) | |||||||||
Platform partners payable | (1 | ) | (1 | ) | (16 | ) | 2 | ||||||||
Accrued expenses and other current liabilities | (31 | ) | (114 | ) | 155 | (105 | ) | ||||||||
Deferred revenue and deposits | — | 4 | (5 | ) | 6 | ||||||||||
Other liabilities | 20 | 148 | 27 | 345 | |||||||||||
Net cash provided by operating activities | 250 | 950 | 931 | 2,991 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of property and equipment | (171 | ) | (284 | ) | (1,037 | ) | (879 | ) | |||||||
Purchases of marketable securities | (1,633 | ) | (904 | ) | (8,590 | ) | (4,364 | ) | |||||||
Sales of marketable securities | 443 | 1,158 | 571 | 2,433 | |||||||||||
Maturities of marketable securities | 1,307 | 780 | 2,413 | 2,954 | |||||||||||
Investments in non-marketable equity securities | — | — | (3 | ) | (1 | ) | |||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets | (336 | ) | (16 | ) | (911 | ) | (237 | ) | |||||||
Change in restricted cash and deposits | 1 | — | (2 | ) | 4 | ||||||||||
Net cash (used in) provided by investing activities | (389 | ) | 734 | (7,559 | ) | (90 | ) | ||||||||
Cash flows from financing activities | |||||||||||||||
Net proceeds from issuance of common stock | (1 | ) | — | 6,760 | — | ||||||||||
Taxes paid related to net share settlement of equity awards | — | (148 | ) | — | (706 | ) | |||||||||
Proceeds from exercise of stock options | — | 10 | 9 | 20 | |||||||||||
Repayment of long-term debt | — | (1,500 | ) | — | (1,500 | ) | |||||||||
Proceeds from sale and lease-back transactions | 123 | — | 205 | — | |||||||||||
Principal payments on capital lease obligations | (88 | ) | (91 | ) | (231 | ) | (291 | ) | |||||||
Excess tax benefit from share-based award activity | 473 | 130 | 854 | 285 | |||||||||||
Net cash (used in) provided by financing activities | 507 | (1,599 | ) | 7,597 | (2,192 | ) |
Effect of exchange rate changes on cash and cash equivalents | 12 | 14 | (3 | ) | 7 | ||||||||||
Net increase in cash and cash equivalents | 380 | 99 | 966 | 716 | |||||||||||
Cash and cash equivalents at beginning of period | 2,098 | 3,001 | 1,512 | 2,384 | |||||||||||
Cash and cash equivalents at end of period | $ | 2,478 | $ | 3,100 | $ | 2,478 | $ | 3,100 | |||||||
Supplemental cash flow data | |||||||||||||||
Cash paid during the period for: | |||||||||||||||
Interest | $ | 11 | $ | 7 | $ | 30 | $ | 33 | |||||||
Income taxes | $ | 2 | $ | 43 | $ | 184 | $ | 61 | |||||||
Cash received during the period for: | |||||||||||||||
Income taxes | $ | — | $ | — | $ | — | $ | 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 | $ | (21 | ) | $ | 36 | $ | (80 | ) | $ | 31 | |||||
Property and equipment acquired under capital leases | $ | 161 | $ | — | $ | 251 | $ | 11 | |||||||
Fair value of shares issued related to acquisitions of businesses and other assets | $ | 250 | $ | — | $ | 275 | $ | 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, | ||||||||||||||
2012 | 2013 | 2012 | 2013 | ||||||||||||
GAAP revenue | $ | 1,262 | $ | 2,016 | $ | 3,504 | $ | 5,286 | |||||||
Foreign exchange effect on 2013 revenue using 2012 rates | 2 | 20 | |||||||||||||
Revenue excluding foreign exchange effect | $ | 2,018 | $ | 5,306 | |||||||||||
GAAP revenue year-over-year change % | 60 | % | 51 | % | |||||||||||
Revenue excluding foreign exchange effect year-over-year change % | 60 | % | 51 | % | |||||||||||
GAAP advertising revenue | $ | 1,086 | $ | 1,798 | $ | 2,950 | $ | 4,641 | |||||||
Foreign exchange effect on 2013 advertising revenue using 2012 rates | 3 | 20 | |||||||||||||
Advertising revenue excluding foreign exchange effect | $ | 1,801 | $ | 4,661 | |||||||||||
GAAP advertising revenue year-over-year change % | 66 | % | 57 | % | |||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 66 | % | 58 | % | |||||||||||
GAAP costs and expenses | $ | 885 | $ | 1,280 | $ | 3,489 | $ | 3,614 | |||||||
Share-based compensation expense | (179 | ) | (239 | ) | (1,388 | ) | (633 | ) | |||||||
Payroll tax expenses related to share-based compensation | 31 | (12 | ) | (122 | ) | (40 | ) | ||||||||
Non-GAAP costs and expenses | $ | 737 | $ | 1,029 | $ | 1,979 | $ | 2,941 | |||||||
GAAP income from operations | $ | 377 | $ | 736 | $ | 15 | $ | 1,672 | |||||||
Share-based compensation expense | 179 | 239 | 1,388 | 633 | |||||||||||
Payroll tax expenses related to share-based compensation | (31 | ) | 12 | 122 | 40 | ||||||||||
Non-GAAP income from operations | $ | 525 | $ | 987 | $ | 1,525 | $ | 2,345 | |||||||
GAAP net income (loss) | $ | (59 | ) | $ | 425 | $ | (11 | ) | $ | 977 | |||||
Share-based compensation expense | 179 | 239 | 1,388 | 633 | |||||||||||
Payroll tax expenses related to share-based compensation | (31 | ) | 12 | 122 | 40 | ||||||||||
Income tax adjustments | 222 | (55 | ) | (609 | ) | (229 | ) | ||||||||
Non-GAAP net income | $ | 311 | $ | 621 | $ | 890 | $ | 1,421 | |||||||
GAAP diluted shares | 2,420 | 2,528 | 1,884 | 2,504 | |||||||||||
Assumed preferred stock conversion1 | — | — | 272 | — | |||||||||||
Dilutive securities excluded due to net loss | 159 | — | 170 | — | |||||||||||
Dilutive equity awards excluded from GAAP1 | — | — | 118 | — | |||||||||||
Non-GAAP diluted shares | 2,579 | 2,528 | 2,444 | 2,504 | |||||||||||
GAAP diluted earnings (loss) per share | (0.02 | ) | 0.17 | (0.01 | ) | 0.39 | |||||||||
Net income attributable to participating securities | — | — | — | — | |||||||||||
Non-GAAP adjustments to net (loss) income | 0.15 | 0.08 | 0.48 | 0.18 | |||||||||||
Non-GAAP adjustments to diluted shares | (0.01 | ) | — | (0.11 | ) | — | |||||||||
Non-GAAP diluted earnings per share | 0.12 | 0.25 | 0.36 | 0.57 | |||||||||||
GAAP operating margin | 30 | % | 37 | % | — | % | 32 | % | |||||||
Share-based compensation expense | 14 | % | 12 | % | 40 | % | 12 | % | |||||||
Payroll tax expenses related to share-based compensation | (2 | )% | 1 | % | 3 | % | 1 | % | |||||||
Non-GAAP operating margin | 42 | % | 49 | % | 44 | % | 44 | % | |||||||
GAAP income (loss) before provision for income taxes | $ | 372 | $ | 726 | $ | (11 | ) | $ | 1,624 | ||||||
GAAP provision for income taxes | 431 | 301 | — | 647 | |||||||||||
GAAP effective tax rate | 116 | % | 41 | % | — | % | 40 | % |
GAAP income (loss) before provision for income taxes | $ | 372 | $ | 726 | $ | (11 | ) | $ | 1,624 | ||||||
Share-based compensation and related payroll tax expenses | 148 | 251 | 1,510 | 673 | |||||||||||
Non-GAAP income before provision for income taxes | $ | 520 | $ | 977 | $ | 1,499 | $ | 2,297 | |||||||
Non-GAAP provision for income taxes | 209 | 356 | 609 | 876 | |||||||||||
Non-GAAP effective tax rate | 40 | % | 36 | % | 41 | % | 38 | % | |||||||
Net cash provided by operating activities | $ | 250 | $ | 950 | $ | 931 | $ | 2,991 | |||||||
Purchases of property and equipment | (171 | ) | (284 | ) | (1,037 | ) | (879 | ) | |||||||
Property and equipment acquired under capital leases | (161 | ) | — | (251 | ) | (11 | ) | ||||||||
Free cash flow | $ | (82 | ) | $ | 666 | $ | (357 | ) | $ | 2,101 | |||||
1Gives effect to assumed preferred stock conversion and other dilutive equity awards prior to our IPO for comparability |