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 November 4, 2015 |
FACEBOOK, INC. | ||||
Date: | November 4, 2015 | 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 November 4, 2015 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
In millions, except percentages and per share amounts | 2015 | 2014 | 2015 | 2014 | |||||||||||
Revenue | $ | 4,501 | $ | 3,203 | $ | 12,087 | $ | 8,615 | |||||||
Income from Operations | |||||||||||||||
GAAP | $ | 1,459 | $ | 1,397 | $ | 3,665 | $ | 3,861 | |||||||
Non-GAAP* | $ | 2,410 | $ | 1,820 | $ | 6,478 | $ | 4,987 | |||||||
Operating Margin | |||||||||||||||
GAAP | 32 | % | 44 | % | 30 | % | 45 | % | |||||||
Non-GAAP* | 54 | % | 57 | % | 54 | % | 58 | % | |||||||
Net Income | |||||||||||||||
GAAP | $ | 896 | $ | 806 | $ | 2,127 | $ | 2,239 | |||||||
Non-GAAP* | $ | 1,628 | $ | 1,149 | $ | 4,253 | $ | 3,194 | |||||||
Diluted Earnings per Share (EPS) | |||||||||||||||
GAAP | $ | 0.31 | $ | 0.30 | $ | 0.75 | $ | 0.86 | |||||||
Non-GAAP* | $ | 0.57 | $ | 0.43 | $ | 1.50 | $ | 1.22 |
• | Daily active users (DAUs) – DAUs were 1.01 billion on average for September 2015, an increase of 17% year-over-year. |
• | Mobile DAUs – Mobile DAUs were 894 million on average for September 2015, an increase of 27% year-over-year. |
• | Monthly active users (MAUs) – MAUs were 1.55 billion as of September 30, 2015, an increase of 14% year-over-year. |
• | Mobile MAUs – Mobile MAUs were 1.39 billion as of September 30, 2015, an increase of 23% year-over-year. |
GAAP | Year-over-Year % Change | |||||||||
Three Months Ended September 30, | ||||||||||
In millions, except percentages and per share amounts | 2015 | 2014 | ||||||||
Revenue: | ||||||||||
Advertising(1) | $ | 4,299 | $ | 2,957 | 45 | % | ||||
Payments and other fees | 202 | 246 | (18 | )% | ||||||
Total revenue(2) | 4,501 | 3,203 | 41 | % | ||||||
Total costs and expenses | 3,042 | 1,806 | 68 | % | ||||||
Income from operations | $ | 1,459 | $ | 1,397 | 4 | % | ||||
Operating margin | 32 | % | 44 | % | ||||||
Provision for income taxes | 536 | |||||||||
Effective tax rate | 37 | % | ||||||||
Net income | $ | 896 | $ | 806 | 11 | % | ||||
Diluted EPS | $ | 0.31 | $ | 0.30 | 3 | % |
NON-GAAP | Year-over-Year % Change | |||||||||
Three Months Ended September 30, | ||||||||||
In millions, except percentages and per share amounts | 2015 | 2014 | ||||||||
GAAP revenue | $ | 4,501 | $ | 3,203 | 41 | % | ||||
Total costs and expenses | 2,091 | 1,383 | 51 | % | ||||||
Income from operations | $ | 2,410 | $ | 1,820 | 32 | % | ||||
Operating margin | 54 | % | 57 | % | ||||||
Effective tax rate | 32 | % | ||||||||
Net income | $ | 1,628 | $ | 1,149 | 42 | % | ||||
Diluted EPS | $ | 0.57 | $ | 0.43 | 33 | % |
• | Mobile advertising revenue – Mobile advertising revenue represented approximately 78% of advertising revenue for the third quarter of 2015, up from 66% of advertising revenue in the third quarter of 2014. |
• | Capital expenditures – Capital expenditures for the third quarter of 2015 were $780 million. |
• | Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $15.83 billion at the end of the third quarter of 2015. |
• | Free cash flow – Free cash flow for the third quarter of 2015 was $1.41 billion. |
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenue | $ | 4,501 | $ | 3,203 | $ | 12,087 | $ | 8,615 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue | 720 | 565 | 2,043 | 1,501 | |||||||||||
Research and development | 1,271 | 608 | 3,502 | 1,555 | |||||||||||
Marketing and sales | 706 | 374 | 1,953 | 1,055 | |||||||||||
General and administrative | 345 | 259 | 924 | 643 | |||||||||||
Total costs and expenses | 3,042 | 1,806 | 8,422 | 4,754 | |||||||||||
Income from operations | 1,459 | 1,397 | 3,665 | 3,861 | |||||||||||
Interest and other income/(expense), net | (27 | ) | (61 | ) | (28 | ) | (65 | ) | |||||||
Income before provision for income taxes | 1,432 | 1,336 | 3,637 | 3,796 | |||||||||||
Provision for income taxes | 536 | 530 | 1,510 | 1,557 | |||||||||||
Net income | $ | 896 | $ | 806 | $ | 2,127 | $ | 2,239 | |||||||
Less: Net income attributable to participating securities | 5 | 4 | 12 | 10 | |||||||||||
Net income attributable to Class A and Class B common stockholders | $ | 891 | $ | 802 | $ | 2,115 | $ | 2,229 | |||||||
Earnings per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.31 | $ | 0.76 | $ | 0.87 | |||||||
Diluted | $ | 0.31 | $ | 0.30 | $ | 0.75 | $ | 0.86 | |||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | 2,808 | 2,587 | 2,796 | 2,565 | |||||||||||
Diluted | 2,863 | 2,644 | 2,848 | 2,616 | |||||||||||
Share-based compensation expense included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | 21 | $ | 16 | $ | 59 | $ | 44 | |||||||
Research and development | 598 | 243 | 1,767 | 643 | |||||||||||
Marketing and sales | 82 | 53 | 236 | 146 | |||||||||||
General and administrative | 56 | 41 | 161 | 108 | |||||||||||
Total share-based compensation expense | $ | 757 | $ | 353 | $ | 2,223 | $ | 941 | |||||||
Payroll tax expenses related to share-based compensation included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | — | $ | 1 | $ | 2 | $ | 3 | |||||||
Research and development | 10 | 6 | 34 | 27 | |||||||||||
Marketing and sales | 2 | 1 | 8 | 7 | |||||||||||
General and administrative | 2 | 3 | 7 | 7 | |||||||||||
Total payroll tax expenses related to share-based compensation | $ | 14 | $ | 11 | $ | 51 | $ | 44 | |||||||
Amortization of intangible assets included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | 44 | $ | 26 | $ | 133 | $ | 42 | |||||||
Research and development | 10 | 9 | 29 | 25 | |||||||||||
Marketing and sales | 102 | 1 | 307 | 3 | |||||||||||
General and administrative | 24 | 23 | 70 | 71 | |||||||||||
Total amortization of intangible assets | $ | 180 | $ | 59 | $ | 539 | $ | 141 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2015 | December 31, 2014 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 4,308 | $ | 4,315 | |||||
Marketable securities | 11,526 | 6,884 | |||||||
Accounts receivable, net of allowances for doubtful accounts of $55 and $39 as of September 30, 2015 and December 31, 2014, respectively | 2,010 | 1,678 | |||||||
Prepaid expenses and other current assets | 1,295 | 793 | |||||||
Total current assets | 19,139 | 13,670 | |||||||
Property and equipment, net | 5,335 | 3,967 | |||||||
Intangible assets, net | 3,437 | 3,929 | |||||||
Goodwill | 18,024 | 17,981 | |||||||
Other assets | 534 | 637 | |||||||
Total assets | $ | 46,469 | $ | 40,184 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 149 | $ | 176 | |||||
Partners payable | 241 | 202 | |||||||
Accrued expenses and other current liabilities | 1,338 | 866 | |||||||
Deferred revenue and deposits | 47 | 66 | |||||||
Current portion of capital lease obligations | 17 | 114 | |||||||
Total current liabilities | 1,792 | 1,424 | |||||||
Capital lease obligations, less current portion | 109 | 119 | |||||||
Other liabilities | 3,148 | 2,545 | |||||||
Total liabilities | 5,049 | 4,088 | |||||||
Stockholders' equity | |||||||||
Common stock and additional paid-in capital | 33,574 | 30,225 | |||||||
Accumulated other comprehensive loss | (380 | ) | (228 | ) | |||||
Retained earnings | 8,226 | 6,099 | |||||||
Total stockholders' equity | 41,420 | 36,096 | |||||||
Total liabilities and stockholders' equity | $ | 46,469 | $ | 40,184 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 896 | $ | 806 | $ | 2,127 | $ | 2,239 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 486 | 289 | 1,402 | 810 | |||||||||||
Share-based compensation | 757 | 353 | 2,214 | 941 | |||||||||||
Deferred income taxes | (383 | ) | 4 | (672 | ) | (30 | ) | ||||||||
Tax benefit from share-based award activity | 346 | 479 | 1,155 | 1,354 | |||||||||||
Excess tax benefit from share-based award activity | (346 | ) | (482 | ) | (1,155 | ) | (1,365 | ) | |||||||
Other | 6 | (3 | ) | 13 | (26 | ) | |||||||||
Changes in assets and liabilities: | |||||||||||||||
Accounts receivable | (207 | ) | (182 | ) | (405 | ) | (264 | ) | |||||||
Prepaid expenses and other current assets | (55 | ) | (55 | ) | (145 | ) | (45 | ) | |||||||
Other assets | 29 | (176 | ) | 4 | (158 | ) | |||||||||
Accounts payable | (9 | ) | (57 | ) | 7 | 12 | |||||||||
Partners payable | 59 | (17 | ) | 40 | (22 | ) | |||||||||
Accrued expenses and other current liabilities | 50 | 123 | 291 | 198 | |||||||||||
Deferred revenue and deposits | (1 | ) | (12 | ) | (18 | ) | 3 | ||||||||
Other liabilities | 564 | 178 | 914 | 227 | |||||||||||
Net cash provided by operating activities | 2,192 | 1,248 | 5,772 | 3,874 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of property and equipment | (780 | ) | (482 | ) | (1,831 | ) | (1,314 | ) | |||||||
Purchases of marketable securities | (4,773 | ) | (1,733 | ) | (10,333 | ) | (6,215 | ) | |||||||
Sales of marketable securities | 1,399 | 5,423 | 4,125 | 7,391 | |||||||||||
Maturities of marketable securities | 848 | 636 | 1,563 | 1,710 | |||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets | (27 | ) | (735 | ) | (309 | ) | (754 | ) | |||||||
Change in restricted cash and deposits | 33 | (111 | ) | 77 | (113 | ) | |||||||||
Other investing activities, net | — | (1 | ) | — | (2 | ) | |||||||||
Net cash (used in) provided by investing activities | (3,300 | ) | 2,997 | (6,708 | ) | 703 | |||||||||
Cash flows from financing activities | |||||||||||||||
Taxes paid related to net share settlement | (8 | ) | — | (20 | ) | (3 | ) | ||||||||
Proceeds from exercise of stock options | — | 5 | — | 7 | |||||||||||
Principal payments on capital lease obligations | (23 | ) | (49 | ) | (107 | ) | (199 | ) | |||||||
Excess tax benefit from share-based award activity | 346 | 482 | 1,155 | 1,365 | |||||||||||
Net cash provided by financing activities | 315 | 438 | 1,028 | 1,170 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (22 | ) | (68 | ) | (99 | ) | (71 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (815 | ) | 4,615 | (7 | ) | 5,676 | |||||||||
Cash and cash equivalents at beginning of period | 5,123 | 4,384 | 4,315 | 3,323 | |||||||||||
Cash and cash equivalents at end of period | $ | 4,308 | $ | 8,999 | $ | 4,308 | $ | 8,999 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Supplemental cash flow data | |||||||||||||||
Cash paid during the period for: | |||||||||||||||
Interest | $ | 3 | $ | 3 | $ | 8 | $ | 11 | |||||||
Income taxes, net | $ | 40 | $ | 42 | $ | 199 | $ | 101 | |||||||
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 | $ | (87 | ) | $ | 20 | $ | 107 | $ | 38 | ||||||
Fair value of shares issued related to acquisitions of businesses | $ | — | $ | 1,368 | $ | — | $ | 1,368 | |||||||
Promissory note payable issued in connection with an acquisition | $ | — | $ | — | $ | 198 | $ | — |
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
GAAP revenue | $ | 4,501 | $ | 3,203 | $ | 12,087 | $ | 8,615 | |||||||
Foreign exchange effect on 2015 revenue using 2014 rates | 342 | 863 | |||||||||||||
Revenue excluding foreign exchange effect | $ | 4,843 | $ | 12,950 | |||||||||||
GAAP revenue year-over-year change % | 41 | % | 40 | % | |||||||||||
Revenue excluding foreign exchange effect year-over-year change % | 51 | % | 50 | % | |||||||||||
GAAP advertising revenue | $ | 4,299 | $ | 2,957 | $ | 11,442 | $ | 7,898 | |||||||
Foreign exchange effect on 2015 advertising revenue using 2014 rates | 342 | 863 | |||||||||||||
Advertising revenue excluding foreign exchange effect | $ | 4,641 | $ | 12,305 | |||||||||||
GAAP advertising revenue year-over-year change % | 45 | % | 45 | % | |||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 57 | % | 56 | % | |||||||||||
GAAP costs and expenses | $ | 3,042 | $ | 1,806 | $ | 8,422 | $ | 4,754 | |||||||
Share-based compensation expense | (757 | ) | (353 | ) | (2,223 | ) | (941 | ) | |||||||
Payroll tax expenses related to share-based compensation | (14 | ) | (11 | ) | (51 | ) | (44 | ) | |||||||
Amortization of intangible assets | (180 | ) | (59 | ) | (539 | ) | (141 | ) | |||||||
Non-GAAP costs and expenses | $ | 2,091 | $ | 1,383 | $ | 5,609 | $ | 3,628 | |||||||
GAAP income from operations | $ | 1,459 | $ | 1,397 | $ | 3,665 | $ | 3,861 | |||||||
Share-based compensation expense | 757 | 353 | 2,223 | 941 | |||||||||||
Payroll tax expenses related to share-based compensation | 14 | 11 | 51 | 44 | |||||||||||
Amortization of intangible assets | 180 | 59 | 539 | 141 | |||||||||||
Non-GAAP income from operations | $ | 2,410 | $ | 1,820 | $ | 6,478 | $ | 4,987 | |||||||
GAAP net income | $ | 896 | $ | 806 | $ | 2,127 | $ | 2,239 | |||||||
Share-based compensation expense | 757 | 353 | 2,223 | 941 | |||||||||||
Payroll tax expenses related to share-based compensation | 14 | 11 | 51 | 44 | |||||||||||
Amortization of intangible assets | 180 | 59 | 539 | 141 | |||||||||||
Income tax adjustments | (219 | ) | (80 | ) | (687 | ) | (171 | ) | |||||||
Non-GAAP net income | $ | 1,628 | $ | 1,149 | $ | 4,253 | $ | 3,194 | |||||||
GAAP and Non-GAAP diluted shares | 2,863 | 2,644 | 2,848 | 2,616 | |||||||||||
GAAP diluted earnings per share | $ | 0.31 | $ | 0.30 | $ | 0.75 | $ | 0.86 | |||||||
Net income attributable to participating securities | — | — | — | (0.01 | ) | ||||||||||
Non-GAAP adjustments to net income | 0.26 | 0.13 | 0.75 | 0.37 | |||||||||||
Non-GAAP diluted earnings per share | $ | 0.57 | $ | 0.43 | $ | 1.50 | $ | 1.22 | |||||||
GAAP operating margin | 32 | % | 44 | % | 30 | % | 45 | % | |||||||
Share-based compensation expense | 17 | % | 11 | % | 18 | % | 11 | % | |||||||
Payroll tax expenses related to share-based compensation | — | % | — | % | — | % | 1 | % | |||||||
Amortization of intangible assets | 4 | % | 2 | % | 4 | % | 2 | % | |||||||
Non-GAAP operating margin | 54 | % | 57 | % | 54 | % | 58 | % | |||||||
GAAP income before provision for income taxes | $ | 1,432 | $ | 1,336 | $ | 3,637 | $ | 3,796 | |||||||
GAAP provision for income taxes | 536 | 530 | 1,510 | 1,557 | |||||||||||
GAAP effective tax rate | 37 | % | 40 | % | 42 | % | 41 | % | |||||||
GAAP income before provision for income taxes | $ | 1,432 | $ | 1,336 | $ | 3,637 | $ | 3,796 |
Share-based compensation and related payroll tax expenses | 771 | 364 | 2,274 | 985 | |||||||||||
Amortization of intangible assets | 180 | 59 | 539 | 141 | |||||||||||
Non-GAAP income before provision for income taxes | $ | 2,383 | $ | 1,759 | $ | 6,450 | $ | 4,922 | |||||||
Non-GAAP provision for income taxes | 755 | 610 | 2,197 | 1,728 | |||||||||||
Non-GAAP effective tax rate | 32 | % | 35 | % | 34 | % | 35 | % | |||||||
Net cash provided by operating activities | $ | 2,192 | $ | 1,248 | $ | 5,772 | $ | 3,874 | |||||||
Purchases of property and equipment | (780 | ) | (482 | ) | (1,831 | ) | (1,314 | ) | |||||||
Free cash flow | $ | 1,412 | $ | 766 | $ | 3,941 | $ | 2,560 |