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) | |
x | 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 April 27, 2016 | |
99.2 | Facebook Newsroom Post and FAQ | |
99.3 | Note from Mark Zuckerberg | |
99.4 | Facebook Internal Communications |
FACEBOOK, INC. | ||||
Date: | April 27, 2016 | By: | /s/ Colin S. Stretch | |
Name: Colin S. Stretch | ||||
Title: Vice President and General Counsel |
Exhibit Number | Exhibit Title or Description | |
99.1 | Press release dated April 27, 2016 | |
99.2 | Facebook Newsroom Post and FAQ | |
99.3 | Note from Mark Zuckerberg | |
99.4 | Facebook Internal Communications |
Three Months Ended March 31, | |||||||
In millions, except percentages and per share amounts | 2016 | 2015 | |||||
Revenue | $ | 5,382 | $ | 3,543 | |||
Income from Operations | |||||||
GAAP | $ | 2,009 | $ | 933 | |||
Non-GAAP* | $ | 2,977 | $ | 1,840 | |||
Operating Margin | |||||||
GAAP | 37 | % | 26 | % | |||
Non-GAAP* | 55 | % | 52 | % | |||
Net Income | |||||||
GAAP | $ | 1,510 | $ | 512 | |||
Non-GAAP* | $ | 2,229 | $ | 1,189 | |||
Diluted Earnings per Share (EPS) | |||||||
GAAP | $ | 0.52 | $ | 0.18 | |||
Non-GAAP* | $ | 0.77 | $ | 0.42 |
* | Non-GAAP financial measures exclude amortization of intangible assets, share-based compensation and related payroll tax expenses. Non-GAAP net income and EPS also exclude the income tax effects of these non-GAAP adjustments. See the table below titled "Reconciliation of GAAP to Non-GAAP Results." |
• | Daily active users (DAUs) – DAUs were 1.09 billion on average for March 2016, an increase of 16% year-over-year. |
• | Mobile DAUs – Mobile DAUs were 989 million on average for March 2016, an increase of 24% year-over-year. |
• | Monthly active users (MAUs) – MAUs were 1.65 billion as of March 31, 2016, an increase of 15% year-over-year. |
• | Mobile MAUs – Mobile MAUs were 1.51 billion as of March 31, 2016, an increase of 21% year-over-year. |
GAAP | Year-over-Year % Change | |||||||||
Three Months Ended March 31, | ||||||||||
In millions, except percentages and per share amounts | 2016 | 2015 | ||||||||
Revenue: | ||||||||||
Advertising(1) | $ | 5,201 | $ | 3,317 | 57 | % | ||||
Payments and other fees | 181 | 226 | (20 | )% | ||||||
Total revenue(2) | 5,382 | 3,543 | 52 | % | ||||||
Total costs and expenses | 3,373 | 2,610 | 29 | % | ||||||
Income from operations | $ | 2,009 | $ | 933 | 115 | % | ||||
Operating margin | 37 | % | 26 | % | ||||||
Provision for income taxes | 555 | |||||||||
Effective tax rate | 27 | % | ||||||||
Net income | $ | 1,510 | $ | 512 | 195 | % | ||||
Diluted EPS | $ | 0.52 | $ | 0.18 | 189 | % |
Non-GAAP | Year-over-Year % Change | |||||||||
Three Months Ended March 31, | ||||||||||
In millions, except percentages and per share amounts | 2016 | 2015 | ||||||||
GAAP revenue | $ | 5,382 | $ | 3,543 | 52 | % | ||||
Total costs and expenses | 2,405 | 1,703 | 41 | % | ||||||
Income from operations | $ | 2,977 | $ | 1,840 | 62 | % | ||||
Operating margin | 55 | % | 52 | % | ||||||
Effective tax rate | 27 | % | ||||||||
Net income | $ | 2,229 | $ | 1,189 | 87 | % | ||||
Diluted EPS | $ | 0.77 | $ | 0.42 | 83 | % |
• | Mobile advertising revenue – Mobile advertising revenue represented approximately 82% of advertising revenue for the first quarter of 2016, up from 73% of advertising revenue in the first quarter of 2015. |
• | Capital expenditures – Capital expenditures for the first quarter of 2016 were $1.13 billion. |
• | Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $20.62 billion at the end of the first quarter of 2016. |
• | Free cash flow – Free cash flow for the first quarter of 2016 was $1.85 billion. |
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(In millions, except for per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 5,382 | $ | 3,543 | |||
Costs and expenses: | |||||||
Cost of revenue | 838 | 654 | |||||
Research and development | 1,343 | 1,062 | |||||
Marketing and sales | 826 | 620 | |||||
General and administrative | 366 | 274 | |||||
Total costs and expenses | 3,373 | 2,610 | |||||
Income from operations | 2,009 | 933 | |||||
Interest and other income/(expense), net | 56 | (1 | ) | ||||
Income before provision for income taxes | 2,065 | 932 | |||||
Provision for income taxes | 555 | 420 | |||||
Net income | $ | 1,510 | $ | 512 | |||
Less: Net income attributable to participating securities | 5 | 3 | |||||
Net income attributable to Class A and Class B common stockholders | $ | 1,505 | $ | 509 | |||
Earnings per share attributable to Class A and Class B common stockholders: | |||||||
Basic | $ | 0.53 | $ | 0.18 | |||
Diluted | $ | 0.52 | $ | 0.18 | |||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: | |||||||
Basic | 2,843 | 2,784 | |||||
Diluted | 2,888 | 2,836 | |||||
Share-based compensation expense included in costs and expenses: | |||||||
Cost of revenue | $ | 22 | $ | 17 | |||
Research and development | 586 | 566 | |||||
Marketing and sales | 82 | 72 | |||||
General and administrative | 57 | 48 | |||||
Total share-based compensation expense | $ | 747 | $ | 703 | |||
Payroll tax expenses related to share-based compensation included in costs and expenses: | |||||||
Cost of revenue | $ | 2 | $ | 1 | |||
Research and development | 29 | 17 | |||||
Marketing and sales | 5 | 4 | |||||
General and administrative | 5 | 3 | |||||
Total payroll tax expenses related to share-based compensation | $ | 41 | $ | 25 | |||
Amortization of intangible assets included in costs and expenses: | |||||||
Cost of revenue | $ | 44 | $ | 44 | |||
Research and development | 9 | 10 | |||||
Marketing and sales | 104 | 102 | |||||
General and administrative | 23 | 23 | |||||
Total amortization of intangible assets | $ | 180 | $ | 179 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
March 31, 2016 | December 31, 2015 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 6,456 | $ | 4,907 | |||||
Marketable securities | 14,165 | 13,527 | |||||||
Accounts receivable, net of allowances for doubtful accounts of $63 and $68 as of March 31, 2016 and December 31, 2015, respectively | 2,348 | 2,559 | |||||||
Prepaid expenses and other current assets | 843 | 659 | |||||||
Total current assets | 23,812 | 21,652 | |||||||
Property and equipment, net | 6,467 | 5,687 | |||||||
Intangible assets, net | 3,067 | 3,246 | |||||||
Goodwill | 18,029 | 18,026 | |||||||
Other assets | 700 | 796 | |||||||
Total assets | $ | 52,075 | $ | 49,407 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 149 | $ | 196 | |||||
Partners payable | 216 | 217 | |||||||
Accrued expenses and other current liabilities | 1,389 | 1,449 | |||||||
Deferred revenue and deposits | 55 | 56 | |||||||
Current portion of capital lease obligations | — | 7 | |||||||
Total current liabilities | 1,809 | 1,925 | |||||||
Capital lease obligations, less current portion | — | 107 | |||||||
Other liabilities | 3,116 | 3,157 | |||||||
Total liabilities | 4,925 | 5,189 | |||||||
Stockholders' equity | |||||||||
Common stock and additional paid-in capital | 36,129 | 34,886 | |||||||
Accumulated other comprehensive loss | (276 | ) | (455 | ) | |||||
Retained earnings | 11,297 | 9,787 | |||||||
Total stockholders' equity | 47,150 | 44,218 | |||||||
Total liabilities and stockholders' equity | $ | 52,075 | $ | 49,407 |
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 1,510 | $ | 512 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 552 | 457 | |||||
Share-based compensation | 747 | 694 | |||||
Deferred income taxes | (65 | ) | (223 | ) | |||
Tax benefit from share-based award activity | 494 | 423 | |||||
Excess tax benefit from share-based award activity | (494 | ) | (423 | ) | |||
Other | 13 | 6 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 267 | 84 | |||||
Prepaid expenses and other current assets | (106 | ) | (43 | ) | |||
Other assets | 15 | (32 | ) | ||||
Accounts payable | 2 | (15 | ) | ||||
Partners payable | (3 | ) | (13 | ) | |||
Accrued expenses and other current liabilities | (16 | ) | 134 | ||||
Deferred revenue and deposits | (2 | ) | (10 | ) | |||
Other liabilities | 69 | 149 | |||||
Net cash provided by operating activities | 2,983 | 1,700 | |||||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (1,132 | ) | (502 | ) | |||
Purchases of marketable securities | (3,126 | ) | (3,055 | ) | |||
Sales of marketable securities | 2,013 | 608 | |||||
Maturities of marketable securities | 537 | 339 | |||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets | (1 | ) | (257 | ) | |||
Change in restricted cash and deposits | 33 | 23 | |||||
Net cash used in investing activities | (1,676 | ) | (2,844 | ) | |||
Cash flows from financing activities | |||||||
Principal payments on capital lease and other financing obligations | (312 | ) | (47 | ) | |||
Excess tax benefit from share-based award activity | 494 | 423 | |||||
Other financing activities, net | 2 | (5 | ) | ||||
Net cash provided by financing activities | 184 | 371 | |||||
Effect of exchange rate changes on cash and cash equivalents | 58 | (123 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 1,549 | (896 | ) | ||||
Cash and cash equivalents at beginning of period | 4,907 | 4,315 | |||||
Cash and cash equivalents at end of period | $ | 6,456 | $ | 3,419 |
FACEBOOK, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(In millions) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Supplemental cash flow data | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 11 | $ | 3 | |||
Income taxes, net | $ | 170 | $ | 119 | |||
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 | $ | 52 | $ | 186 | |||
Promissory note payable issued in connection with an acquisition | $ | — | $ | 198 |
Reconciliation of GAAP to Non-GAAP Results | |||||||
(In millions, except percentages and per share amounts) | |||||||
(Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
GAAP revenue | $ | 5,382 | $ | 3,543 | |||
Foreign exchange effect on 2016 revenue using 2015 rates | 202 | ||||||
Revenue excluding foreign exchange effect | $ | 5,584 | |||||
GAAP revenue year-over-year change % | 52 | % | |||||
Revenue excluding foreign exchange effect year-over-year change % | 58 | % | |||||
GAAP advertising revenue | $ | 5,201 | $ | 3,317 | |||
Foreign exchange effect on 2016 advertising revenue using 2015 rates | 202 | ||||||
Advertising revenue excluding foreign exchange effect | $ | 5,403 | |||||
GAAP advertising revenue year-over-year change % | 57 | % | |||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 63 | % | |||||
GAAP costs and expenses | $ | 3,373 | $ | 2,610 | |||
Share-based compensation expense | (747 | ) | (703 | ) | |||
Payroll tax expenses related to share-based compensation | (41 | ) | (25 | ) | |||
Amortization of intangible assets | (180 | ) | (179 | ) | |||
Non-GAAP costs and expenses | $ | 2,405 | $ | 1,703 | |||
GAAP income from operations | $ | 2,009 | $ | 933 | |||
Share-based compensation expense | 747 | 703 | |||||
Payroll tax expenses related to share-based compensation | 41 | 25 | |||||
Amortization of intangible assets | 180 | 179 | |||||
Non-GAAP income from operations | $ | 2,977 | $ | 1,840 | |||
GAAP net income | $ | 1,510 | $ | 512 | |||
Share-based compensation expense | 747 | 703 | |||||
Payroll tax expenses related to share-based compensation | 41 | 25 | |||||
Amortization of intangible assets | 180 | 179 | |||||
Income tax adjustments | (249 | ) | (230 | ) | |||
Non-GAAP net income | $ | 2,229 | $ | 1,189 | |||
GAAP and Non-GAAP diluted shares | 2,888 | 2,836 | |||||
GAAP diluted earnings per share | $ | 0.52 | $ | 0.18 | |||
Non-GAAP adjustments to net income | 0.25 | 0.24 | |||||
Non-GAAP diluted earnings per share | $ | 0.77 | $ | 0.42 | |||
GAAP operating margin | 37 | % | 26 | % | |||
Share-based compensation expense | 14 | % | 20 | % | |||
Payroll tax expenses related to share-based compensation | 1 | % | 1 | % | |||
Amortization of intangible assets | 3 | % | 5 | % | |||
Non-GAAP operating margin | 55 | % | 52 | % | |||
GAAP income before provision for income taxes | $ | 2,065 | $ | 932 | |||
GAAP provision for income taxes | 555 | 420 | |||||
GAAP effective tax rate | 27 | % | 45 | % | |||
GAAP income before provision for income taxes | $ | 2,065 | $ | 932 | |||
Share-based compensation and related payroll tax expenses | 788 | 728 | |||||
Amortization of intangible assets | 180 | 179 |
Non-GAAP income before provision for income taxes | $ | 3,033 | $ | 1,839 | |||
Non-GAAP provision for income taxes | 804 | 650 | |||||
Non-GAAP effective tax rate | 27 | % | 35 | % | |||
Net cash provided by operating activities | $ | 2,983 | $ | 1,700 | |||
Purchases of property and equipment | (1,132 | ) | (502 | ) | |||
Free cash flow | $ | 1,851 | $ | 1,198 |
• | allowing the company to maintain focus on Mark’s long-term vision for Facebook; |
• | encouraging Mark to remain involved with Facebook in a leadership role; |
• | mitigating succession risk; and |
• | better mitigating potential future voting dilution. |