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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||
Emerging growth company | o | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | o |
Exhibit Number | Exhibit Title or Description | |
99.1 | Press release dated November 1, 2017 |
Exhibit Number | Exhibit Title or Description | |
99.1 |
FACEBOOK, INC. | ||||
Date: | November 1, 2017 | By: | /s/ David Kling | |
Name: David Kling | ||||
Title: Vice President, Deputy General Counsel and Secretary |
Three Months Ended September 30, | Year-over-Year % Change | |||||||||
In millions, except percentages and per share amounts | 2017 | 2016 | ||||||||
Revenue: | ||||||||||
Advertising | $ | 10,142 | $ | 6,816 | 49 | % | ||||
Payments and other fees | 186 | 195 | (5 | )% | ||||||
Total revenue | 10,328 | 7,011 | 47 | % | ||||||
Total costs and expenses(1) | 5,206 | 3,894 | 34 | % | ||||||
Income from operations(1) | $ | 5,122 | $ | 3,117 | 64 | % | ||||
Operating margin(1) | 50 | % | 44 | % | ||||||
Provision for income taxes | $ | 529 | ||||||||
Effective tax rate | 10 | % | ||||||||
Net income(1) | $ | 4,707 | $ | 2,627 | 79 | % | ||||
Diluted Earnings per Share (EPS)(1) | $ | 1.59 | $ | 0.90 | 77 | % |
• | Daily active users (DAUs) – DAUs were 1.37 billion on average for September 2017, an increase of 16% year-over-year. |
• | Monthly active users (MAUs) – MAUs were 2.07 billion as of September 30, 2017, an increase of 16% year-over-year. |
• | Mobile advertising revenue – Mobile advertising revenue represented approximately 88% of advertising revenue for the third quarter of 2017, up from approximately 84% of advertising revenue in the third quarter of 2016. |
• | Capital expenditures – Capital expenditures for the third quarter of 2017 were $1.76 billion. |
• | Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $38.29 billion at the end of the third quarter of 2017. |
• | Headcount – Headcount was 23,165 as of September 30, 2017, an increase of 47% year-over-year. |
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, | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Revenue | $ | 10,328 | $ | 7,011 | $ | 27,681 | $ | 18,829 | |||||||
Costs and expenses: | |||||||||||||||
Cost of revenue | 1,448 | 987 | 3,843 | 2,742 | |||||||||||
Research and development | 2,052 | 1,542 | 5,805 | 4,356 | |||||||||||
Marketing and sales | 1,170 | 926 | 3,351 | 2,654 | |||||||||||
General and administrative | 536 | 439 | 1,831 | 1,217 | |||||||||||
Total costs and expenses | 5,206 | 3,894 | 14,830 | 10,969 | |||||||||||
Income from operations | 5,122 | 3,117 | 12,851 | 7,860 | |||||||||||
Interest and other income, net | 114 | 47 | 281 | 125 | |||||||||||
Income before provision for income taxes | 5,236 | 3,164 | 13,132 | 7,985 | |||||||||||
Provision for income taxes | 529 | 537 | 1,467 | 1,337 | |||||||||||
Net income | $ | 4,707 | $ | 2,627 | $ | 11,665 | $ | 6,648 | |||||||
Less: Net income attributable to participating securities | 3 | 7 | 13 | 20 | |||||||||||
Net income attributable to Class A and Class B common stockholders | $ | 4,704 | $ | 2,620 | $ | 11,652 | $ | 6,628 | |||||||
Earnings per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | $ | 1.62 | $ | 0.91 | $ | 4.02 | $ | 2.32 | |||||||
Diluted | $ | 1.59 | $ | 0.90 | $ | 3.95 | $ | 2.28 | |||||||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: | |||||||||||||||
Basic | 2,904 | 2,871 | 2,898 | 2,857 | |||||||||||
Diluted | 2,956 | 2,931 | 2,954 | 2,918 | |||||||||||
Share-based compensation expense included in costs and expenses: | |||||||||||||||
Cost of revenue | $ | 47 | $ | 30 | $ | 128 | $ | 81 | |||||||
Research and development | 776 | 636 | 2,233 | 1,853 | |||||||||||
Marketing and sales | 114 | 95 | 330 | 272 | |||||||||||
General and administrative | 73 | 63 | 218 | 181 | |||||||||||
Total share-based compensation expense | $ | 1,010 | $ | 824 | $ | 2,909 | $ | 2,387 |
FACEBOOK, INC. | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
September 30, 2017 | December 31, 2016 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 7,201 | $ | 8,903 | |||||
Marketable securities | 31,088 | 20,546 | |||||||
Accounts receivable, net of allowances for doubtful accounts of $103 and $94 as of September 30, 2017 and December 31, 2016, respectively | 4,424 | 3,993 | |||||||
Prepaid expenses and other current assets | 1,490 | 959 | |||||||
Total current assets | 44,203 | 34,401 | |||||||
Property and equipment, net | 12,158 | 8,591 | |||||||
Intangible assets, net | 2,050 | 2,535 | |||||||
Goodwill | 18,213 | 18,122 | |||||||
Other assets | 2,374 | 1,312 | |||||||
Total assets | $ | 78,998 | $ | 64,961 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 383 | $ | 302 | |||||
Partners payable | 314 | 280 | |||||||
Accrued expenses and other current liabilities | 2,503 | 2,203 | |||||||
Deferred revenue and deposits | 105 | 90 | |||||||
Total current liabilities | 3,305 | 2,875 | |||||||
Other liabilities | 4,485 | 2,892 | |||||||
Total liabilities | 7,790 | 5,767 | |||||||
Stockholders' equity: | |||||||||
Common stock and additional paid-in capital | 40,199 | 38,227 | |||||||
Accumulated other comprehensive loss | (200 | ) | (703 | ) | |||||
Retained earnings | 31,209 | 21,670 | |||||||
Total stockholders' equity | 71,208 | 59,194 | |||||||
Total liabilities and stockholders' equity | $ | 78,998 | $ | 64,961 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Net income | $ | 4,707 | $ | 2,627 | $ | 11,665 | $ | 6,648 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 773 | 591 | 2,172 | 1,728 | |||||||||||
Share-based compensation | 1,010 | 824 | 2,909 | 2,387 | |||||||||||
Deferred income taxes | (94 | ) | (23 | ) | (152 | ) | (201 | ) | |||||||
Other | 7 | 4 | 18 | 23 | |||||||||||
Changes in assets and liabilities: | |||||||||||||||
Accounts receivable | (458 | ) | (253 | ) | (235 | ) | (478 | ) | |||||||
Prepaid expenses and other current assets | (57 | ) | (57 | ) | (634 | ) | (314 | ) | |||||||
Other assets | 47 | 42 | 130 | 46 | |||||||||||
Accounts payable | 31 | 18 | (7 | ) | (21 | ) | |||||||||
Partners payable | 32 | 6 | 22 | 20 | |||||||||||
Accrued expenses and other current liabilities | (62 | ) | 228 | 95 | 642 | ||||||||||
Deferred revenue and deposits | 16 | (2 | ) | 12 | 21 | ||||||||||
Other liabilities | 176 | 31 | 550 | 677 | |||||||||||
Net cash provided by operating activities | 6,128 | 4,036 | 16,545 | 11,178 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of property and equipment | (1,755 | ) | (1,095 | ) | (4,470 | ) | (3,222 | ) | |||||||
Purchases of marketable securities | (6,273 | ) | (7,733 | ) | (20,410 | ) | (17,368 | ) | |||||||
Sales of marketable securities | 3,651 | 5,633 | 7,649 | 9,791 | |||||||||||
Maturities of marketable securities | 730 | 131 | 2,228 | 1,034 | |||||||||||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets | (98 | ) | (61 | ) | (106 | ) | (81 | ) | |||||||
Change in restricted cash and deposits | 31 | 8 | 64 | 82 | |||||||||||
Net cash used in investing activities | (3,714 | ) | (3,117 | ) | (15,045 | ) | (9,764 | ) | |||||||
Cash flows from financing activities | |||||||||||||||
Taxes paid related to net share settlement of equity awards | (866 | ) | (6 | ) | (2,360 | ) | (6 | ) | |||||||
Principal payments on capital lease and other financing obligations | — | — | — | (312 | ) | ||||||||||
Repurchases of Class A common stock | (640 | ) | — | (1,018 | ) | — | |||||||||
Other financing activities, net | (26 | ) | (2 | ) | (14 | ) | 4 | ||||||||
Net cash used in financing activities | (1,532 | ) | (8 | ) | (3,392 | ) | (314 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 67 | 19 | 190 | 31 | |||||||||||
Net increase (decrease) in cash and cash equivalents | 949 | 930 | (1,702 | ) | 1,131 | ||||||||||
Cash and cash equivalents at beginning of period | 6,252 | 5,108 | 8,903 | 4,907 | |||||||||||
Cash and cash equivalents at end of period | $ | 7,201 | $ | 6,038 | $ | 7,201 | $ | 6,038 |
FACEBOOK, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(In millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016(1) | 2017 | 2016(1) | ||||||||||||
Supplemental cash flow data | |||||||||||||||
Cash paid during the period for: | |||||||||||||||
Interest | $ | — | $ | — | $ | — | $ | 11 | |||||||
Income taxes, net | $ | 434 | $ | 357 | $ | 1,793 | $ | 764 | |||||||
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 | $ | 285 | $ | 230 | $ | 441 | $ | 319 | |||||||
Settlement of acquisition-related contingent consideration liability | $ | 102 | $ | 33 | $ | 102 | $ | 33 | |||||||
Change in unsettled repurchases of Class A common stock | $ | (10 | ) | $ | — | $ | 20 | $ | — |
Reconciliation of GAAP to Non-GAAP Results | |||||||||||||||
(In millions, except percentages) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
GAAP revenue | $ | 10,328 | $ | 7,011 | $ | 27,681 | $ | 18,829 | |||||||
Foreign exchange effect on 2017 revenue using 2016 rates | (128 | ) | 36 | ||||||||||||
Revenue excluding foreign exchange effect | $ | 10,200 | $ | 27,717 | |||||||||||
GAAP revenue year-over-year change % | 47 | % | 47 | % | |||||||||||
Revenue excluding foreign exchange effect year-over-year change % | 45 | % | 47 | % | |||||||||||
GAAP advertising revenue | $ | 10,142 | $ | 6,816 | $ | 27,163 | $ | 18,256 | |||||||
Foreign exchange effect on 2017 advertising revenue using 2016 rates | (128 | ) | 35 | ||||||||||||
Advertising revenue excluding foreign exchange effect | $ | 10,014 | $ | 27,198 | |||||||||||
GAAP advertising revenue year-over-year change % | 49 | % | 49 | % | |||||||||||
Advertising revenue excluding foreign exchange effect year-over-year change % | 47 | % | 49 | % | |||||||||||
Net cash provided by operating activities(1) | $ | 6,128 | $ | 4,036 | $ | 16,545 | $ | 11,178 | |||||||
Purchases of property and equipment | (1,755 | ) | (1,095 | ) | (4,470 | ) | (3,222 | ) | |||||||
Free cash flow(1) | $ | 4,373 | $ | 2,941 | $ | 12,075 | $ | 7,956 |