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July 23, 2014
MENLO PARK, Calif., July 23, 2014 /PRNewswire/ -- Facebook, Inc. (NASDAQ: FB) today reported financial results for the quarter ended June 30, 2014.
"We had a good second quarter," said Mark Zuckerberg, Facebook founder and CEO. "Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world."
Second Quarter 2014 Financial Summary
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
In millions, except percentages and per share amounts |
2013 |
2014 |
2013 |
2014 |
|||
Revenue |
$ 1,813 |
$ 2,910 |
$ 3,271 |
$ 5,412 |
|||
Income from Operations |
|||||||
GAAP |
$ 562 |
$ 1,390 |
$ 935 |
$ 2,464 |
|||
Non-GAAP |
$ 794 |
$ 1,712 |
$ 1,357 |
$ 3,085 |
|||
Operating Margin |
|||||||
GAAP |
31 % |
48 % |
29 % |
46 % |
|||
Non-GAAP |
44 % |
59 % |
41 % |
57 % |
|||
Net Income |
|||||||
GAAP |
$ 333 |
$ 791 |
$ 552 |
$ 1,433 |
|||
Non-GAAP |
$ 488 |
$ 1,091 |
$ 800 |
$ 1,976 |
|||
Diluted Earnings per Share (EPS) |
|||||||
GAAP |
$ 0.13 |
$ 0.30 |
$ 0.22 |
$ 0.55 |
|||
Non-GAAP |
$ 0.19 |
$ 0.42 |
$ 0.32 |
$ 0.76 |
FACEBOOK, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||
(In millions, except for per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
2013 |
2014 |
2013 |
2014 |
||||
Revenue |
$ 1,813 |
$ 2,910 |
$ 3,271 |
$ 5,412 |
|||
Costs and expenses: |
|||||||
Cost of revenue |
465 |
473 |
878 |
936 |
|||
Research and development |
344 |
492 |
637 |
947 |
|||
Marketing and sales |
269 |
358 |
472 |
681 |
|||
General and administrative |
173 |
197 |
349 |
384 |
|||
Total costs and expenses |
1,251 |
1,520 |
2,336 |
2,948 |
|||
Income from operations |
562 |
1,390 |
935 |
2,464 |
|||
Interest and other income/(expense), net |
(17) |
(4) |
(37) |
(4) |
|||
Income before provision for income taxes |
545 |
1,386 |
898 |
2,460 |
|||
Provision for income taxes |
212 |
595 |
346 |
1,027 |
|||
Net income |
$ 333 |
$ 791 |
$ 552 |
$ 1,433 |
|||
Less: Net income attributable to participating securities |
2 |
3 |
3 |
6 |
|||
Net income attributable to Class A and Class B common stockholders |
$ 331 |
$ 788 |
$ 549 |
$ 1,427 |
|||
Earnings per share attributable to Class A and Class B common stockholders: |
|||||||
Basic |
$ 0.14 |
$ 0.31 |
$ 0.23 |
$ 0.56 |
|||
Diluted |
$ 0.13 |
$ 0.30 |
$ 0.22 |
$ 0.55 |
|||
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders: |
|||||||
Basic |
2,407 |
2,560 |
2,397 |
2,552 |
|||
Diluted |
2,502 |
2,615 |
2,499 |
2,609 |
|||
Share-based compensation expense included in costs and expenses: |
|||||||
Cost of revenue |
$ 11 |
$ 16 |
$ 19 |
$ 28 |
|||
Research and development |
151 |
219 |
268 |
400 |
|||
Marketing and sales |
33 |
50 |
57 |
93 |
|||
General and administrative |
29 |
29 |
50 |
67 |
|||
Total share-based compensation expense |
$ 224 |
$ 314 |
$ 394 |
$ 588 |
|||
Payroll tax expenses related to share-based compensation included in costs and expenses: |
|||||||
Cost of revenue |
$ - |
$ - |
$ 1 |
$ 2 |
|||
Research and development |
7 |
6 |
18 |
21 |
|||
Marketing and sales |
1 |
2 |
5 |
6 |
|||
General and administrative |
- |
- |
4 |
4 |
|||
Total payroll tax expenses related to share-based compensation |
$ 8 |
$ 8 |
$ 28 |
$ 33 |
FACEBOOK, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(In millions) |
|||||
(Unaudited) |
|||||
December 31, 2013 |
June 30, 2014 |
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Assets |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ 3,323 |
$ 4,384 |
|||
Marketable securities |
8,126 |
9,572 |
|||
Accounts receivable |
1,109 |
1,190 |
|||
Prepaid expenses and other current assets |
512 |
411 |
|||
Total current assets |
13,070 |
15,557 |
|||
Property and equipment, net |
2,882 |
3,334 |
|||
Goodwill and intangible assets, net |
1,722 |
1,672 |
|||
Other assets |
221 |
206 |
|||
Total assets |
$ 17,895 |
$ 20,769 |
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Liabilities and stockholders' equity |
|||||
Current liabilities: |
|||||
Accounts payable |
$ 87 |
$ 146 |
|||
Developer partners payable |
181 |
176 |
|||
Accrued expenses and other current liabilities |
555 |
666 |
|||
Deferred revenue and deposits |
38 |
53 |
|||
Current portion of capital lease obligations |
239 |
173 |
|||
Total current liabilities |
1,100 |
1,214 |
|||
Capital lease obligations, less current portion |
237 |
153 |
|||
Other liabilities |
1,088 |
1,056 |
|||
Total liabilities |
2,425 |
2,423 |
|||
Stockholders' equity |
|||||
Common stock and additional paid-in capital |
12,297 |
13,759 |
|||
Accumulated other comprehensive income (loss) |
14 |
(5) |
|||
Retained earnings |
3,159 |
4,592 |
|||
Total stockholders' equity |
15,470 |
18,346 |
|||
Total liabilities and stockholders' equity |
$ 17,895 |
$ 20,769 |
FACEBOOK, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
2013 |
2014 |
2013 |
2014 |
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Cash flows from operating activities |
|||||||
Net income |
$ 333 |
$ 791 |
$ 552 |
$ 1,433 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
230 |
257 |
463 |
521 |
|||
Lease abandonment |
57 |
(13) |
65 |
(26) |
|||
Share-based compensation |
224 |
314 |
394 |
588 |
|||
Deferred income taxes |
26 |
(33) |
19 |
(34) |
|||
Tax benefit from share-based award activity |
89 |
530 |
148 |
875 |
|||
Excess tax benefit from share-based award activity |
(93) |
(535) |
(155) |
(883) |
|||
Other |
11 |
(6) |
20 |
3 |
|||
Changes in assets and liabilities: |
|||||||
Accounts receivable |
(116) |
(187) |
(62) |
(82) |
|||
Prepaid expenses and other current assets |
429 |
14 |
428 |
10 |
|||
Other assets |
(8) |
2 |
(44) |
18 |
|||
Accounts payable |
1 |
79 |
2 |
69 |
|||
Developer partners payable |
(18) |
(12) |
3 |
(5) |
|||
Accrued expenses and other current liabilities |
42 |
102 |
9 |
75 |
|||
Deferred revenue and deposits |
2 |
15 |
2 |
15 |
|||
Other liabilities |
113 |
23 |
197 |
49 |
|||
Net cash provided by operating activities |
1,322 |
1,341 |
2,041 |
2,626 |
|||
Cash flows from investing activities |
|||||||
Purchases of property and equipment |
(268) |
(469) |
(595) |
(832) |
|||
Purchases of marketable securities |
(1,952) |
(1,508) |
(3,460) |
(4,482) |
|||
Sales of marketable securities |
576 |
1,121 |
1,275 |
1,968 |
|||
Maturities of marketable securities |
1,271 |
455 |
2,174 |
1,074 |
|||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets |
(122) |
(19) |
(221) |
(19) |
|||
Other investing activities, net |
(3) |
(2) |
3 |
(3) |
|||
Net cash used in investing activities |
(498) |
(422) |
(824) |
(2,294) |
|||
Cash flows from financing activities |
|||||||
Taxes paid related to net share settlement of equity awards |
(153) |
— |
(558) |
(3) |
|||
Proceeds from exercise of stock options |
2 |
1 |
10 |
2 |
|||
Principal payments on capital lease obligations |
(91) |
(66) |
(200) |
(150) |
|||
Excess tax benefit from share-based award activity |
93 |
535 |
155 |
883 |
|||
Net cash (used in) provided by financing activities |
(149) |
470 |
(593) |
732 |
|||
Effect of exchange rate changes on cash and cash equivalents |
1 |
(3) |
(7) |
(3) |
|||
Net increase in cash and cash equivalents |
676 |
1,386 |
617 |
1,061 |
|||
Cash and cash equivalents at beginning of period |
2,325 |
2,998 |
2,384 |
3,323 |
|||
Cash and cash equivalents at end of period |
$ 3,001 |
$ 4,384 |
$ 3,001 |
$ 4,384 |
|||
Supplemental cash flow data |
|||||||
Cash paid during the period for: |
|||||||
Interest |
$ 14 |
$ 4 |
$ 26 |
$ 8 |
|||
Income taxes |
$ 9 |
$ 24 |
$ 18 |
$ 61 |
|||
Cash received during the period for: |
|||||||
Refund of income taxes |
$ 419 |
$ 2 |
$ 419 |
$ 2 |
|||
Non-cash investing and financing activities: |
|||||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions |
$ (52) |
$ 21 |
$ (5) |
$ 18 |
|||
Property and equipment acquired under capital leases |
$ - |
$ - |
$ 11 |
$ - |
|||
Fair value of shares issued related to acquisitions of businesses |
$ 44 |
$ - |
$ 77 |
$ - |
Reconciliation of Non-GAAP Results to Nearest GAAP Measures |
|||||||
(In millions, except percentages and per share amounts) |
|||||||
(Unaudited) |
|||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
2013 |
2014 |
2013 |
2014 |
||||
GAAP revenue |
$ 1,813 |
$ 2,910 |
$ 3,271 |
$ 5,412 |
|||
Foreign exchange effect on 2014 revenue using 2013 rates |
(30) |
(21) |
|||||
Revenue excluding foreign exchange effect |
$ 2,880 |
$ 5,391 |
|||||
GAAP revenue year-over-year change % |
61 % |
65 % |
|||||
Revenue excluding foreign exchange effect year-over-year change % |
59 % |
65 % |
|||||
GAAP advertising revenue |
$ 1,599 |
$ 2,676 |
$ 2,844 |
$ 4,941 |
|||
Foreign exchange effect on 2014 advertising revenue using 2013 rates |
(30) |
(21) |
|||||
Advertising revenue excluding foreign exchange effect |
$ 2,646 |
$ 4,920 |
|||||
GAAP advertising revenue year-over-year change % |
67 % |
74 % |
|||||
Advertising revenue excluding foreign exchange effect year-over-year change % |
65 % |
73 % |
|||||
GAAP costs and expenses |
$ 1,251 |
$ 1,520 |
$ 2,336 |
$ 2,948 |
|||
Share-based compensation expense |
(224) |
(314) |
(394) |
(588) |
|||
Payroll tax expenses related to share-based compensation |
(8) |
(8) |
(28) |
(33) |
|||
Non-GAAP costs and expenses |
$ 1,019 |
$ 1,198 |
$ 1,914 |
$ 2,327 |
|||
GAAP income from operations |
$ 562 |
$ 1,390 |
$ 935 |
$ 2,464 |
|||
Share-based compensation expense |
224 |
314 |
394 |
588 |
|||
Payroll tax expenses related to share-based compensation |
8 |
8 |
28 |
33 |
|||
Non-GAAP income from operations |
$ 794 |
$ 1,712 |
$ 1,357 |
$ 3,085 |
|||
GAAP net income |
$ 333 |
$ 791 |
$ 552 |
$ 1,433 |
|||
Share-based compensation expense |
224 |
314 |
394 |
588 |
|||
Payroll tax expenses related to share-based compensation |
8 |
8 |
28 |
33 |
|||
Income tax adjustments |
(77) |
(22) |
(174) |
(78) |
|||
Non-GAAP net income |
$ 488 |
$ 1,091 |
$ 800 |
$ 1,976 |
|||
GAAP and Non-GAAP diluted shares |
2,502 |
2,615 |
2,499 |
2,609 |
|||
GAAP diluted earnings per share |
$ 0.13 |
$ 0.30 |
$ 0.22 |
$ 0.55 |
|||
Non-GAAP adjustments to net income |
0.06 |
0.12 |
0.10 |
0.21 |
|||
Non-GAAP diluted earnings per share |
$ 0.19 |
$ 0.42 |
$ 0.32 |
$ 0.76 |
|||
GAAP operating margin |
31 % |
48 % |
29 % |
46 % |
|||
Share-based compensation expense |
12 % |
11 % |
12 % |
11 % |
|||
Payroll tax expenses related to share-based compensation |
—% |
—% |
1 % |
1 % |
|||
Non-GAAP operating margin |
44 % |
59 % |
41 % |
57 % |
|||
GAAP income before provision for income taxes |
$ 545 |
$ 1,386 |
$ 898 |
$ 2,460 |
|||
GAAP provision for income taxes |
212 |
595 |
346 |
1,027 |
|||
GAAP effective tax rate |
39 % |
43 % |
39 % |
42 % |
|||
GAAP income before provision for income taxes |
$ 545 |
$ 1,386 |
$ 898 |
$ 2,460 |
|||
Share-based compensation and related payroll tax expenses |
232 |
322 |
422 |
621 |
|||
Non-GAAP income before provision for income taxes |
$ 777 |
$ 1,708 |
$ 1,320 |
$ 3,081 |
|||
Non-GAAP provision for income taxes |
289 |
617 |
520 |
1,105 |
|||
Non-GAAP effective tax rate |
37 % |
36 % |
39 % |
36 % |
|||
Net cash provided by operating activities |
$ 1,322 |
$ 1,341 |
$ 2,041 |
$ 2,626 |
|||
Purchases of property and equipment |
(268) |
(469) |
(595) |
(832) |
|||
Property and equipment acquired under capital leases |
— |
— |
(11) |
— |
|||
Free cash flow |
$ 1,054 |
$ 872 |
$ 1,435 |
$ 1,794 |