Facebook Reports First Quarter 2017 Results

                 Facebook Reports First Quarter 2017 Results

PR Newswire

MENLO PARK, Calif., May 3, 2017

MENLO PARK, Calif., May 3, 2017 /PRNewswire/ -- Facebook, Inc. (NASDAQ: FB)
today reported financial results for the quarter ended March 31, 2017.

Founded in 2004, Facebook's mission is to make the world more open and
connected. People use Facebook to stay connected with friends and family, to
discover what's going on in the world, and to share and express what matters
to them. (PRNewsFoto/Facebook, Inc.)

"We had a good start to 2017," said Mark Zuckerberg, Facebook founder and CEO.
"We're continuing to build tools to support a strong global community."

First Quarter 2017 Financial Highlights

Facebook is no longer reporting non-GAAP expenses, income, tax rate, and
earnings per share (EPS).

                                              Three Months Ended    Year-over-
                                              March 31,             Year %
In millions, except percentages and per share 2017       2016       Change
amounts
Revenue:
   Advertising                                $ 7,857    $ 5,201    51     %
   Payments and other fees                    175        181        (3)    %
Total revenue                                 8,032      5,382      49     %
Total costs and expenses^(1)                  4,705      3,372      40     %
Income from operations^(1)                    $ 3,327    $ 2,010    66     %
Operating margin^(1)                          41      %  37      %
Provision for income taxes                    $ 344
Effective tax rate                            10      %
Net income^(1)                                $ 3,064    $ 1,738    76     %
Diluted EPS^(1)                               $ 1.04     $ 0.60     73     %

    In the fourth quarter of 2016, we elected to early adopt Accounting
    Standards Update No. 2016-09, Compensation - Stock Compensation (Topic
    718): Improvement to Employee Share-based Payment Accounting (ASU
    2016-09). We are required to reflect any adoption adjustments as of
    January 1, 2016, the beginning of the annual period that includes the
(1) interim period of adoption. As such, certain financial highlights data for
    the three months ended March 31, 2016, had been adjusted to include the
    impact of ASU 2016-09 adoption. See Note 1 - Summary of Significant
    Accounting Policies (Note 1) in the notes to our consolidated financial
    statements in our Annual Report on Form 10-K for the year ended December
    31, 2016 for detailed adoption information.

First Quarter 2017 Operational and Other Financial Highlights

  o Daily active users (DAUs) – DAUs were 1.28 billion on average for March
    2017, an increase of 18% year-over-year.
  o Monthly active users (MAUs) – MAUs were 1.94 billion as of March 31, 2017,
    an increase of 17% year-over-year.
  o Mobile advertising revenue – Mobile advertising revenue represented
    approximately 85% of advertising revenue for the first quarter of 2017, up
    from approximately 82% of advertising revenue in the first quarter of
    2016.
  o Capital expenditures – Capital expenditures for the first quarter of 2017
    were $1.27 billion.
  o Cash and cash equivalents and marketable securities – Cash and cash
    equivalents and marketable securities were $32.31 billion at the end of
    the first quarter of 2017.
  o Headcount – Headcount was 18,770 as of March 31, 2017, an increase of 38%
    year-over-year.

Webcast and Conference Call Information

Facebook will host a conference call to discuss the results at 2 p.m. PT / 5
p.m. ET today. The live webcast of Facebook's earnings conference call can be
accessed at investor.fb.com, along with the earnings press release, financial
tables, and slide presentation. Facebook uses the investor.fb.com and
newsroom.fb.com websites as well as Mark Zuckerberg's Facebook Page
(https://www.facebook.com/zuck) as means of disclosing material non-public
information and for complying with its disclosure obligations under Regulation
FD.

Following the call, a replay will be available at the same website. A
telephonic replay will be available for one week following the conference call
at +1 (404) 537-3406 or +1 (855) 859-2056, conference ID 93279401.

About Facebook

Founded in 2004, Facebook's mission is to give people the power to share and
make the world more open and connected. People use Facebook to stay connected
with friends and family, to discover what's going on in the world, and to
share and express what matters to them.

Contacts

Investors:
Deborah Crawford
investor@fb.com / investor.fb.com

Press:
Vanessa Chan
press@fb.com / newsroom.fb.com

Forward Looking Statements

This press release contains forward-looking statements regarding our future
business expectations, which are subject to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are only predictions and may differ materially from actual results
due to a variety of factors including: our ability to retain or increase users
and engagement levels; our reliance on advertising revenue; our dependency on
mobile operating systems, networks, and standards that we do not control;
risks associated with new product development and their introduction as well
as other new business initiatives; our emphasis on user growth and engagement
and the user experience over short-term financial results; competition;
litigation; privacy and regulatory concerns; risks associated with
acquisitions; security breaches; and our ability to manage growth and
geographically-dispersed operations. These and other potential risks and
uncertainties that could cause actual results to differ from the results
predicted are more fully detailed under the caption "Risk Factors" in our
Annual Report on Form 10-K filed with the SEC on February 3, 2017, which is
available on our Investor Relations website at investor.fb.com and on the SEC
website at www.sec.gov. Additional information will also be set forth in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. In
addition, please note that the date of this press release is May 3, 2017, and
any forward-looking statements contained herein are based on assumptions that
we believe to be reasonable as of this date. We undertake no obligation to
update these statements as a result of new information or future events.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are
prepared and presented in accordance with generally accepted accounting
principles in the United States (GAAP), we use the following non-GAAP
financial measures: revenue excluding foreign exchange effect and advertising
revenue excluding foreign exchange effect; and free cash flow. The
presentation of these financial measures is not intended to be considered in
isolation or as a substitute for, or superior to, financial information
prepared and presented in accordance with GAAP. Investors are cautioned that
there are material limitations associated with the use of non-GAAP financial
measures as an analytical tool. In addition, these measures may be different
from non-GAAP financial measures used by other companies, limiting their
usefulness for comparison purposes. We compensate for these limitations by
providing specific information regarding the GAAP amounts excluded from these
non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful
supplemental information about the financial performance of our business,
enable comparison of financial results between periods where certain items may
vary independent of business performance, and allow for greater transparency
with respect to key metrics used by management in operating our business.

We exclude the following items from our non-GAAP financial measures:

Foreign exchange effect on revenue. We translated revenue for the three months
ended March 31, 2017 using the prior year's monthly exchange rates for our
settlement currencies other than the U.S. dollar, which we believe is a useful
metric that facilitates comparison to our historical performance.

Purchases of property and equipment. We subtract purchases of property and
equipment in our calculation of free cash flow because we believe that this
methodology can provide useful supplemental information to help investors
better understand underlying trends in our business.

For more information on our non-GAAP financial measures and a reconciliation
of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to
Non-GAAP Results" table in this press release.

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except for per share amounts)
(Unaudited)
                                                            Three Months Ended
                                                            March 31,
                                                            2017      2016^(1)
Revenue                                                     $ 8,032   $ 5,382
Costs and expenses:
Cost of revenue                                             1,159     838
Research and development                                    1,834     1,343
Marketing and sales                                         1,057     826
General and administrative                                  655       365
   Total costs and expenses                                 4,705     3,372
Income from operations                                      3,327     2,010
Interest and other income, net                              81        56
Income before provision for income taxes                    3,408     2,066
Provision for income taxes                                  344       328
Net income                                                  $ 3,064   $ 1,738
Less: Net income attributable to participating securities   5         6
Net income attributable to Class A and Class B common       $ 3,059   $ 1,732
stockholders
Earnings per share attributable to Class A and Class B
common stockholders:
Basic                                                       $ 1.06    $ 0.61
Diluted                                                     $ 1.04    $ 0.60
Weighted average shares used to compute earnings per share
attributable to Class A and Class B common stockholders:
Basic                                                       2,891     2,843
Diluted                                                     2,944     2,905
Share-based compensation expense included in costs and
expenses:
Cost of revenue                                             $ 34      $ 22
Research and development                                    670       586
Marketing and sales                                         96        82
General and administrative                                  67        56
   Total share-based compensation expense                   $ 867     $ 746

    We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. Our
    condensed consolidated statement of income for the three months ended
(1) March 31, 2016, had been adjusted to include the impact of ASU 2016-09
    adoption. See Note 1 in the notes to our consolidated financial statements
    in our Annual Report on Form 10-K for the year ended December 31, 2016 for
    detailed adoption information.

 

FACEBOOK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
                                             March 31, 2017  December 31, 2016
Assets
Current assets:
 Cash and cash equivalents                   $   7,104       $    8,903
 Marketable securities                       25,202          20,546
 Accounts receivable, net of allowances for
 doubtful accounts of $86 and $94 as of      3,415           3,993
 March 31, 2017 and December 31, 2016,
 respectively
 Prepaid expenses and other current assets   1,209           959
      Total current assets                   36,930          34,401
Property and equipment, net                  9,462           8,591
Intangible assets, net                       2,360           2,535
Goodwill                                     18,126          18,122
Other assets                                 1,836           1,312
Total assets                                 $   68,714      $    64,961
Liabilities and stockholders' equity
Current liabilities:
 Accounts payable                            $   170         $    302
 Partners payable                            278             280
 Accrued expenses and other current          2,400           2,203
 liabilities
 Deferred revenue and deposits               80              90
      Total current liabilities              2,928           2,875
Other liabilities                            3,598           2,892
      Total liabilities                      6,526           5,767
Stockholders' equity:
 Common stock and additional paid-in capital 38,639          38,227
 Accumulated other comprehensive loss        (626)           (703)
 Retained earnings                           24,175          21,670
      Total stockholders' equity             62,188          59,194
Total liabilities and stockholders' equity   $   68,714      $    64,961

 

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
                                                            Three Months Ended
                                                            March 31,
                                                            2017      2016^(1)
Cash flows from operating activities
Net income                                                  $ 3,064   $ 1,738
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization                               671       552
Share-based compensation                                    867       746
Deferred income taxes                                       (84)      (77)
Other                                                       5         13
Changes in assets and liabilities:
Accounts receivable                                         609       267
Prepaid expenses and other current assets                   (365)     (107)
Other assets                                                31        15
Accounts payable                                            (10)      2
Partners payable                                            (3)       (3)
Accrued expenses and other current liabilities              61        (18)
Deferred revenue and deposits                               (10)      (2)
Other liabilities                                           222       351
Net cash provided by operating activities                   5,058     3,477
Cash flows from investing activities
Purchases of property and equipment                         (1,271)   (1,132)
Purchases of marketable securities                          (6,992)   (3,126)
Sales of marketable securities                              1,762     2,013
Maturities of marketable securities                         599       537
Acquisitions of businesses, net of cash acquired, and       —         (1)
purchases of intangible assets
Change in restricted cash and deposits                      11        33
Net cash used in investing activities                       (5,891)   (1,676)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards (771)     —
Principal payments on capital lease and other financing     —         (312)
obligations
Repurchases of Class A common stock                         (228)     —
Other financing activities, net                             7         2
Net cash used in financing activities                       (992)     (310)
Effect of exchange rate changes on cash and cash            26        58
equivalents
Net increase (decrease) in cash and cash equivalents        (1,799)   1,549
Cash and cash equivalents at beginning of period            8,903     4,907
Cash and cash equivalents at end of period                  $ 7,104   $ 6,456

 

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
                                                            Three Months Ended
                                                            March 31,
                                                            2017      2016^(1)
Supplemental cash flow data
Cash paid during the period for:
Interest                                                    $  —      $  11
Income taxes, net                                           $  664    $  170
Non-cash investing activities:
Net change in accounts payable, accrued expenses and other
current liabilities,                                        $  (26)   $  52
and other liabilities related to property and equipment
additions

    We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. Our
    condensed consolidated statements of cash flow for the three months ended
(1) March 31, 2016, had been adjusted to include the impact of ASU 2016-09
    adoption. See Note 1 in the notes to our consolidated financial statements
    in our Annual Report on Form 10-K for the year ended December 31, 2016 for
    detailed adoption information.

 

Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
                                                           Three Months Ended
                                                           March 31,
                                                           2017       2016
GAAP revenue                                               $ 8,032    $ 5,382
   Foreign exchange effect on 2017 revenue using 2016      22
rates
Revenue excluding foreign exchange effect                  $ 8,054
GAAP revenue year-over-year change %                       49      %
Revenue excluding foreign exchange effect year-over-year   50      %
change %
GAAP advertising revenue                                   $ 7,857    $ 5,201
   Foreign exchange effect on 2017 advertising revenue     22
using 2016 rates
Advertising revenue excluding foreign exchange effect      $ 7,879
GAAP advertising revenue year-over-year change %           51      %
Advertising revenue excluding foreign exchange effect      51      %
year-over-year change %
Net cash provided by operating activities^(1)              $ 5,058    $ 3,477
   Purchases of property and equipment                     (1,271)    (1,132)
Free cash flow^(1)                                         $ 3,787    $ 2,345

    We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. Net
    cash provided by operating activities and free cash flow for the three
(1) months ended March 31, 2016, had been adjusted to include the impact of
    ASU 2016-09 adoption. See Note 1 in the notes to our consolidated
    financial statements in our Annual Report on Form 10-K for the year ended
    December 31, 2016 for detailed adoption information.

 

To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/facebook-reports-first-quarter-2017-results-300450988.html

SOURCE Facebook, Inc.

Website: https://www.facebook.com
Press spacebar to pause and continue. Press esc to stop.