FB
$159.42
Facebook
$.64
.40%
Earnings Details
2nd Quarter June 2018
Wednesday, July 25, 2018 4:05:00 PM
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Summary

Facebook Misses

Facebook (FB) reported 2nd Quarter June 2018 earnings of $1.74 per share on revenue of $13.2 billion. The consensus earnings estimate was $1.75 per share on revenue of $13.4 billion. The Earnings Whisper number was $1.90 per share. Revenue grew 41.9% on a year-over-year basis.

Facebook Inc is a social networking website which builds products that creates utility for users, developers and advertisers.

Results
Reported Earnings
$1.74
Earnings Whisper
$1.90
Consensus Estimate
$1.75
Reported Revenue
$13.23 Bil
Revenue Estimate
$13.43 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Facebook Reports Second Quarter 2018 Results

MENLO PARK, Calif., July 25, 2018 /PRNewswire/ -- Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended June 30, 2018.

"Our community and business continue to grow quickly," said Mark Zuckerberg, Facebook founder and CEO. "We are committed to investing to keep people safe and secure, and to keep building meaningful new ways to help people connect."

Second Quarter 2018 Financial Highlights


Three Months Ended June 30,


Year-over-Year %
Change

In millions, except percentages and per share amounts

2018


2017


Revenue:






   Advertising

$

13,038



$

9,164



42

%

   Payments and other fees

193



157



23

%

Total revenue

13,231



9,321



42

%

Total costs and expenses

7,368



4,920



50

%

Income from operations

$

5,863



$

4,401



33

%

Operating margin

44

%


47

%



Provision for income taxes

$

762






Effective tax rate

13

%





Net income

$

5,106



$

3,894



31

%

Diluted Earnings per Share (EPS)

$

1.74



$

1.32



32

%

Second Quarter 2018 Operational and Other Financial Highlights

  • Daily active users (DAUs) – DAUs were 1.47 billion on average for June 2018, an increase of 11% year-over-year.
  • Monthly active users (MAUs) – MAUs were 2.23 billion as of June 30, 2018, an increase of 11% year-over-year.
  • Mobile advertising revenue – Mobile advertising revenue represented approximately 91% of advertising revenue for the second quarter of 2018, up from approximately 87% of advertising revenue in the second quarter of 2017.
  • Capital expenditures – Capital expenditures for the second quarter of 2018 were $3.46 billion.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $42.31 billion at the end of the second quarter of 2018.
  • Headcount – Headcount was 30,275 as of June 30, 2018, an increase of 47% 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 7356229.

About Facebook

Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. 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 products and changes to existing products as well as other new business initiatives; our emphasis on user growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing safety, security, and content review efforts; competition; litigation and government inquiries; 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 Quarterly Report on Form 10-Q filed with the SEC on April 26, 2018, 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 June 30, 2018. In addition, please note that the date of this press release is July 25, 2018, 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, 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 and six months ended June 30, 2018 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. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.

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
June 30,


Six Months Ended
June 30,



2018


2017


2018


2017


Revenue

$

13,231



$

9,321



$

25,197



$

17,353



Costs and expenses:









Cost of revenue

2,214



1,237



4,141



2,395



Research and development

2,523



1,919



4,761



3,753



Marketing and sales

1,855



1,124



3,450



2,181



General and administrative

776



640



1,532



1,295



    Total costs and expenses

7,368



4,920



13,884



9,624



Income from operations

5,863



4,401



11,313



7,729



Interest and other income, net

5



87



165



168



Income before provision for income taxes

5,868



4,488



11,478



7,897



Provision for income taxes

762



594



1,385



938



Net income

$

5,106



$

3,894



$

10,093



$

6,959



Less: Net income attributable to participating securities



4



1



10



Net income attributable to Class A and Class B common stockholders

$

5,106



$

3,890



$

10,092



$

6,949



Earnings per share attributable to Class A and Class B common









stockholders:









Basic

$

1.76



$

1.34



$

3.48



$

2.40



Diluted

$

1.74



$

1.32



$

3.43



$

2.36



Weighted average shares used to compute earnings per share attributable









to Class A and Class B common stockholders:









Basic

2,895



2,900



2,900



2,895



Diluted

2,930



2,951



2,939



2,950



Share-based compensation expense included in costs and expenses:









Cost of revenue

$

74



$

47



$

130



$

81



Research and development

881



787



1,599



1,457



Marketing and sales

139



120



248



216



General and administrative

92



78



164



145



    Total share-based compensation expense

$

1,186



$

1,032



$

2,141



$

1,899



 

FACEBOOK, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions)


(Unaudited)





June 30, 2018


December 31, 2017


Assets





Current assets:






Cash and cash equivalents

$

11,552



$

8,079




Marketable securities

30,757



33,632




Accounts receivable, net of allowances of $198 and $189 as of June 30,
2018 and December 31, 2017, respectively

5,590



5,832




Prepaid expenses and other current assets

1,934



1,020




      Total current assets

49,833



48,563



Property and equipment, net

18,357



13,721



Intangible assets, net

1,573



1,884



Goodwill

18,263



18,221



Other assets

2,265



2,135



Total assets

$

90,291



$

84,524










Liabilities and stockholders' equity





Current liabilities:






Accounts payable

$

419



$

380




Partners payable

440



390




Accrued expenses and other current liabilities

3,720



2,892




Deferred revenue and deposits

91



98




      Total current liabilities

4,670



3,760



Other liabilities

6,239



6,417




      Total liabilities

10,909



10,177



Commitments and contingencies





Stockholders' equity:






Common stock and additional paid-in capital

41,832



40,584




Accumulated other comprehensive loss

(687)



(227)




Retained earnings

38,237



33,990




      Total stockholders' equity

79,382



74,347



Total liabilities and stockholders' equity

$

90,291



$

84,524



 

FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,



2018


2017*


2018


2017*


Cash flows from operating activities









Net income

$

5,106



$

3,894



$

10,093



$

6,959



Adjustments to reconcile net income to net cash provided by operating









activities:









    Depreciation and amortization

1,034



728



1,983



1,400



    Share-based compensation

1,186



1,032



2,141



1,899



    Deferred income taxes

101



26



54



(58)



    Other

10



8



18



12



Changes in assets and liabilities:









   Accounts receivable

(627)



(386)



161



223



   Prepaid expenses and other current assets

(535)



(212)



(898)



(577)



   Other assets

(77)



51



(59)



82



   Accounts payable

49



(28)



50



(38)



   Partners payable

51



(7)



53



(10)



   Accrued expenses and other current liabilities

(17)



96



690



157



   Deferred revenue and deposits



6



(4)



(4)



   Other liabilities

18



152



(124)



373



Net cash provided by operating activities

6,299



5,360



14,158



10,418



Cash flows from investing activities









Purchases of property and equipment

(3,459)



(1,444)



(6,272)



(2,715)



Purchases of marketable securities

(4,261)



(7,145)



(8,283)



(14,137)



Sales of marketable securities

4,282



2,236



8,612



3,998



Maturities of marketable securities

1,071



899



2,338



1,498



Acquisitions of businesses, net of cash acquired, and purchases of intangible assets

(16)



(8)



(65)



(8)



Other investing activities, net



(4)



(1)



(22)



Net cash used in investing activities

(2,383)



(5,466)



(3,671)



(11,386)



Cash flows from financing activities









Taxes paid related to net share settlement of equity awards

(927)



(724)



(1,758)



(1,495)



Repurchases of Class A common stock

(3,349)



(150)



(5,123)



(378)



Other financing activities, net

4



5



7



12



Net cash used in financing activities

(4,272)



(869)



(6,874)



(1,861)



Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(186)



94



(149)



122



Net (decrease) increase in cash, cash equivalents, and restricted cash

(542)



(881)



3,464



(2,707)



Cash, cash equivalents, and restricted cash at beginning of year

12,210



7,283



8,204



9,109



Cash, cash equivalents, and restricted cash at end of the period

$

11,668



$

6,402



$

11,668



$

6,402












Reconciliation of cash, cash equivalents, and restricted cash to the









condensed consolidated balance sheets









Cash and cash equivalents

$

11,552



$

6,252



$

11,552



$

6,252



Restricted cash, included in prepaid expenses and other current assets

11



59



11



59



Restricted cash, included in other assets

105



91



105



91



Total cash, cash equivalents, and restricted cash

$

11,668



$

6,402



$

11,668



$

6,402




*Prior-period information has been retrospectively adjusted due to our adoption of ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) on January 1, 2018.

 

FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,



2018


2017*


2018


2017*


Supplemental cash flow data









Cash paid during the period for:









Income taxes, net

$

1,545



$

695



$

2,281



$

1,359



Non-cash investing and financing activities:









Net change in prepaids and liabilities related to property and equipment additions

$

(198)



$

170



$

231



$

240



Change in unsettled repurchases of Class A common stock

$

(135)



$

30



$

6



$

30




*Prior-period information has been retrospectively adjusted due to our adoption of ASU No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic 230) on January 1, 2018.

 

Reconciliation of GAAP to Non-GAAP Results


(In millions, except percentages)


(Unaudited)



Three Months Ended
June 30,


Six Months Ended
June 30,



2018


2017


2018


2017


GAAP revenue

$

13,231



$

9,321



$

25,197



$

17,353



   Foreign exchange effect on 2018 revenue using 2017 rates

(373)





(908)





Revenue excluding foreign exchange effect

$

12,858





$

24,289





GAAP revenue year-over-year change %

42

%




45

%




Revenue excluding foreign exchange effect year-over-year change %

38

%




40

%




GAAP advertising revenue

$

13,038



$

9,164



$

24,833



$

17,021



   Foreign exchange effect on 2018 advertising revenue using 2017 rates

(371)





(906)





Advertising revenue excluding foreign exchange effect

$

12,667





$

23,927





GAAP advertising revenue year-over-year change %

42

%




46

%




Advertising revenue excluding foreign exchange effect year-over-year change %

38

%




41

%













Net cash provided by operating activities

$

6,299



$

5,360



$

14,158



$

10,418



   Purchases of property and equipment

(3,459)



(1,444)



(6,272)



(2,715)



Free cash flow

$

2,840



$

3,916



$

7,886



$

7,703



 

 

Cision View original content:http://www.prnewswire.com/news-releases/facebook-reports-second-quarter-2018-results-300686623.html

SOURCE Facebook