FB
$141.99
Facebook
($2.97)
(2.05%)
Earnings Details
3rd Quarter September 2018
Tuesday, October 30, 2018 4:05:00 PM
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Summary

Facebook Beats

Facebook (FB) reported 3rd Quarter September 2018 earnings of $1.76 per share on revenue of $13.7 billion. The consensus earnings estimate was $1.46 per share on revenue of $13.8 billion. The Earnings Whisper number was $1.49 per share. Revenue grew 32.9% 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
$1.76
Earnings Whisper
$1.49
Consensus Estimate
$1.46
Reported Revenue
$13.73 Bil
Revenue Estimate
$13.81 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Facebook Reports Third Quarter 2018 Results

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

"Our community and business continue to grow quickly, and now more than 2 billion people use at least one of our services every day," said Mark Zuckerberg, Facebook founder and CEO. "We're building the best services for private messaging and stories, and there are huge opportunities ahead in video and commerce as well."

Third Quarter 2018 Financial Highlights


Three Months Ended September 30,


Year-over-Year %
Change

In millions, except percentages and per share amounts

2018


2017


Revenue:






   Advertising

$

13,539



$

10,142



33

%

   Payments and other fees

188



186



1

%

Total revenue

13,727



10,328



33

%

Total costs and expenses

7,946



5,206



53

%

Income from operations

$

5,781



$

5,122



13

%

Operating margin

42

%


50

%



Provision for income taxes

$

775








Effective tax rate

13

%







Net income

$

5,137



$

4,707



9

%

Diluted Earnings per Share (EPS)

$

1.76



$

1.59



11

%

Third Quarter 2018 Operational and Other Financial Highlights

  • Daily active users (DAUs) – DAUs were 1.49 billion on average for September 2018, an increase of 9% year-over-year.
  • Monthly active users (MAUs) – MAUs were 2.27 billion as of September 30, 2018, an increase of 10% year-over-year.
  • Mobile advertising revenue – Mobile advertising revenue represented approximately 92% of advertising revenue for the third quarter of 2018, up from approximately 88% of advertising revenue in the third quarter of 2017.
  • Effective Tax Rate – Our effective tax rate was 13%, which was lower than expected primarily due to the withdrawal in August of an appellate court ruling in the case of Altera Corp. v. Commissioner.
  • Capital expenditures – Capital expenditures for the third quarter of 2018 were $3.34 billion.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $41.21 billion at the end of the third quarter of 2018.
  • Headcount – Headcount was 33,606 as of September 30, 2018, an increase of 45% year-over-year.

In addition, we estimate that more than 2.6 billion people now use Facebook, WhatsApp, Instagram, or Messenger (our "Family" of services) each month, and more than 2 billion people use at least one of our Family of services every day on average.

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 5638138.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

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 July 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 September 30, 2018. In addition, please note that the date of this press release is October 30, 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 nine months ended September 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
September 30,


Nine Months Ended
September 30,



2018


2017


2018


2017


Revenue

$

13,727



$

10,328



$

38,924



$

27,681



Costs and expenses:









Cost of revenue

2,418



1,448



6,559



3,843



Research and development

2,657



2,052



7,418



5,805



Marketing and sales

1,928



1,170



5,379



3,351



General and administrative

943



536



2,475



1,831



    Total costs and expenses

7,946



5,206



21,831



14,830



Income from operations

5,781



5,122



17,093



12,851



Interest and other income, net

131



114



297



281



Income before provision for income taxes

5,912



5,236



17,390



13,132



Provision for income taxes

775



529



2,160



1,467



Net income

$

5,137



$

4,707



$

15,230



$

11,665



Less: Net income attributable to participating securities



3



1



13



Net income attributable to Class A and Class B common stockholders

$

5,137



$

4,704



$

15,229



$

11,652



Earnings per share attributable to Class A and Class B common









stockholders:









Basic

$

1.78



$

1.62



$

5.26



$

4.02



Diluted

$

1.76



$

1.59



$

5.20



$

3.95



Weighted average shares used to compute earnings per share attributable 









to Class A and Class B common stockholders:









Basic

2,885



2,904



2,895



2,898



Diluted

2,913



2,956



2,931



2,954



Share-based compensation expense included in costs and expenses:









Cost of revenue

$

72



$

47



$

202



$

128



Research and development

748



776



2,347



2,233



Marketing and sales

133



114



380



330



General and administrative

87



73



251



218



    Total share-based compensation expense

$

1,040



$

1,010



$

3,180



$

2,909



 

FACEBOOK, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions)


(Unaudited)



September 30, 2018


December 31, 2017


Assets





Current assets:






Cash and cash equivalents

$

9,637



$

8,079




Marketable securities

31,569



33,632




Accounts receivable, net of allowances of $207 and $189 as of September 30,








2018 and December 31, 2017, respectively

6,058



5,832




Prepaid expenses and other current assets

1,883



1,020




     Total current assets

49,147



48,563



Property and equipment, net

21,112



13,721



Intangible assets, net

1,451



1,884



Goodwill

18,304



18,221



Other assets

2,438



2,135



Total assets

$

92,452



$

84,524









Liabilities and stockholders' equity





Current liabilities:






Accounts payable

$

590



$

380




Partners payable

502



390




Accrued expenses and other current liabilities

4,255



2,892




Deferred revenue and deposits

115



98




     Total current liabilities

5,462



3,760



Other liabilities

6,648



6,417




     Total liabilities

12,110



10,177



Commitments and contingencies





Stockholders' equity:






Common stock and additional paid-in capital

42,352



40,584




Accumulated other comprehensive loss

(777)



(227)




Retained earnings

38,767



33,990




     Total stockholders' equity

80,342



74,347



Total liabilities and stockholders' equity

$

92,452



$

84,524



 

FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)



Three Months Ended
September 30,


Nine Months Ended
September 30,



2018


2017*


2018


2017*


Cash flows from operating activities









Net income

$

5,137



$

4,707



$

15,230



$

11,665



Adjustments to reconcile net income to net cash provided by operating









activities:









    Depreciation and amortization

1,107



773



3,090



2,172



    Share-based compensation

1,040



1,010



3,180



2,909



    Deferred income taxes

30



(94)



83



(152)



    Other

3



7



19



18



Changes in assets and liabilities:









   Accounts receivable

(489)



(458)



(328)



(235)



   Prepaid expenses and other current assets

8



(57)



(889)



(634)



   Other assets

(40)



47



(99)



130



   Accounts payable

37



31



88



(7)



   Partners payable

63



32



116



22



   Accrued expenses and other current liabilities

350



(62)



1,044



95



   Deferred revenue and deposits

24



16



20



12



   Other liabilities

226



176



102



550



Net cash provided by operating activities

7,496



6,128



21,656



16,545



Cash flows from investing activities









Purchases of property and equipment

(3,343)



(1,755)



(9,614)



(4,470)



Purchases of marketable securities

(4,375)



(6,273)



(12,658)



(20,410)



Sales of marketable securities

2,492



3,651



11,104



7,649



Maturities of marketable securities

1,053



730



3,391



2,228



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

(72)



(98)



(137)



(106)



Other investing activities, net

(3)



16



(4)



(6)



Net cash used in investing activities

(4,248)



(3,729)



(7,918)



(15,115)



Cash flows from financing activities









Taxes paid related to net share settlement of equity awards

(905)



(866)



(2,663)



(2,360)



Repurchases of Class A common stock

(4,256)



(640)



(9,379)



(1,018)



Other financing activities, net

3



(26)



11



(14)



Net cash used in financing activities

(5,158)



(1,532)



(12,031)



(3,392)



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

(14)



70



(167)



192



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

(1,924)



937



1,540



(1,770)



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

11,668



6,402



8,204



9,109



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

$

9,744



$

7,339



$

9,744



$

7,339












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









condensed consolidated balance sheets









Cash and cash equivalents

$

9,637



$

7,201



$

9,637



$

7,201



Restricted cash, included in prepaid expenses and other current assets

7



41



7



41



Restricted cash, included in other assets

100



97



100



97



Total cash, cash equivalents, and restricted cash

$

9,744



$

7,339



$

9,744



$

7,339




*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
September 30,


Nine Months Ended
September 30,



2018


2017*


2018


2017*


Supplemental cash flow data









Cash paid during the period for:









Income taxes, net

$

447



$

434



$

2,728



$

1,793



Non-cash investing and financing activities:









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

$

382



$

300



$

613



$

540



Settlement of acquisition-related contingent consideration liability

$



$

102



$



$

102



Change in unsettled repurchases of Class A common stock

$



$

(10)



$

6



$

20




*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
September 30,


Nine Months Ended
September 30,



2018


2017


2018


2017


GAAP revenue

$

13,727



$

10,328



$

38,924



$

27,681



   Foreign exchange effect on 2018 revenue using 2017 rates

159





(749)





Revenue excluding foreign exchange effect

$

13,886





$

38,175





GAAP revenue year-over-year change %

33

%




41

%




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

34

%




38

%




GAAP advertising revenue

$

13,539



$

10,142



$

38,373



$

27,163



   Foreign exchange effect on 2018 advertising revenue using 2017 rates

159





(748)





Advertising revenue excluding foreign exchange effect

$

13,698





$

37,625





GAAP advertising revenue year-over-year change %

33

%




41

%




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

35

%




39

%













Net cash provided by operating activities

$

7,496



$

6,128



$

21,656



$

16,545



   Purchases of property and equipment

(3,343)



(1,755)



(9,614)



(4,470)



Free cash flow

$

4,153



$

4,373



$

12,042



$

12,075



 

Cision View original content:http://www.prnewswire.com/news-releases/facebook-reports-third-quarter-2018-results-300740693.html

SOURCE Facebook