facebook's q3 2013 report
TRANSCRIPT
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Quarterly Earnings SlidesQ3 2013
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Non-GAAP Measures
In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. Thesenon-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance
prepared in accordance with U.S. GAAP. A reconciliation of non-GAAP financial measures to the corresponding
GAAP measures is provided in the appendix to this presentation.
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124 126 129 130 132 135 139 142 144
135 143 152 154160 169 179
182 188
98 105119 129
141 153167 181
189100
109126
139152 161
180195
208
457483
526552
584618
665699
728
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
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Daily Active Users (DAUs)
DAUs / MAUs
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q313
57% 57% 58% 58% 58% 59% 60% 61% 61%
Rest of World
Asia
Europe
US & Canada
Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.
In Millions
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176 179 183 186 189 193 195 198 199
221 229 239 246 253261 269 272 276
196 212234 255 277
298 319339 351
207225
245268
288304 327 346
362
800845 901
955
1,0071,056
1,1101,155
1,189
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
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Monthly Active Users (MAUs)
In MillionsRest of World
Asia
Europe
US & Canada
Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.
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Mobile Daily Active Users (Mobile DAUs)
In Millions
329
374
425
469507
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Mobile DAUs are defined as users who accessed Facebook through our mobile apps or our mobile website during a given day. The number of mobile DAUsdo not include Instagram users unless they would otherwise qualify as such users based on their other activities on Facebook.
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Mobile Monthly Active Users (Mobile MAUs)
In Millions
376432
488543
604
680
751
819874
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.
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Mobile-Only Monthly Active Users (Mobile-Only MAUs)
In Millions
126
157
189219
254
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Mobile-only MAUs are defined as users who accessed Facebook solely through mobile apps or our mobile website during a given month. The number ofmobile-only MAUs do not include Instagram users unless they would otherwise qualify as such users based on their other activities on Facebook.
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$798$943 $872
$992$1,086
$1,329$1,245
$1,599
$1,798$156
$188$186
$192$176
$256 $213
$214
$218
$954
$1,131$1,058
$1,184$1,262
$1,585
$1,458
$1,813$2,016
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Payments and other fees
Advertising
Revenue
In Millions
8
*In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 of ourForm 10-K filed on February 1, 2013.
*
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$482 $567 $525$590 $637
$780$679
$848$962
$290
$361$328
$346$341
$440
$423
$505
$538
$104
$115$118
$135$154
$198
$197
$247
$278
$78
$87$87
$113$130
$167
$159
$213
$238
$954
$1,131$1,058
$1,184$1,262
$1,585
$1,458
$1,813$2,016
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Rest of World
Asia
Europe
US & Canada
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Revenue by User Geography
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.
In Millions
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Rest of World
Asia
Europe
US & Canada
10
Advertising Revenue by User Geography
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.
$395 $462 $419 $479$538
$631 $552$721
$832
$245$306
$274$294
$295
$374
$367
$451
$482
$88
$95
$99
$115$133
$168$176
$225
$255
$71
$79$79
$104$120
$156$150
$202
$229
$798
$943$872
$992
$1,086
$1,329
$1,245
$1,599$1,798
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
In Millions
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Rest of World
Asia
Europe
US & Canada
$87$105 $106 $111 $99
$149$127 $127 $130
$45
$55 $54 $52
$46
$66
$56 $54 $56
$16
$20 $19 $20
$21
$30
$21 $22 $23
$7
$8 $8 $9
$10
$11
$9 $11
$9
$156
$188 $186 $192$176
$256
$213 $214 $218
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
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Payments & Other Fees Revenue by User Geography
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.
*In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47and 48 of our Form 10-K filed on February 1, 2013.
In Millions
*
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Average Revenue per User (ARPU)
$1.18$1.46 $1.38
$1.67 $1.76
$0.18
$0.26$0.21
$0.20$0.20
$1.37
$1.71$1.60
$1.87$1.96
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Europe
$0.50$0.58 $0.57
$0.68 $0.74
$0.08
$0.10 $0.07
$0.07$0.07
$0.58
$0.69$0.64
$0.75$0.81
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Asia
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they performa revenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements whererevenue is geographically apportioned based on the location of the marketer or developer. Please see Facebooks Form 10-Q for the quarter endedSeptember 30, 2013 for the definition of ARPU.
*In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 ofour Form 10-K filed on February 1, 2013.
$0.43$0.53
$0.48$0.60 $0.65
$0.04
$0.04$0.03
$0.03$0.03
$0.47
$0.56
$0.50
$0.63$0.67
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Rest of World
$1.11 $1.29 $1.15 $1.41
$1.53
$0.18
$0.25
$0.20
$0.19$0.19
$1.29
$1.54
$1.35
$1.60$1.72
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Worldwide
$2.87 $3.30 $2.85
$3.67$4.19
$0.53
$0.78
$0.65
$0.65$0.65
$3.40
$4.08
$3.50
$4.32 $4.85
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
US & Canada
Payments*
Advertising
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Share-Based Compensation Expense
13
$59 $74 $97$113 $138
$137 $135$175 $193
$986
$28 $24 $9$17 $14
$70 $76$103
$1,106
$179 $184 $170
$224$239
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
In MillionsPre-2011 RSUs
Post-2011 RSUs
Options & Other
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Expenses as a % of Revenue
12% 10% 12% 13% 10%
13% 12% 14% 15% 12%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Marketing & Sales
11% 10% 11% 10% 10%
8% 9%9%
9% 9%
19% 19% 20% 19% 18%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Research & Development
10% 9% 10% 8% 7%
12% 11% 12%10% 8%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
General & Administrative
Share-based compensation + Payroll tax related to share-based compensation All other expenses
25% 24%28% 25% 25%
26% 25%28%
26% 25%
Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Cost of Revenue
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Income (Loss) from Operations
$414$548
$381
($743)
$377$523
$373$562
$736
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
GAAP Income (Loss) from Operations (in millions)
$484
$624
$485 $515 $525
$736$563
$794$987
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Non-GAAP Income from Operations (in millions)
15
Non-GAAP income (loss) from operations excludes share-based compensation expense, payroll tax expenses related to share-basedcompensation, and related income tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP income (loss)from operations.
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Operating Margin
51% 55%46% 43% 42% 46% 39%
44%49%
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Non-GAAP Operating Margin
43% 48% 36%
(63%)
30% 33% 26% 31% 37%
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
GAAP Operating Margin
Non-GAAP operating margin excludes share-based compensation expense, payroll tax expenses related to share-based compensation, andrelated income tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP operating margin.
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Effective Tax Rate
Q312 through Q412 GAAP effective tax rates were influenced by significant share-based compensation expense resulting from our initial publicoffering, a portion of which is not tax-deductiblesee the Appendix for a reconciliation of this non-GAAP measure to GAAP effective tax rate.
GAAP Effective Tax Rate
Non-GAAP Effective Tax Rate
Q2 Q3 Q4 Q1 Q2 FY FY
($ in millions) 2012 2012 2012 2013 2013 2011 2012
GAAP (loss) income before provision for income taxes (765)$ 372$ 505$ 353 545 1,695 494GAAP (provision for) benefit from income taxes 608 (431) (441) (134) (212) (695) (441)
Effective Tax Rate 79% 116% 87% 38% 39% 41% 89%
Q2 Q3 Q4 Q1 Q2 FY FY
($ in millions) 2012 2012 2012 2013 2013 2011 2012
Non-GAAP income before provision for income taxes 493 520 718 543 777 1,919 2,217Non-GAAP provision for income taxes 198 209 292 231 289 755 900
Effective Tax Rate 40% 40% 41% 43% 37% 39% 41%
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Net Income (Loss)
$227 $302 $205
($157)($59)
$64$219
$333 $425
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Non-GAAP net income excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and relatedincome tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP net income.
$273 $360 $287 $295 $311 $426 $312$488
$621
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
GAAP Net Income (Loss) (in millions)
Non-GAAP Net Income (in millions)
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Diluted EPS
$0.10$0.14
$0.09
($0.08)
($0.02)
$0.03
$0.09$0.13
$0.17
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
$0.12
$0.15
$0.12 $0.12 $0.12
$0.17
$0.12
$0.19
$0.25
Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
GAAP Diluted EPS
Non-GAAP Diluted EPS
Non-GAAP diluted EPS excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and relatedincome tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP diluted EPS.
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Capital Investments
In MillionsProperty and equipment acquired
under capital leases
Purchases of property
and equipment
$293
$606
$1,235
$217
$473
$340
$510
$1,079
$1,575
2010 2011 2012
Annual
$1,037$879
$251
$11
$1,288
$890
2012 2013
YTD
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Appendix
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Effective Tax Rate (in millions) Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 FY2012
GAAP income before provision for income taxes 372$ 505$ 353$ 545$ 726$ 494$
GAAP provision for income taxes 431 441 134 212 301 441
GAAP effective tax rate 116% 87% 38% 39% 41% 89%
GAAP income before provision for income taxes 372$ 505$ 353$ 545$ 726$ 494$
Share-based compensation and related payroll tax expenses 148 213 190 232 251 1,723
Non-GAAP income before provision for income taxes 520$ 718$ 543$ 777$ 977$ 2,217$Non-GAAP provision for income taxes 209 292 231 289 356 900
Non-GAAP effective tax rate 40% 41% 43% 37% 36% 41%
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Reconciliations (continued)
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Reconciliations (continued)
Free Cash Flow (in millions) Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
Net cash provided by operating activities 565$ 510$ 441$ 240$ 250$ 681$ 719$ 1,322$ 950$Purchases of property and equipment 136 185 453 413 171 198 327 268 284Property and equpiment acquired under capital leases 102 80 38 52 161 89 11 - -
Free Cash Flow 327$ 245$ (50)$ (225)$ (82)$ 394$ 381$ 1,054$ 666$
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