fb q3 investor deck

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Quarterly Earnings SlidesQ3 2012


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Safe Harbor

This presentation contains forward-looking statements, which are subject to the safe harbor provisions of the

Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts

contained in this presentation, including statements regarding our estimates of future stock-basedcompensation expense, are forward-looking statements. These forward-looking statements are only

predictions and may differ materially from actual results due to a variety of factors, including variations in the

future price of our common stock as well as future grants and forfeitures of equity awards. In addition, please

note that the date of this presentation is October 23, 2012, 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.

In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These

non-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. Please also see the appendix to this

presentation for information concerning limitations of our key user metrics.


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3

Monthly Active Users (MAUs)

Please see Facebook's Form 10-Q for the quarter ended September 30, 2012 for definitions of user activity used to determine the number of our MAUs, DAUs andmobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and

mobile MAUs based on activity that is shared back to Facebook.

In June 2012, we discovered an error in the algorithm we used to estimate the geographic location of our users that affected our attribution of certain userlocations for the first quarter of 2012. The first quarter of 2012 user metrics reflect a reclassification to more correctly attribute users by geographic region.

144 154 163 169 176 179 183 186 189

167 183201 212

221 229 239 246253

113138

156174

196 212234 255

277

126133

161

183207

225245

268288

550

608

680

739

800845

901

9551,007

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Millions of MAUs

Rest of WorldAsia

Europe

US & Canada


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Daily Active Users (DAUs)

92 99 105 117124 126 129 130 132

94 107120

127 135143 152 154 160

5464

72 85

98 105119 129

141

5458

74

87100

109126

139152

293327

372

417

457483

526552

584

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

DAUs / MAUs

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

53% 54% 55% 56% 57% 57% 58% 58% 58%

Millions of DAUs

Rest of WorldAsia

Europe

US & Canada

Please see Facebook's Form 10-Q for the quarter ended September 30, 2012 for definitions of user activity used to determine the number of our MAUs, DAUs andmobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and

mobile MAUs based on activity that is shared back to Facebook.For non-worldwide DAU user numbers presented for the periods marked March 31, 2012 and June 30, 2012, the figures represent an average of the first 25 daysof the period and the last 27 days of the period, respectively, due to the algorithm error described in the MAU note on slide 3. These average numbers do notmeaningfully differ from the average numbers when calculated over a full month.


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Mobile Monthly Active Users (Mobile MAUs)

Millions of Mobile MAUs

Please see Facebook's Form 10-Q for the quarter ended September 30, 2012 for definitions of user activity used to determine the number of our MAUs,DAUs and mobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs,

DAUs, and mobile MAUs based on activity that is shared back to Facebook.

196

245288

325376

432

488

543

604

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12


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Payments and other feesAdvertising

6

Revenue

Millions of Dollars

$450

$655 $637$776 $798

$943$872

$992$1,086

$17

$76 $94

$119$156

$188$186

$192

$176

$467

$731 $731

$895$954

$1,131$1,058

$1,184$1,262

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12


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Rest of WorldAsia

Europe

US & Canada

7

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 a

revenue-generating activity. This allocation differs from our revenue by geography disclosure in our consolidated financial statements whererevenue is geographically apportioned based on the location of the advertiser or developer.

Millions of Dollars

$271

$412 $394 $471 $482

$567

$525

$590 $637$134

$218 $229

$275 $290

$361$328

$346$341

$37

$58 $62

$82$104

$115

$118

$135$154

$25

$43 $47

$65$78

$87

$87

$113$130

$467

$731 $731

$895$954

$1,131$1,058

$1,184

$1,262

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12


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Rest of WorldAsia

Europe

US & Canada

8

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 consolidated financial statements whererevenue is geographically apportioned based on the location of the advertiser or developer.

$260$359 $332 $394 $395

$462$419

$479$538

$130

$201$206

$245 $245

$306$274

$294

$295

$36

$53 $56

$74 $88

$95

$99

$115

$133

$24

$41

$44

$61 $71

$79

$79

$104$120

$450

$655$637

$776$798

$943

$872

$992

$1,086

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Millions of Dollars


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Rest of WorldAsia

Europe

US & Canada

9

Payments & Other 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 consolidated financial statements whererevenue is geographically apportioned based on the location of the advertiser or developer.

$11

$53$62 $77

$87$105 $106 $111 $99

$17

$23

$30

$45

$55 $54$52

$46

$5

$6

$8

$16

$20 $19 $20

$21

$2

$3

$4

$7

$8 $8 $9$10

$17

$76

$94

$119

$156

$188 $186$192

$176

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Millions of Dollars


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Payments Revenue Recognition Timing

Therefore starting in Q4, we expect to recordall Payments revenues in the month thetransaction occurs, net of estimated refunds orchargebacks. We anticipate that thischange will result in a one-time increasein Payments revenue in the fourthquarter as we recognize revenue from an

extra month of payments transactions(those occurring in September throughDecember.)

In Q3 and prior, due to insufficient transactionhistory, Payments revenues have been recognizedafter the claim period lapses.

For example, transactions occurring in Juneare recognized as revenue 30 days later, inJuly, and included in Q3 revenue. So Q3revenue reflects transactions that occurred

during the months of June, July and August.

In Q4 we will have 24 months of historicaltransactional information at which time we believewe will be able to reasonably estimate futurerefunds and chargebacks.

Q 3 2012 Q 4 2012 Q1 2013

June Jul Aug Sept Oct Nov Jan MarFebDec

Payments terms and conditions provide for a 30-day claim period following aPayments transaction during which the customer may dispute the transaction.


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Average Revenue per User (ARPU)

$0.36

$0.46$0.43

$0.50

$0.56 $0.56 $0.53 $0.55$0.58

Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12

Asia

$1.93

$2.77$2.49

$2.84 $2.80

$3.20$2.90

$3.20$3.40

Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12

US & Canada& Canada

$0.84

$1.25 $1.19$1.33 $1.34

$1.60

$1.40 $1.43 $1.37

Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12

Europe

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 consolidated financial statements where

revenue is geographically apportioned based on the location of the advertiser or developer. The ARPU amount for US & Canada region in Q12012 reflects an adjustment based on the reclassification of certain users between geographical regions to more correctly attribute users bygeographic region.

$0.90

$1.26$1.14

$1.26

$1.24

$1.38

$1.21

$1.28 $1.29

Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12

Worldwide

$0.22

$0.33$0.31

$0.38$0.40

$0.41

$0.37

$0.44$0.47

Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12

Rest of the World


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Share-Based Compensation Expense

$25$58 $59 $74 $97

$113 $138$135

$986

$28 $30

$4 $6 $7

$64 $70 $76$103

$1,106

$179 $190

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12E

~

Millions of Dollars

Pre-2011 RSUsPost-2011 RSUs

Options & Other

Q4 2012 expenses are estimates and exclude any potential impact of future acquisitions.


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Expenses as a % of Revenue

11% 9% 12% 11% 12%

12% 11%14%

33%

13%

Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Marketing & Sales

24% 22%26% 25% 25%

25%22%

26%

31%

26%

Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Cost of Revenue

8% 7% 9% 9%11%

11% 11%14%

60%

19%

Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Research & Development

6% 7% 8% 11% 10%

9% 8% 10%

39%

12%

Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

General & Administrative

We have reclassified certain prior period amounts in marketing and sales to general and administrative expense to conform to our current

period presentation. These reclassifications did not affect revenue, total costs and expenses, income (loss) from operations, or net (loss)income.

Share-based compensation + Payroll tax related to share-based compensation All other expenses


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14

GAAP Income (Loss) from Operations & Margin

$216$437 $388 $407 $414

$548$381

$(743)

$377

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Income (Loss) from Operations ($M)

46%60% 53% 45% 43% 48% 36%

(63%)

30%

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Operating Margin


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15

Effective Tax Rate

Q2 and Q3 effective tax rates were influenced by significant share-based compensation expense resulting from our initial publicoffering, a portion of which is not tax-deductible. A combination of tax benefits recorded in Q2 and tax provisions in Q1 andQ3 result in an approximately 0% effective tax rate in the year-to-date period.

(in millions) Q1 Q2 Q3

2012 2012 2012 2012

Revenue 1,058$ 1,184$ 1,262$ 3,504$

Costs and expenses:

Cost of revenue 277 367 322 967

Research and development 153 705 244 1,102

Marketing and sales 143 392 168 703

General and administrative 104 463 151 717

Total costs and expenses 677 1,927 885 3,489

Income from operations 381 (743) 377 15

Interest and other income (expense), net

Interest expense (13) (10) (11) (35)

Other income (expense), net 14 (12) 6 9

Income (loss) before provision for income taxes 382 (765) 372 (11)

Provision for (benefit from) income taxes 177 (608) 431 -

Net income (loss) 205$ (157)$ (59)$ (11)$

Effective Tax Rate 46% 79% 116% 0%

YTD


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16

GAAP Net Income (Loss)

$131

$251$233 $240 $227

$302

$205

$(157)

$(59)

Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12

Millions of Dollars


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17

Non-GAAP Net Income

Millions of Dollars

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.

Quarterly YTD

$273$311

$804

$890

Q3 2011 Q3 2012 YTD '11 YTD '12


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18

Capital Investments

Millions of DollarsProperty and equipment acquired

under capital leases

Purchases of property

and equipment

Annual YTD

$33$293

$606

$421

$1,037

$56

$217

$473

$393

$251

$89

$510

$1,079

$814

$1,288

2009 2010 2011 YTD'11 YTD'12


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Period-end Headcount

19

Employees

Annual YTD

1,218

2,127

3,200

2,958

4,331

2009 2010 2011 YTD'11 YTD'12


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Appendix


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Reconciliations

2011 2012 2011 2012

GAAP net income (loss) 227$ (59)$ 698$ (11)$

Share-based compensation expense 70 179 141 1,388

Payroll tax expenses related to share-based compensation - (31) 7 122

Income tax adjustments (24) 222 (42) (609)

Non-GAAP net income 273$ 311$ 804$ 890$

September 30, September 30,Three Months Ended Nine Months Ended


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Limitations of Key Metrics

The numbers of our MAUs and DAUs and average revenue per user (ARPU) are calculated using internal

company data. While these numbers are based on what we believe to be reasonable estimates of our user

base for the applicable period of measurement, there are inherent challenges in measuring usage of our

products across large online and mobile populations around the world. For example, there may be

individuals who maintain one or more Facebook accounts in violation of our terms of service, despite our

efforts to detect and suppress such behavior. We estimate, for example, that duplicate accounts (an

account that a user maintains in addition to his or her principal account) may have represented

approximately 4.8% of our worldwide MAUs as of June 30, 2012. We also seek to identify false accounts,

which we divide into two categories: (1) user-misclassified accounts, where users have created personal

profiles for a business, organization, or non-human entity such as a pet (such entities are permitted on

Facebook using a Page rather than a personal profile under our terms of service); and (2) undesirable

accounts, which represent user profiles that we determine are intended to be used for purposes that violate

our terms of service, such as spamming. As of June 30, 2012, for example, we estimate user-misclassified

accounts may have represented approximately 2.4% of our worldwide MAUs and undesirable accounts

may have represented approximately 1.5% of our worldwide MAUs. We believe the percentage ofaccounts that are duplicate or false is meaningfully lower in developed markets such as the United States

or Australia and higher in developing markets such as Indonesia and Turkey. However, these estimates

are based on an internal review of a limited sample of accounts and we apply significant judgment inmaking this determination, such as identifying names that appear to be fake or other behavior that appears

inauthentic to the reviewers. As such, our estimation of duplicate or false accounts may not accurately

represent the actual number of such accounts. We are continually seeking to improve our ability to identifyduplicate or false accounts and estimate the total number of such accounts, and such estimates may be

affected by improvements or changes in our methodology.

22


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Limitations of Key Metrics (continued)

Our metrics are also affected by applications on certain mobile devices that automatically contact our

servers for regular updates with no user action involved, and this activity can cause our system to count

the user associated with such a device as an active user on the day such contact occurs. For example, we

estimate that less than 5% of our estimated worldwide DAUs as of December 31, 2011 and 2010 resulted

from this type of automatic mobile activity, and that this type of activity had a substantially smaller effect on

our estimate of worldwide MAUs and mobile MAUs. The impact of this automatic activity on our metrics

varies by geography because mobile usage varies in different regions of the world. In addition, our data

regarding the geographic location of our users is estimated based on a number of factors, such as the

users IP address and self-disclosed location. These factors may not always accurately reflect the users

actual location. For example, a mobile-only user may appear to be accessing Facebook from the location

of the proxy server that the user connects to rather than from the users actual location. The

methodologies used to measure user metrics may also be susceptible to algorithm or other technical

errors. For example, in early June 2012, we discovered an error in the algorithm we use to estimate the

geographic location of our users that affected our attribution of certain user locations for the period ended

March 31, 2012. While this issue did not affect our overall worldwide MAU number, it did affect ourattribution of users to different geographic regions. We estimate that the number of MAUs as of March 31,

2012 for the United States and Canada region was overstated as a result of the error by approximately 3%

and these overstatements were offset by understatements in other regions. In addition, our estimates for

revenue by user location are also affected by these factors. We regularly review and may adjust our

processes for calculating these metrics to improve their accuracy. In addition, our MAU and DAU estimates

will differ from estimates published by third parties due to differences in methodology. For example, somethird parties are not able to accurately measure mobile users or do not count mobile users for certain user

groups or at all in their analyses.

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