Jan 28, 2015 - Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of .... A
Facebook Q4 2014 Results
investor.fb.com
Non-GAAP Measures 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.
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Daily Active Users (DAUs) In Millions Rest of World Asia-Pacific Europe US & Canada 665 618
161
180
802
699
195
728
208
829
864
757
216
890
256
263
233
244
228
242
253
181
200
153
167
189
216
182
188
195
203
206
212
217
169
179
135
139
142
144
147
150
152
155
157
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q4'12
Q1'13
Q2'13
Q3’13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
59%
60%
61%
61%
62%
63%
63%
64%
64%
DAUs / MAUs
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram or WhatsApp users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook.
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Mobile Daily Active Users (Mobile DAUs) In Millions
745 703 654 609 556 507 469
425 374
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram or WhatsApp users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook.
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Monthly Active Users (MAUs) In Millions Rest of World Asia-Pacific Europe US & Canada
1,056 304
1,110 327
1,155 346
1,189 362
1,228
376
1,393
1,317
1,350
395
411
423
410
426
449
1,276
436
298
319
339
351
368
390
261
269
272
276
282
289
292
296
301
193
195
198
199
201
202
204
206
208
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram or WhatsApp users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook.
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Mobile Monthly Active Users (Mobile MAUs) In Millions
1,189 1,070
1,124
1,008 945
874 819 751 680
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram or WhatsApp users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook.
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Mobile-Only Monthly Active Users (Mobile-Only MAUs) In Millions
526 456 399 341 296
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Mobile-only MAUs are defined as users who accessed Facebook solely through mobile apps or mobile versions of our website, or used our Messenger app, in the last 30 days of the given quarter. The number of mobile-only MAUs do not include Instagram or WhatsApp users unless they would otherwise qualify as such users based on their other activities on Facebook.
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Revenue In Millions Payments and Other Fees Advertising
$3,851 $257 $3,203 $2,910 $2,585
$2,502
$241
$237
$246
$234
$2,016 *
$1,585 $256 *
$1,458
$1,813
$218
$3,594
$214
$213
$2,676 $1,599
$1,329
$1,245
Q4'12
Q1'13
Q2'13
$2,344
$2,265
Q4'13
Q1'14
$2,957
$1,798
Q3'13
Q2'14
Q3'14
*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 our Form 10-K filed on February 1, 2013.
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Q4'14
Revenue by User Geography In Millions Rest of World Asia-Pacific Europe US & Canada
$3,851
$403 $3,203 $2,910
$2,016 $1,585 $167 $198 $440
$1,458 $159 $197
$1,813
$238
$213 $247
$278
$505
$2,585
$2,502
$347
$311
$271
$431
$341
$354
$727
$353
$554
$492 $1,030 $844
$824 $698
$538 $1,864
$423
$780
$679
$848
$962
Q4'12
Q1'13
Q2'13
Q3'13
$1,206
$1,179
$1,308
Q4'13
Q1'14
Q2'14
$1,514
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenuegenerating 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 marketer or developer.
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Q3'14
Q4'14
Advertising Revenue by User Geography In Millions Rest of World Asia-Pacific Europe US & Canada
$3,594 $394 $2,957
$2,676 $2,344
$1,798 $1,329 $156 $168 $374
$1,245 $150 $176
$1,599
$229
$202 $225
$255
$451
$2,265
$300
$262
$318
$333
$336
$552
Q4'12
Q1'13
$343 $469
$960
$408 $783 $757
$658
$631
$482 $1,709
$367
$631
$531
$721
$832
Q2'13
Q3'13
$1,068
$1,039
$1,175
Q4'13
Q1'14
Q2'14
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenuegenerating 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 marketer or developer.
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$1,362
Q3'14
Q4'14
Payments & Other Fees Revenue by User Geography In Millions Rest of World Asia-Pacific Europe US & Canada $256 $241
$11
$30 $66
$149
Q4'12*
$213
$214
$218
$9
$11
$9
$21
$22
$237
$11
$234
$9
$23
$21
$11
$23
$246 $10
$23
$23 $61
$69
$67
$67
$56
$54
$56
$127
$127
$130
$138
$140
$133
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
$9
$23
$70
$152
$155
Q3'14
Q4'14
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 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 47 and 48 of our Form 10-K filed on February 1, 2013.
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$257
Average Revenue per User (ARPU) Payments and Other Fees Advertising
Worldwide
US & Canada
$9.00
$2.81 $2.14 $0.20
$2.24 $2.00
$0.18
$2.40
$0.19
$0.18
$0.19
$7.39 $6.03
$5.85
$0.69
$0.69
$6.44
$0.74
$0.66
$8.26
$2.62
Europe $2.61 $0.25
$2.44
$3.45 $2.84
$2.87
$0.23
$0.21
$1.94
$1.81
Q4'13
Q1'14
$2.06
Q2'14
$1.08 $0.95
$0.93
$0.06
$0.06
$2.21
Q4'13
Q1'14
$2.61
$2.66
Q2'14
Q3'14
Q4'14
$0.88
$0.88
Q4'13
Q1'14
$5.34
$5.16
Q4'13
Q1'14
$5.79
$6.64
Q2'14
Q3'14
$0.84
$0.86
$0.85
$0.03
$0.03
$0.02
$0.83
$0.82
Q2'14
Q3'14
Rest of World $1.18
$1.27 $0.05
$0.06
$0.06
$0.70
Q4'14
$0.94 $0.02
$0.02
$3.22 $2.36
Q4'14
Asia-Pacific
$0.23
$0.23
$2.22
Q3'14
$0.75
$1.02
Q2'14
$1.12
Q3'14
$1.21
$0.81
$0.92
$0.68
Q4'14
Q4'13
Q1'14
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 where revenue is geographically apportioned based on the location of the marketer or developer. Please see Facebook’s most recent quarterly or annual report filed with the SEC for the definition of ARPU. 12
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Q4'14
Expenses as a % of Revenue Amortization of intangibles Share-based compensation + payroll tax expenses related to share-based compensation All other expenses
Cost of Revenue 19%
18%
Q4'13
Research & Development
18%
16%
17%
15% Q2'14
16% Q3'14
Marketing & Sales 11%
13%
17%
8%
8%
9%
10%
9%
11%
11%
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
15% Q4'14
12%
10%
11%
10%
Q4'13
Q1'14
Q2'14
19%
18%
16% 7%
18%
Q1'14
18%
29% 18%
8%
General & Administrative 12%
16% 3% 3%
10%
7%
7%
8%
9%
10%
11%
4% 5%
5%
5%
6%
6%
Q3'14
Q4'14
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
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Income from Operations In Millions GAAP Income from Operations $1,390 $1,133
$1,075
Q4'13
Q1'14
$1,397 $1,133
$736 $562 $373
Q1'13
Q2'13
Q3'13
Q2'14
Q3'14
Q4'14
Non-GAAP Income from Operations $2,219
$596
Q1'13
$830
Q2'13
$1,498
$1,415
Q4'13
Q1'14
$1,753
$1,820
Q2'14
Q3'14
$1,024
Q3'13
Non-GAAP income from operations excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and amortization of intangibles—see the Appendix for a reconciliation of this non-GAAP measure to GAAP income from operations.
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Q4'14
Operating Margin GAAP Operating Margin
26%
Q1'13
31%
Q2'13
37%
44%
43%
48%
44% 29%
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
58%
57%
60%
57%
58%
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Non-GAAP Operating Margin
41%
Q1'13
46%
Q2'13
51%
Q3'13
Non-GAAP operating margin excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and amortization of intangibles—see the Appendix for a reconciliation of this non-GAAP measure to GAAP operating margin.
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Effective Tax Rate GAAP Effective Tax Rate
($ in millions) GAAP income before provision for income taxes GAAP provision for income taxes Effective Tax Rate
Q1 2013 $ 353 134
Q2 2013 $ 545 212
Q3 2013 $ 726 301
Q4 2013 $ 1,130 607
Q1 2014 $ 1,075 433
Q2 2014 $ 1,386 595
38%
39%
41%
54%
40%
43%
40%
37%
Q1 2013 576 241
Q2 2013 813 294
Q3 2013 1,014 348
Q4 2013 1,495 681
Q1 2014 1,415 489
Q2 2014 1,749 627
Q3 2014 1,759 610
Q4 2014 2,200 682
42%
36%
34%
46%
35%
36%
35%
31%
Q3 Q4 2014 2014 $ 1,336 $ 1,114 530 413
Non-GAAP Effective Tax Rate
($ in millions) Non-GAAP income before provision for income taxes Non-GAAP provision for income taxes Effective Tax Rate
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Net Income In Millions GAAP Net Income $791
$806
Q2'14
Q3'14
$642
$219
Q1'13
$333
Q2'13
$425
Q3'13
$701
$523
Q4'13
Q1'14
Q4'14
Non-GAAP Net Income $1,518
$335
Q1'13
$519
Q2'13
$666
Q3'13
$814
$926
Q4'13
Q1'14
$1,121
$1,149
Q2'14
Q3'14
Non-GAAP net income excludes share-based compensation expense, payroll tax expenses related to share-based compensation, related income tax adjustments, and amortization of intangibles—see the Appendix for a reconciliation of this non-GAAP measure to GAAP net income.
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Q4'14
Diluted Earnings Per Share GAAP Diluted Earnings Per Share $0.30
$0.30
$0.25
$0.25
$0.20 $0.09
Q1'13
$0.13
Q2'13
$0.17
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Non-GAAP Diluted Earnings Per Share $0.54
$0.21
$0.27
$0.32
$0.35
Q4'13
Q1'14
$0.43
$0.43
Q2'14
Q3'14
$0.13
Q1'13
Q2'13
Q3'13
Non-GAAP diluted earnings per share excludes share-based compensation expense, payroll tax expenses related to share-based compensation, related income tax adjustments, and amortization of intangibles—see the Appendix for a reconciliation of this non-GAAP measure to GAAP diluted earnings per share.
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Q4'14
Capital Investments In Millions Property and equipment acquired under capital leases Purchases of property and equipment
$1,831 $1,575 $340
$1,373
$1,831 $483
$517
$483
$517
Q4'13
Q4'14
$1,235
2012
Quarterly
$1,362
2013 Annual
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2014
Appendix
Reconciliations Income from Operations (in millions) GAAP income from operations Share-based compensation expense Payroll tax expenses related to share-based compensation Amortization of intangible assets Non-GAAP income from operations
Q1'13 373 170 20 33 $ 596
Operating Margin GAAP operating margin Share-based compensation expense Payroll tax expenses related to share-based compensation Amortization of intangible assets Non-GAAP operating margin
Net Income (in millions) GAAP net income Share-based compensation expense Payroll tax expenses related to share-based compensation Amortization of intangible assets Income tax adjustments Non-GAAP net income
Diluted Earnings Per Share GAAP diluted earnings per share Non-GAAP adjustments to net income Non-GAAP diluted earnings per share
Q2'13 562 224 8 36 $ 830
$
$
Q1'13 26% 12% 1% 2% 41%
Q3'13 736 239 12 37 $ 1,024
Q4'13 $ 1,133 273 53 39 $ 1,498
Q1'14 $ 1,075 274 25 41 $ 1,415
Q2'14 $ 1,390 314 8 41 $ 1,753
Q3'13 37% 12% 1% 2% 51%
Q4'13 44% 11% 2% 2% 58%
Q1'14 43% 11% 1% 2% 57%
Q2'14 48% 11% 0% 1% 60%
$
Q2'13 31% 12% 0% 2% 46%
Q1'13 219 170 20 33 (107) $ 335
$
Q1'13 0.09 0.04 $ 0.13
Q2'13 333 224 8 36 (82) $ 519
$
Q2'13 0.13 0.08 $ 0.21
$
$
21
Q3'13 425 239 12 37 (47) $ 666
$
Q3'13 0.17 0.10 $ 0.27
$
Q4'13 523 273 53 39 (74) $ 814
$
Q4'13 0.20 0.12 $ 0.32
$
Q1'14 642 274 25 41 (56) $ 926
$
Q1'14 0.25 0.10 $ 0.35
$
Q2'14 791 314 8 41 (33) $ 1,121
$
Q2'14 0.30 0.13 $ 0.43
$
Q3'14 Q4'14 $ 1,397 $ 1,133 353 896 11 13 59 177 $ 1,820 $ 2,219
Q3'14 44% 11% 0% 2% 57%
Q4'14 29% 23% 0% 5% 58%
Q3'14 Q4'14 806 $ 701 353 896 11 13 59 177 (80) (269) $ 1,149 $ 1,518
$
Q3'14 Q4'14 0.30 $ 0.25 0.13 0.29 $ 0.43 $ 0.54
$
Reconciliations (continued) ($ in millions) GAAP income before provision for income taxes GAAP provision for income taxes Effective Tax Rate
Q1'13 $ 353 134 38%
Q2'13 $ 545 212 39%
Q3'13 $ 726 301 41%
Q4'13 $ 1,130 607 54%
Q1'14 $ 1,075 433 40%
Q2'14 $ 1,386 595 43%
Q3'14 Q4'14 $ 1,336 $ 1,114 530 413 40% 37%
GAAP income before provision for income taxes Share-based compensation and related payroll tax expenses Amortization of intangibles Non-GAAP income before provision for income taxes Non-GAAP provision for income taxes Non-GAAP effective tax rate
$
$
$
$ 1,130 326 39 $ 1,495 681 46%
$ 1,075 299 41 $ 1,415 489 35%
$ 1,386 322 41 $ 1,749 627 36%
$ 1,336 $ 1,114 364 909 59 177 $ 1,759 $ 2,200 610 682 35% 31%
$
353 190 33 576 241 42%
$
22
545 232 36 813 294 36%
726 251 37 $ 1,014 348 34%
Reconciliations (continued) Free Cash Flow (in millions) Net cash provided by operating activities Purchases of property and equipment Property and equpiment acquired under capital leases Free Cash Flow
Q1'13 719 327 11 $ 381
$
Q2'13 $ 1,322 268 $ 1,054
23
Q3'13 950 284 $ 666
$
Q4'13 $ 1,231 483 $ 748
Q1'14 $ 1,285 363 $ 922
Q2'14 $ 1,341 469 $ 872
Q3'14 $ 1,248 482 $ 766
Q4'14 $ 1,583 517 $ 1,066
Limitations of Key Metrics and Other Data The numbers for our key metrics, which include our daily active users (DAUs), mobile DAUs, monthly active users (MAUs), mobile MAUs, and average revenue per user (ARPU), as well as certain other metrics such as mobile-only DAUs and mobile-only MAUs, are calculated using internal company data based on the activity of user accounts. 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. We estimate, for example, that "duplicate" accounts (an account that a user maintains in addition to his or her principal account) may have represented less than 5% of our worldwide MAUs in 2014. 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. In 2014, for example, we estimate user-misclassified and undesirable accounts may have represented less than 2% of our worldwide MAUs. We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed markets such as the United States or United Kingdom and higher in developing markets such as India and Turkey. However, these estimates are based on an internal review of a limited sample of accounts and we apply significant judgment in making 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 identify duplicate or false accounts and estimate the total number of such accounts, and such estimates may change due to improvements or changes in our methodology.
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Limitations of Key Metrics and Other Data (continued) Our data limitations may affect our understanding of certain details of our business. For example, while user-provided data indicates a decline in usage among younger users, this age data is unreliable because a disproportionate number of our younger users register with an inaccurate age. Accordingly, our understanding of usage by age group may not be complete.
Some of our metrics have also been 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. 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 user's IP address and selfdisclosed location. These factors may not always accurately reflect the user's 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 user's actual location. The methodologies used to measure user metrics may also be susceptible to algorithm or other technical errors. Our estimates for revenue by user location and revenue by user device are also affected by these factors. We regularly review our processes for calculating these metrics, and from time to time we may discover inaccuracies in our metrics or make adjustments to improve their accuracy, including adjustments that may result in the recalculation of our historical metrics. We believe that any such inaccuracies or adjustments are immaterial unless otherwise stated. In addition, our DAU and MAU estimates will differ from estimates published by third parties due to differences in methodology. For example, some third 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. The numbers of DAUs, mobile DAUs, MAUs, mobile MAUs, mobile-only DAUs and mobile-only MAUs discussed in this presentation, as well as ARPU, do not include users of Instagram or WhatsApp unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook.
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Facebook Q4 2014 Results
investor.fb.com