Facebook Reports Fourth Quarter and Full Year 2019 Results
MENLO PARK, Calif., Jan. 29, 2020 /PRNewswire/ -- Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter and full year ended December 31, 2019.
"We had a good quarter and a strong end to the year as our community and business continue to grow," said Mark Zuckerberg, Facebook founder and CEO. "We remain focused on building services that help people stay connected to those they care about."
Fourth Quarter and Full Year 2019 Financial Highlights
Three Months Ended December 31, Year-over-Year % Year Ended December 31, Year-over-Year %
Change Change
In millions, except percentages and per share amounts 2019 2018 2019 2018
Revenue:
Advertising $
20,736 $
16,640 25
% $
69,655 $
55,013 27
%
Other 346 274 26
% 1,042 825 26
%
Total revenue 21,082 16,914 25
% 70,697 55,838 27
%
Total costs and expenses 12,224 9,094 34
% 46,711 30,925 51
%
Income from operations $
8,858 $
7,820 13 $
23,986 $
24,913 (4)
% %
Operating margin 42 46 34 45
% % % %
Provision for income taxes $
1,820 $
1,089 67
% $
6,327 $
3,249 95
%
Effective tax rate 20 14 25 13
% % % %
Net income $
7,349 $
6,882 7
% $
18,485 $
22,112 (16)
%
Diluted earnings per share (EPS) $
2.56 $
2.38 8
% $
6.43 $
7.57 (15)
%
Fourth Quarter and Full Year 2019 Operational and Other Financial Highlights
-- Facebook daily active users (DAUs) - DAUs were 1.66 billion on average
for December 2019, an increase of 9% year-over-year.
-- Facebook monthly active users (MAUs) - MAUs were 2.50 billion as of
December 31, 2019, an increase of 8% year-over-year.
-- Family daily active people (DAP) - DAP was 2.26 billion on average for
December 2019, an increase of 11% year-over-year.
-- Family monthly active people (MAP) - MAP was 2.89 billion as of December
31, 2019, an increase of 9% year-over-year.
-- Capital expenditures - Capital expenditures, including principal
payments on finance leases, were $4.24 billion and $15.65 billion for
the fourth quarter and full year 2019, respectively.
-- Cash and cash equivalents and marketable securities - Cash and cash
equivalents and marketable securities were $54.86 billion as of December
31, 2019.
-- Headcount - Headcount was 44,942 as of December 31, 2019, an increase of
26% year-over-year.
Our Family metrics represent our estimates of the underlying number of unique people using one or more of Facebook, Instagram, Messenger, and/or WhatsApp (collectively, our "Family" of products). We define a DAP as a registered and logged-in user of one or more Family products who visited at least one of these products through a mobile device application or using a web or mobile browser on a given day. We define a MAP as a registered and logged-in user of one or more Family products who visited at least one of these products through a mobile device application or using a web or mobile browser in the last 30 days as of the date of measurement.
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 1262637.
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's apps and technologies to connect with friends and family, find communities and grow businesses.
Contacts
Investors:
Deborah Crawford
investor@fb.com / investor.fb.com
Press:
Ryan Moore
press@fb.com / newsroom.fb.com
Forward-Looking Statements
This press release contains forward-looking statements regarding our future business expectations. 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 data signals and 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 community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; 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 October 31, 2019, 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 Annual Report on Form 10-K for the year ended December 31, 2019. In addition, please note that the date of this press release is January 29, 2020, 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 months and full year ended December 31, 2019 using the prior year's monthly exchange rates for our settlement or billing 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, net; Principal payments on finance leases. We subtract both net purchases of property and equipment and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. 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 Twelve Months Ended
December 31, December 31,
2019 2018 2019 2018
Revenue $
21,082 $
16,914 $
70,697 $
55,838
Costs and expenses:
Cost of revenue 3,492 2,796 12,770 9,355
Research and development 3,877 2,855 13,600 10,273
Marketing and sales 3,026 2,467 9,876 7,846
General and administrative 1,829 976 10,465 3,451
Total costs and expenses 12,224 9,094 46,711 30,925
Income from operations 8,858 7,820 23,986 24,913
Interest and other income, net 311 151 826 448
Income before provision for income taxes 9,169 7,971 24,812 25,361
Provision for income taxes 1,820 1,089 6,327 3,249
Net income $
7,349 $
6,882 $
18,485 $
22,112
Less: Net income attributable to participating securities - (1)
Net income attributable to Class A and Class B common stockholders $
7,349 $
6,882 $
18,485 $
22,111
Earnings per share attributable to Class A and Class B common stockholders:
Basic $
2.58 $
2.40 $
6.48 $
7.65
Diluted $
2.56 $
2.38 $
6.43 $
7.57
Weighted-average shares used to compute earnings per share attributable to Class A and
Class B common stockholders:
Basic 2,853 2,872 2,854 2,890
Diluted 2,871 2,886 2,876 2,921
Share-based compensation expense included in costs and expenses:
Cost of revenue $
90 $
82 $
377 $
284
Research and development 931 675 3,488 3,022
Marketing and sales 147 130 569 511
General and administrative 105 84 402 335
Total share-based compensation expense $
1,273 $
971 $
4,836 $
4,152
FACEBOOK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
December 31, December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $
19,079 $
10,019
Marketable securities 35,776 31,095
Accounts receivable, net of allowances of $206 and $229 as of December
31, 2019 and
December 31, 2018, respectively 9,518 7,587
Prepaid expenses and other current assets 1,852 1,779
Total current assets 66,225 50,480
Property and equipment, net 35,323 24,683
Operating lease right-of-use assets, net 9,460
Intangible assets, net 894 1,294
Goodwill 18,715 18,301
Other assets 2,759 2,576
Total assets $
133,376 $
97,334
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $
1,363 $
820
Partners payable 886 541
Operating lease liabilities, current 800
Accrued expenses and other current liabilities 11,735 5,509
Deferred revenue and deposits 269 147
Total current liabilities 15,053 7,017
Operating lease liabilities, non-current 9,524
Other liabilities 7,745 6,190
Total liabilities 32,322 13,207
Commitments and contingencies
Stockholders' equity:
Common stock and additional paid-in capital 45,851 42,906
Accumulated other comprehensive loss (489) (760)
Retained earnings 55,692 41,981
Total stockholders' equity 101,054 84,127
Total liabilities and stockholders' equity $
133,376 $
97,334
FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2019 2018 2019 2018
---
Cash flows from operating activities
Net income $
7,349 $
6,882 $
18,485 $
22,112
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,468 1,225 5,741 4,315
Share-based compensation 1,273 971 4,836 4,152
Deferred income taxes (395) 201 (37) 286
Other (6) (19) 39 (64)
Changes in assets and liabilities:
Accounts receivable (1,697) (1,564) (1,961) (1,892)
Prepaid expenses and other current assets 577 198 47 (690)
Other assets (26) (60) 41 (159)
Accounts payable 112 133 113 221
Partners payable 289 41 348 157
Accrued expenses and other current liabilities 861 378 7,300 1,417
Deferred revenue and deposits 41 33 123 53
Other liabilities (763) (735) 1,239 (634)
Net cash provided by operating activities 9,083 7,684 36,314 29,274
Cash flows from investing activities
Purchases of property and equipment, net (4,100) (4,366) (15,102) (13,915)
Purchases of marketable securities (4,758) (1,997) (23,910) (14,656)
Sales of marketable securities 2,163 1,254 9,565 12,358
Maturities of marketable securities 3,104 1,381 10,152 4,772
Acquisitions of businesses, net of cash acquired, and purchases of intangible
assets (445) (508) (137)
Other investing activities, net - (21) (61) (25)
Net cash used in investing activities (4,036) (3,749) (19,864) (11,603)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards (627) (545) (2,337) (3,208)
Repurchases of Class A common stock (1,296) (3,500) (4,202) (12,879)
Principal payments on finance leases (141) (552)
Net change in overdraft in cash pooling entities 37 500 (223) 500
Other financing activities, net 2 4 15 15
Net cash used in financing activities (2,025) (3,541) (7,299) (15,572)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 177 (14) 4 (179)
Net increase in cash, cash equivalents, and restricted cash 3,199 380 9,155 1,920
Cash, cash equivalents, and restricted cash at beginning of the period 16,080 9,744 10,124 8,204
Cash, cash equivalents, and restricted cash at end of the period $
19,279 $
10,124 $
19,279 $
10,124
Reconciliation of cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets
Cash and cash equivalents $
19,079 $
10,019 $
19,079 $
10,019
Restricted cash, included in prepaid expenses and other current assets 8 10 8 10
Restricted cash, included in other assets 192 95 192 95
Total cash, cash equivalents, and restricted cash $
19,279 $
10,124 $
19,279 $
10,124
FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2019 2018 2019 2018
---
Supplemental cash flow data
Cash paid for income taxes, net $
2,654 $
1,034 $
5,182 $
3,762
Non-cash investing activities:
Net change in prepaids and liabilities related to property and equipment $
(94) $
306 $
(153) $
918
Property and equipment in accounts payable and accrued liabilities $
1,887 $
1,955 $
1,887 $
1,955
Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2019 2018 2019 2018
GAAP revenue $
21,082 $
16,914 $
70,697 $
55,838
Foreign exchange effect on 2019 revenue using 2018 rates 295 1,669
Revenue excluding foreign exchange effect $
21,377 $
72,366
GAAP revenue year-over-year change % 25
% 27
%
Revenue excluding foreign exchange effect year-over-year change % 26
% 30
%
GAAP advertising revenue $
20,736 $
16,640 $
69,655 $
55,013
Foreign exchange effect on 2019 advertising revenue using 2018 rates 294 1,664
Advertising revenue excluding foreign exchange effect $
21,030 $
71,319
GAAP advertising revenue year-over-year change % 25
% 27
%
Advertising revenue excluding foreign exchange effect year-over-year
change % 26
% 30
%
Net cash provided by operating activities $
9,083 $
7,684 $
36,314 $
29,274
Purchases of property and equipment, net (4,100) (4,366) (15,102) (13,915)
Principal payments on finance leases (141) (552)
Free cash flow $
4,842 $
3,318 $
20,660 $
15,359
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SOURCE Facebook
