MENLO PARK, Calif.,
July 30, 2020 /PRNewswire/
-- Facebook, Inc. (Nasdaq: FB) today reported financial
results for the quarter ended June 30, 2020.
"We're glad to be able to provide small businesses the
tools they need to grow and be successful online during these
challenging times," said Mark
Zuckerberg, Facebook founder and CEO. "And we're proud that
people can rely on our services to stay connected when they can't
always be together in person."
Second Quarter 2020 Financial Highlights
|
Three Months Ended June 30,
|
|
Year-over-Year %
|
In millions, except percentages and per share
amounts
|
2020
|
|
2019 (1)
|
|
Change
|
Revenue:
|
|
|
|
|
|
Advertising
|
$
|
18,321
|
|
$
|
16,624
|
|
10%
|
Other
|
366
|
|
262
|
|
40%
|
Total
revenue
|
18,687
|
|
16,886
|
|
11%
|
Total costs and
expenses
|
12,724
|
|
12,260
|
|
4%
|
Income from
operations
|
$
|
5,963
|
|
$
|
4,626
|
|
29%
|
Operating
margin
|
32%
|
|
27%
|
|
|
Provision for income
taxes
|
$
|
953
|
|
$
|
2,216
|
|
(57)%
|
Effective tax
rate
|
16%
|
|
46%
|
|
|
Net income
|
$
|
5,178
|
|
$
|
2,616
|
|
98%
|
Diluted earnings per
share (EPS)
|
$
|
1.80
|
|
$
|
0.91
|
|
98%
|
_________________________
|
(1) Includes an additional $2.0
billion legal expense related to our settlement with the U.S.
Federal Trade Commission (FTC) and a $1.1 billion income tax
expense due to the Altera Ninth Circuit Opinion, both
accrued in the second quarter of 2019.
|
Second Quarter 2020 Operational and Other Financial
Highlights
- Facebook daily active users (DAUs) –
DAUs were 1.79 billion on average for June
2020, an increase of 12% year-over-year.
- Facebook monthly active users (MAUs)
– MAUs were 2.70 billion as of June 30, 2020, an
increase of 12% year-over-year.
- Family daily active people (DAP) –
DAP was 2.47 billion on average for June
2020, an increase of 15% year-over-year.
- Family monthly active people (MAP) –
MAP was 3.14 billion as of June 30,
2020, an increase of 14% year-over-year.
- Capital expenditures – Capital
expenditures, including principal payments on finance leases, were
$3.36 billion for the second
quarter of 2020.
- Cash and cash equivalents and marketable
securities – Cash and cash equivalents and
marketable securities were $58.24
billion as of June 30, 2020. On July 7, 2020, we paid approximately $5.8 billion at the then–current exchange rate
for our investment in Jio Platforms Limited.
- Headcount – Headcount was 52,534
as of June 30, 2020, an increase of 32%
year-over-year.
Impact of COVID-19 on Outlook
Our business has been impacted by the COVID-19 pandemic
and, like all companies, we are facing a period of unprecedented
uncertainty in our business outlook. We expect our business
performance will be impacted by issues beyond our control,
including the duration and efficacy of shelter-in-place orders, the
effectiveness of economic stimuli around the world, and the
fluctuations of currencies relative to the U.S. dollar.
- Engagement - Facebook DAUs and MAUs
in the second quarter of 2020 reflect increased engagement as
people around the world sheltered in place and used our products to
connect with the people and organizations they care about. More
recently, we are seeing signs of normalization in user growth and
engagement as shelter-in-place measures have eased around the
world, particularly in developed markets where Facebook's
penetration is higher. Looking forward, as shelter-in-place
restrictions continue to ease, we expect the number of Facebook
DAUs and MAUs to be flat or slightly down in most regions in the
third quarter of 2020 compared to the second quarter of 2020.
- Revenue - In the first three weeks of
July, our year-over-year ad revenue growth rate was approximately
in-line with our second quarter 2020 year-over-year ad revenue
growth rate of 10%. We expect our full quarter year-over-year ad
revenue growth rate for the third quarter of 2020 will be
roughly similar to this July performance. There are several factors
contributing to this outlook, including:
-
- First, continued macroeconomic uncertainty, including the
pace of recovery and the prospects for additional economic
stimulus;
- Second, our expectation that some of the recent surge in
community engagement will normalize as regions reopen;
- Third, the impact from certain advertisers pausing spend
on our platforms related to the current boycott, which is reflected
in our July trends; and
- Lastly, headwinds related to ad targeting and
measurement, including the impact of regulation, such as the
California Consumer Privacy Act, as well as headwinds from expected
changes to mobile operating platforms, which we anticipate will be
increasingly significant as the year progresses.
- Total expenses - We expect total
expenses in 2020 to be in the range of $52-55 billion, narrowed slightly from the prior
range of $52-56 billion.
- Capital expenditures - We expect
full-year 2020 capital expenditures to be approximately
$16 billion, at the high end of our
prior $14-16 billion range, as we
have resumed data center construction efforts earlier than
expected. However, a great deal of uncertainty remains in our
outlook, and our full year capital expenditures will depend on how
the pandemic impacts our ability to construct data centers and
refresh equipment.
- Tax rates - We expect our full-year
2020 tax rate to be in the mid-teens, although we may see
fluctuations in our quarterly rate depending on our financial
results.
Webcast and Conference Call Information
Facebook will host a conference call to discuss the
results at 3 p.m. PT / 6 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 3783991.
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: the impact of
the COVID-19 pandemic on our business and financial results;
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 April 30,
2020, 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 June 30, 2020. In addition, please
note that the date of this press release is July 30, 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 and six months ended June 30,
2020 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019 (1)
|
|
2020
|
|
2019
(1)
|
|
Revenue
|
$
|
18,687
|
|
$
|
16,886
|
|
$
|
36,423
|
|
$
|
31,963
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
3,829
|
|
3,307
|
|
7,288
|
|
6,123
|
|
Research and
development
|
4,462
|
|
3,315
|
|
8,477
|
|
6,175
|
|
Marketing and
sales
|
2,840
|
|
2,414
|
|
5,627
|
|
4,434
|
|
General and
administrative
|
1,593
|
|
3,224
|
|
3,175
|
|
7,288
|
|
Total costs and
expenses
|
12,724
|
|
12,260
|
|
24,567
|
|
24,020
|
|
Income from
operations
|
5,963
|
|
4,626
|
|
11,856
|
|
7,943
|
|
Interest and other
income, net
|
168
|
|
206
|
|
136
|
|
371
|
|
Income before
provision for income taxes
|
6,131
|
|
4,832
|
|
11,992
|
|
8,314
|
|
Provision for income
taxes
|
953
|
|
2,216
|
|
1,911
|
|
3,269
|
|
Net
income
|
$
|
5,178
|
|
$
|
2,616
|
|
$
|
10,081
|
|
$
|
5,045
|
|
Earnings per share
attributable to Class A and Class B
|
|
|
|
|
|
|
|
|
common
stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
1.82
|
|
$
|
0.92
|
|
$
|
3.54
|
|
$
|
1.77
|
|
Diluted
|
$
|
1.80
|
|
$
|
0.91
|
|
$
|
3.51
|
|
$
|
1.76
|
|
Weighted-average
shares used to compute earnings per
|
|
|
|
|
|
|
|
|
share attributable
to Class A and Class B common
|
|
|
|
|
|
|
|
|
stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
2,850
|
|
2,855
|
|
2,851
|
|
2,855
|
|
Diluted
|
2,879
|
|
2,875
|
|
2,876
|
|
2,873
|
|
Share-based
compensation expense included in costs
|
|
|
|
|
|
|
|
|
and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
$
|
117
|
|
$
|
109
|
|
$
|
211
|
|
$
|
196
|
|
Research and
development
|
1,261
|
|
927
|
|
2,260
|
|
1,650
|
|
Marketing and
sales
|
187
|
|
160
|
|
336
|
|
273
|
|
General and
administrative
|
130
|
|
107
|
|
223
|
|
194
|
|
Total share-based
compensation expense
|
$
|
1,695
|
|
$
|
1,303
|
|
$
|
3,030
|
|
$
|
2,313
|
|
_________________________
|
(1) Includes $2.0 billion and $5.0
billion legal expenses accrued related to our settlement with
the FTC in the second quarter and the first six months of 2019,
respectively, and $1.1 billion of cumulative income tax expense
related to the Altera Ninth Circuit Opinion.
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
21,045
|
|
$
|
19,079
|
|
Marketable
securities
|
37,195
|
|
35,776
|
|
Accounts receivable,
net of allowances of $365 and $206 as of June 30, 2020
and
|
|
|
|
|
December 31, 2019,
respectively
|
7,483
|
|
9,518
|
|
Prepaid expenses and
other current assets
|
2,407
|
|
1,852
|
|
|
Total current
assets
|
68,130
|
|
66,225
|
Property and
equipment, net
|
39,006
|
|
35,323
|
Operating lease
right-of-use assets, net
|
9,429
|
|
9,460
|
Intangible assets,
net
|
859
|
|
894
|
Goodwill
|
19,029
|
|
18,715
|
Other
assets
|
3,238
|
|
2,759
|
Total
assets
|
$
|
139,691
|
|
$
|
133,376
|
|
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
920
|
|
$
|
1,363
|
|
Partners
payable
|
729
|
|
886
|
|
Operating lease
liabilities, current
|
899
|
|
800
|
|
Accrued expenses and
other current liabilities
|
8,496
|
|
11,735
|
|
Deferred revenue and
deposits
|
264
|
|
269
|
|
|
Total current
liabilities
|
11,308
|
|
15,053
|
Operating lease
liabilities, non-current
|
9,633
|
|
9,524
|
Other
liabilities
|
8,303
|
|
7,745
|
|
|
Total
liabilities
|
29,244
|
|
32,322
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock and
additional paid-in capital
|
47,805
|
|
45,851
|
|
Accumulated other
comprehensive loss
|
(142)
|
|
(489)
|
|
Retained
earnings
|
62,784
|
|
55,692
|
|
|
Total stockholders'
equity
|
110,447
|
|
101,054
|
Total liabilities
and stockholders' equity
|
$
|
139,691
|
|
$
|
133,376
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
Net income
|
$
|
5,178
|
|
$
|
2,616
|
|
$
|
10,081
|
|
$
|
5,045
|
Adjustments to
reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
1,704
|
|
1,502
|
|
3,301
|
|
2,857
|
Share-based compensation
|
1,695
|
|
1,303
|
|
3,030
|
|
2,313
|
Deferred
income taxes
|
214
|
|
1
|
|
690
|
|
184
|
Other
|
43
|
|
9
|
|
49
|
|
14
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(122)
|
|
(1,006)
|
|
1,924
|
|
64
|
Prepaid
expenses and other current assets
|
(325)
|
|
(252)
|
|
(353)
|
|
(168)
|
Other
assets
|
3
|
|
24
|
|
(15)
|
|
65
|
Accounts
payable
|
(56)
|
|
8
|
|
(100)
|
|
(87)
|
Partners
payable
|
11
|
|
20
|
|
(158)
|
|
20
|
Accrued
expenses and other current liabilities
|
(3,995)
|
|
2,827
|
|
(3,016)
|
|
5,982
|
Deferred
revenue and deposits
|
15
|
|
55
|
|
(1)
|
|
51
|
Other
liabilities
|
(487)
|
|
1,508
|
|
(554)
|
|
1,584
|
Net cash provided
by operating activities
|
3,878
|
|
8,615
|
|
14,878
|
|
17,924
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
Purchases of property
and equipment, net
|
(3,255)
|
|
(3,633)
|
|
(6,813)
|
|
(7,470)
|
Purchases of
marketable securities
|
(6,179)
|
|
(5,152)
|
|
(14,063)
|
|
(11,755)
|
Sales of marketable
securities
|
2,617
|
|
2,944
|
|
5,381
|
|
4,456
|
Maturities of
marketable securities
|
3,224
|
|
1,895
|
|
7,868
|
|
4,105
|
Acquisitions of
businesses, net of cash acquired, and purchases of
|
|
|
|
|
|
|
|
intangible
assets
|
(339)
|
|
(3)
|
|
(372)
|
|
(53)
|
Other investing
activities, net
|
(245)
|
|
(61)
|
|
(288)
|
|
(61)
|
Net cash used in
investing activities
|
(4,177)
|
|
(4,010)
|
|
(8,287)
|
|
(10,778)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
Taxes paid related to
net share settlement of equity awards
|
(753)
|
|
(606)
|
|
(1,444)
|
|
(1,119)
|
Repurchases of Class
A common stock
|
(1,369)
|
|
(1,144)
|
|
(2,618)
|
|
(1,758)
|
Principal payments on
finance leases
|
(109)
|
|
(142)
|
|
(209)
|
|
(267)
|
Net change in
overdraft in cash pooling entities
|
63
|
|
58
|
|
(17)
|
|
(119)
|
Other financing
activities, net
|
16
|
|
4
|
|
114
|
|
9
|
Net cash used in
financing activities
|
(2,152)
|
|
(1,830)
|
|
(4,174)
|
|
(3,254)
|
Effect of exchange
rate changes on cash, cash equivalents, and
|
|
|
|
|
|
|
|
restricted
cash
|
93
|
|
26
|
|
(127)
|
|
(18)
|
Net increase
(decrease) in cash, cash equivalents, and restricted
cash
|
(2,358)
|
|
2,801
|
|
2,290
|
|
3,874
|
Cash, cash
equivalents, and restricted cash at beginning of the
period
|
23,927
|
|
11,197
|
|
19,279
|
|
10,124
|
Cash, cash
equivalents, and restricted cash at end of the
period
|
$
|
21,569
|
|
$
|
13,998
|
|
$
|
21,569
|
|
$
|
13,998
|
|
|
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents, and restricted cash to
|
|
|
|
|
|
|
|
the condensed
consolidated balance sheets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
21,045
|
|
$
|
13,877
|
|
$
|
21,045
|
|
$
|
13,877
|
Restricted cash,
included in prepaid expenses and other current assets
|
308
|
|
9
|
|
308
|
|
9
|
Restricted cash,
included in other assets
|
216
|
|
112
|
|
216
|
|
112
|
Total cash, cash
equivalents, and restricted cash
|
$
|
21,569
|
|
$
|
13,998
|
|
$
|
21,569
|
|
$
|
13,998
|
FACEBOOK,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Supplemental cash
flow data
|
|
|
|
|
|
|
|
Cash paid for income
taxes, net
|
$
|
1,041
|
|
$
|
1,014
|
|
$
|
1,250
|
|
$
|
1,696
|
Non-cash investing
activities:
|
|
|
|
|
|
|
|
Acquisition of
businesses and other investments in
|
|
|
|
|
|
|
|
|
|
|
|
accrued expenses and
other liabilities
|
$
|
316
|
|
$
|
—
|
|
$
|
316
|
|
$
|
—
|
Property and
equipment in accounts payable and
|
|
|
|
|
|
|
|
|
|
|
|
accrued
liabilities
|
$
|
1,592
|
|
$
|
1,667
|
|
$
|
1,592
|
|
$
|
1,667
|
Reconciliation of
GAAP to Non-GAAP Results
|
(In millions,
except percentages)
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
GAAP
revenue
|
$
|
18,687
|
|
$
|
16,886
|
|
$
|
36,423
|
|
$
|
31,963
|
Foreign exchange
effect on 2020 revenue using 2019
|
|
|
|
|
|
|
|
rates
|
297
|
|
|
|
573
|
|
|
Revenue excluding
foreign exchange effect
|
$
|
18,984
|
|
|
|
$
|
36,996
|
|
|
GAAP revenue
year-over-year change %
|
11%
|
|
|
|
14%
|
|
|
Revenue excluding
foreign exchange effect year-over-
|
|
|
|
|
|
|
|
year change
%
|
12%
|
|
|
|
16%
|
|
|
GAAP advertising
revenue
|
$
|
18,321
|
|
$
|
16,624
|
|
$
|
35,760
|
|
$
|
31,536
|
Foreign exchange
effect on 2020 advertising revenue
|
|
|
|
|
|
|
|
using 2019
rates
|
295
|
|
|
|
571
|
|
|
Advertising revenue
excluding foreign exchange effect
|
$
|
18,616
|
|
|
|
$
|
36,331
|
|
|
GAAP advertising
revenue year-over-year change %
|
10%
|
|
|
|
13%
|
|
|
Advertising revenue
excluding foreign exchange effect
|
|
|
|
|
|
|
|
year-over-year change
%
|
12%
|
|
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
3,878
|
|
$
|
8,615
|
|
$
|
14,878
|
|
$
|
17,924
|
Purchases of property
and equipment, net
|
(3,255)
|
|
(3,633)
|
|
(6,813)
|
|
(7,470)
|
Principal payments on
finance leases
|
(109)
|
|
(142)
|
|
(209)
|
|
(267)
|
Free cash flow
(1)
|
$
|
514
|
|
$
|
4,840
|
|
$
|
7,856
|
|
$
|
10,187
|
______________________
|
(1) Free
cash flow in the second quarter and the first six months of 2020
reflects the $5.0 billion FTC settlement that was paid in April
2020.
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/facebook-reports-second-quarter-2020-results-301103475.html
SOURCE Facebook