Zuckerberg: Focused on building out our privacy-focused vision for the future of social networking
MENLO PARK, Calif., April 24, 2019 /PRNewswire/ — Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended March 31, 2019. “We had a good quarter and our business and community continue to grow,” said Mark Zuckerberg, Facebook founder and CEO. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”
First Quarter 2019 Financial Highlights
Three Months Ended March 31, | Year-over-Year % | |||||||||
In millions, except percentages and per share amounts | 2019 | 2018 | ||||||||
Revenue: | ||||||||||
Advertising | $ | 14,912 | $ | 11,795 | 26 | % | ||||
Payments and other fees | 165 | 171 | (4) | % | ||||||
Total revenue | 15,077 | 11,966 | 26 | % | ||||||
Total costs and expenses* | 11,760 | 6,517 | 80 | % | ||||||
Income from operations* | $ | 3,317 | $ | 5,449 | (39) | % | ||||
Operating margin* | 22 | % | 46 | % | ||||||
Provision for income taxes | $ | 1,053 | ||||||||
Effective tax rate* | 30 | % | ||||||||
Net income* | $ | 2,429 | $ | 4,988 | (51) | % | ||||
Diluted earnings per share (EPS)* | $ | 0.85 | $ | 1.69 | (50) | % | ||||
*Includes a $3.0 billion legal expense accrued in the first quarter of 2019 related to the ongoing U.S. Federal Trade Commission (FTC) matter as discussed below. As this expense is not expected to be tax-deductible, it had no effect on our provision for income taxes. Excluding this expense, our operating margin would have been 20 percentage points higher, our effective tax rate would have been 14 percentage points lower and our diluted EPS would have been $1.04 higher. |
First Quarter 2019 Operational and Other Financial Highlights
- Daily active users (DAUs) – DAUs were 1.56 billion on average for March 2019, an increase of 8% year-over-year.
Monthly active users (MAUs) – MAUs were 2.38 billion as of March 31, 2019, an increase of 8% year-over-year. - Mobile advertising revenue – Mobile advertising revenue represented approximately 93% of advertising revenue for the first quarter of 2019, up from approximately 91% of advertising revenue in the first quarter of 2018.
- Capital expenditures – Capital expenditures, including principal payments on finance leases, were $3.96 billion for the first quarter of 2019.
- Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $45.24 billion at the end of the first quarter of 2019.
- Headcount – Headcount was 37,773 as of March 31, 2019, an increase of 36% year-over-year.
In addition, we estimate that more than 2.1 billion people now use Facebook, Instagram, WhatsApp, or Messenger (our “Family” of services) every day on average, and around 2.7 billion people use at least one of our Family of services each month.
In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.
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 9195605.
Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.
FACEBOOK, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
(In millions, except for per share amounts) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2019* | 2018 | |||||||
Revenue | $ | 15,077 | $ | 11,966 | ||||
Costs and expenses: | ||||||||
Cost of revenue | 2,816 | 1,927 | ||||||
Research and development | 2,860 | 2,238 | ||||||
Marketing and sales | 2,020 | 1,595 | ||||||
General and administrative | 4,064 | 757 | ||||||
Total costs and expenses | 11,760 | 6,517 | ||||||
Income from operations | 3,317 | 5,449 | ||||||
Interest and other income, net | 165 | 161 | ||||||
Income before provision for income taxes | 3,482 | 5,610 | ||||||
Provision for income taxes | 1,053 | 622 | ||||||
Net income | $ | 2,429 | $ | 4,988 | ||||
Less: Net income attributable to participating securities | — | 1 | ||||||
Net income attributable to Class A and Class B common stockholders | $ | 2,429 | $ | 4,987 | ||||
Earnings per share attributable to Class A and Class B common stockholders: | ||||||||
Basic | $ | 0.85 | $ | 1.72 | ||||
Diluted | $ | 0.85 | $ | 1.69 | ||||
Weighted average shares used to compute earnings per share attributable to Class A and | ||||||||
Class B common stockholders: | ||||||||
Basic | 2,856 | 2,906 | ||||||
Diluted | 2,869 | 2,945 | ||||||
Share-based compensation expense included in costs and expenses: | ||||||||
Cost of revenue | $ | 87 | $ | 56 | ||||
Research and development | 723 | 718 | ||||||
Marketing and sales | 113 | 109 | ||||||
General and administrative | 87 | 72 | ||||||
Total share-based compensation expense | $ | 1,010 | $ | 955 | ||||
*Includes a $3.0 billion legal expense accrued within general and administrative expense related to the ongoing FTC matter as discussed above. |
FACEBOOK, INC. | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(In millions) | ||||||||||
(Unaudited) | ||||||||||
March 31, 2019 | December 31, 2018 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 11,076 | $ | 10,019 | ||||||
Marketable securities | 34,167 | 31,095 | ||||||||
Accounts receivable, net of allowances of $216 and $229 as of March 31, 2019 and | 6,475 | 7,587 | ||||||||
December 31, 2018, respectively | ||||||||||
Prepaid expenses and other current assets | 1,582 | 1,779 | ||||||||
Total current assets | 53,300 | 50,480 | ||||||||
Property and equipment, net | 27,345 | 24,683 | ||||||||
Operating lease right-of-use assets, net | 6,747 | — | ||||||||
Intangible assets, net | 1,150 | 1,294 | ||||||||
Goodwill | 18,333 | 18,301 | ||||||||
Other assets | 2,602 | 2,576 | ||||||||
Total assets | $ | 109,477 | $ | 97,334 | ||||||
Liabilities and stockholders’ equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 604 | $ | 820 | ||||||
Partners payable | 537 | 541 | ||||||||
Operating lease liabilities, current | 645 | — | ||||||||
Accrued expenses and other current liabilities | 7,980 | 5,509 | ||||||||
Deferred revenue and deposits | 142 | 147 | ||||||||
Total current liabilities | 9,908 | 7,017 | ||||||||
Operating lease liabilities, non-current | 6,565 | — | ||||||||
Other liabilities | 6,488 | 6,190 | ||||||||
Total liabilities | 22,961 | 13,207 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders’ equity: | ||||||||||
Common stock and additional paid-in capital | 43,533 | 42,906 | ||||||||
Accumulated other comprehensive loss | (781) | (760) | ||||||||
Retained earnings | 43,764 | 41,981 | ||||||||
Total stockholders’ equity | 86,516 | 84,127 | ||||||||
Total liabilities and stockholders’ equity | $ | 109,477 | $ | 97,334 |
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