Financial Trends

Facebook Reports First Quarter 2019 Results

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 %
Change

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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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 to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.