Facebook Reports Fourth Quarter and Full Year 2019 Results
 
MENLO PARK, Calif. – January 29, 2020 – 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 % Change
 
Year Ended December 31,
 
Year-over-Year % 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.

1



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

2



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.

3



FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except for per share amounts)
(Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended 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





4



FACEBOOK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
 
 
 
December 31, 2019
 
December 31, 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




5



FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended 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


6




FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended 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






7



Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
 
Three Months Ended December 31,
 
Twelve Months Ended 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







8

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