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Meta Platforms, Inc. (FB) SEC Filing 10-Q Quarterly Report for the period ending Thursday, March 31, 2022

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META Quarterly Reports

Meta Platforms, Inc.

CIK: 1326801 Ticker: META

Meta Reports First Quarter 2022 Results


MENLO PARK, Calif. – April 27, 2022 – Meta Platforms, Inc. (Nasdaq: FB) today reported financial results for the quarter ended March 31, 2022.

"We made progress this quarter across a number of key company priorities and we remain confident in the long‑term opportunities and growth that our product roadmap will unlock," said Mark Zuckerberg, Meta founder and CEO. "More people use our services today than ever before, and I'm proud of how our products are serving people around the world."

First Quarter 2022 Financial Highlights
Three Months Ended March 31,Year-over-Year % Change
In millions, except percentages and per share amounts20222021
Total revenue$27,908 $26,171 7%
Total costs and expenses19,384 14,793 31%
Income from operations$8,524 $11,378 (25)%
Operating margin31 %43 %
Provision for income taxes$1,443 $2,006 (28)%
Effective tax rate 16 %17 %
Net income$7,465 $9,497 (21)%
Diluted earnings per share (EPS)$2.72 $3.30 (18)%


First Quarter 2022 Operational and Other Financial Highlights

Family daily active people (DAP) – DAP was 2.87 billion on average for March 2022, an increase of 6% year-over-year.
Family monthly active people (MAP) – MAP was 3.64 billion as of March 31, 2022, an increase of 6% year-over-year.
Facebook daily active users (DAUs) – DAUs were 1.96 billion on average for March 2022, an increase of 4% year-over-year.
Facebook monthly active users (MAUs) – MAUs were 2.94 billion as of March 31, 2022, an increase of 3% year-over-year.
Ad impressions and price per ad – In the first quarter of 2022, ad impressions delivered across our Family of Apps increased by 15% year-over-year and the average price per ad decreased by 8% year-over-year.
Capital expenditures – Capital expenditures, including principal payments on finance leases, were $5.55 billion for the first quarter of 2022.
Share repurchases – We repurchased $9.39 billion of our Class A common stock in the first quarter of 2022. As of March 31, 2022, we had $29.41 billion available and authorized for repurchases.
Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $43.89 billion as of March 31, 2022.
Headcount – Headcount was 77,805 as of March 31, 2022, an increase of 28% year-over-year.
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The following information was filed by Meta Platforms, Inc (META) on Wednesday, April 27, 2022 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________ 

FORM 10-Q
____________________________________________ 
(Mark One)
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission File Number: 001-35551
____________________________________________ 
meta-20220331_g1.jpg
Meta Platforms, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________ 
Delaware20-1665019
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
1601 Willow Road, Menlo Park, California 94025
(Address of principal executive offices and Zip Code)

(650) 543-4800
(Registrant's telephone number, including area code)
 ____________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.000006 par valueFBThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date.
ClassNumber of Shares Outstanding
Class A Common Stock $0.000006 par value2,293,518,778 shares outstanding as of April 22, 2022
Class B Common Stock $0.000006 par value412,804,609 shares outstanding as of April 22, 2022




Meta Platforms, Inc.

Form 10-Q
For the Quarterly Period Ended March 31, 2022

TABLE OF CONTENTS

  Page 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2

NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward‑looking statements.

In October 2021, we changed our corporate name from Facebook, Inc. to Meta Platforms, Inc. We will not distinguish between our prior and current corporate name and will refer to our current corporate name throughout this Quarterly Report on Form 10-Q. As such, unless expressly indicated or the context requires otherwise, the terms "Meta," "company," "we," "us," and "our" in this document refer to Meta Platforms, Inc., a Delaware corporation, and, where appropriate, its subsidiaries. The term "Family" refers to our Facebook, Instagram, Messenger, and WhatsApp products. For references to accessing Meta's products on the "web" or via a "website," such terms refer to accessing such products on personal computers. For references to accessing Meta's products on "mobile," such term refers to accessing such products via a mobile application or via a mobile-optimized version of our websites such as m.facebook.com, whether on a mobile phone or tablet.
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LIMITATIONS OF KEY METRICS AND OTHER DATA

The numbers for our key metrics are calculated using internal company data based on the activity of user accounts. We have historically reported the numbers of our daily active users (DAUs), monthly active users (MAUs), and average revenue per user (ARPU) (collectively, our "Facebook metrics") based on user activity only on Facebook and Messenger and not on our other products. Beginning with our Annual Report on Form 10-K for the year ended December 31, 2019, we also report our estimates of the numbers of our daily active people (DAP), monthly active people (MAP), and average revenue per person (ARPP) (collectively, our "Family metrics") based on the activity of users who visited at least one of Facebook, Instagram, Messenger, and WhatsApp (collectively, our "Family" of products) during the applicable period of measurement. We believe our Family metrics better reflect the size of our community and the fact that many people are using more than one of our products. As a result, over time we intend to report our Family metrics as key metrics in place of DAUs, MAUs, and ARPU in our periodic reports filed with the Securities and Exchange Commission.

While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. The methodologies used to measure these metrics require significant judgment and are also susceptible to algorithm or other technical errors. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in our methodology. We regularly review our processes for calculating these metrics, and from time to time we discover inaccuracies in our metrics or make adjustments to improve their accuracy, which can result in adjustments to our historical metrics. Our ability to recalculate our historical metrics may be impacted by data limitations or other factors that require us to apply different methodologies for such adjustments. We generally do not intend to update previously disclosed Family metrics for any such inaccuracies or adjustments that are within the error margins disclosed below.

In addition, our Family metrics and Facebook metrics estimates will differ from estimates published by third parties due to differences in methodology.

Family Metrics

Many people in our community have user accounts on more than one of our products, and some people have multiple user accounts within an individual product. Accordingly, for our Family metrics, we do not seek to count the total number of user accounts across our products because we believe that would not reflect the actual size of our community. Rather, our Family metrics represent our estimates of the number of unique people using at least one of Facebook, Instagram, Messenger, and WhatsApp. We do not require people to use a common identifier or link their accounts to use multiple products in our Family, and therefore must seek to attribute multiple user accounts within and across products to individual people. To calculate these metrics, we rely upon complex techniques, algorithms and machine learning models that seek to count the individual people behind user accounts, including by matching multiple user accounts within an individual product and across multiple products when we believe they are attributable to a single person, and counting such group of accounts as one person. These techniques and models require significant judgment, are subject to data and other limitations discussed below, and inherently are subject to statistical variances and uncertainties. We estimate the potential error in our Family metrics primarily based on user survey data, which itself is subject to error as well. While we expect the error margin for our Family metrics to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide MAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. As a result, it is also possible that our Family metrics may indicate changes or trends in user numbers that do not match actual changes or trends.

To calculate our estimates of Family DAP and MAP, we currently use a series of machine learning models that are developed based on internal reviews of limited samples of user accounts and calibrated against user survey data. We apply significant judgment in designing these models and calculating these estimates. For example, to match user accounts within individual products and across multiple products, we use data signals such as similar device information, IP addresses, and user names. We also calibrate our models against data from periodic user surveys of varying sizes and frequency across our products, which are inherently subject to error. The timing and results of such user surveys have in the past contributed, and may in the future contribute, to changes in our reported Family metrics from period to period. In addition, our data limitations may affect our understanding of certain details of our business and increase the risk of error for our Family metrics estimates.
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Our techniques and models rely on a variety of data signals from different products, and we rely on more limited data signals for some products compared to others. For example, as a result of limited visibility into encrypted products, we have fewer data signals from WhatsApp user accounts and primarily rely on phone numbers and device information to match WhatsApp user accounts with accounts on our other products. Similarly, although Messenger Kids users are included in our Family metrics, we do not seek to match their accounts with accounts on our other applications for purposes of calculating DAP and MAP. Any loss of access to data signals we use in our process for calculating Family metrics, whether as a result of our own product decisions, actions by third-party browser or mobile platforms, regulatory or legislative requirements, or other factors, also may impact the stability or accuracy of our reported Family metrics, as well as our ability to report these metrics at all. Our estimates of Family metrics also may change as our methodologies evolve, including through the application of new data signals or technologies, product changes, or other improvements in our user surveys, algorithms, or machine learning that may improve our ability to match accounts within and across our products or otherwise evaluate the broad population of our users. In addition, such evolution may allow us to identify previously undetected violating accounts (as defined below).

We regularly evaluate our Family metrics to estimate the percentage of our MAP consisting solely of "violating" accounts. We define "violating" accounts as accounts which we believe are intended to be used for purposes that violate our terms of service, including bots and spam. In the fourth quarter of 2021, we estimated that approximately 3% of our worldwide MAP consisted solely of violating accounts. Such estimation is based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination. For example, we look for account information and behaviors associated with Facebook and Instagram accounts that appear to be inauthentic to the reviewers, but we have limited visibility into WhatsApp user activity due to encryption. In addition, if we believe an individual person has one or more violating accounts, we do not include such person in our violating accounts estimation as long as we believe they have one account that does not constitute a violating account. From time to time, we disable certain user accounts, make product changes, or take other actions to reduce the number of violating accounts among our users, which may also reduce our DAP and MAP estimates in a particular period. We intend to disclose our estimates of the percentage of our MAP consisting solely of violating accounts on an annual basis. Violating accounts are very difficult to measure at our scale, and it is possible that the actual number of violating accounts may vary significantly from our estimates.

The numbers of Family DAP and MAP discussed in this Quarterly Report on Form 10-Q, as well as ARPP, do not include users on our other products, unless they would otherwise qualify as DAP or MAP, respectively, based on their other activities on our Family products.

Facebook Metrics

We regularly evaluate our Facebook metrics to estimate the number of "duplicate" and "false" accounts among our MAUs. A duplicate account is one that a user maintains in addition to his or her principal account. We divide "false" accounts into two categories: (1) user-misclassified accounts, where users have created personal profiles for a business, organization, or non-human entity such as a pet (such entities are permitted on Facebook using a Page rather than a personal profile under our terms of service); and (2) violating accounts, which represent user profiles that we believe are intended to be used for purposes that violate our terms of service, such as bots and spam. The estimates of duplicate and false accounts are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination. For example, to identify duplicate accounts we use data signals such as identical IP addresses and similar user names, and to identify false accounts we look for names that appear to be fake or other behavior that appears inauthentic to the reviewers. Any loss of access to data signals we use in this process, whether as a result of our own product decisions, actions by third-party browser or mobile platforms, regulatory or legislative requirements, or other factors, also may impact the stability or accuracy of our estimates of duplicate and false accounts. Our estimates also may change as our methodologies evolve, including through the application of new data signals or technologies or product changes that may allow us to identify previously undetected duplicate or false accounts and may improve our ability to evaluate a broader population of our users. Duplicate and false accounts are very difficult to measure at our scale, and it is possible that the actual number of duplicate and false accounts may vary significantly from our estimates.

In the fourth quarter of 2021, we estimated that duplicate accounts may have represented approximately 11% of our worldwide MAUs. We believe the percentage of duplicate accounts is meaningfully higher in developing markets such as the Philippines and Vietnam, as compared to more developed markets. In the fourth quarter of 2021, we estimated that false accounts may have represented approximately 5% of our worldwide MAUs. Our estimation of false accounts can vary as a result of episodic spikes in the creation of such accounts, which we have seen originate more frequently in specific countries
5

such as Indonesia, Nigeria, and Vietnam. From time to time, we disable certain user accounts, make product changes, or take other actions to reduce the number of duplicate or false accounts among our users, which may also reduce our DAU and MAU estimates in a particular period. We intend to disclose our estimates of the number of duplicate and false accounts among our MAUs on an annual basis.

The numbers of DAUs and MAUs discussed in this Quarterly Report on Form 10-Q, as well as ARPU, do not include users on Instagram, WhatsApp, or our other products, unless they would otherwise qualify as DAUs or MAUs, respectively, based on their other activities on Facebook.

User Geography

Our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location. These factors may not always accurately reflect the user's actual location. For example, a user may appear to be accessing Facebook from the location of the proxy server that the user connects to rather than from the user's actual location. The methodologies used to measure our metrics are also susceptible to algorithm or other technical errors, and our estimates for revenue by user location and revenue by user device are also affected by these factors.

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PART I—FINANCIAL INFORMATION
Item 1.Financial Statements
META PLATFORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except for number of shares and par value)
(Unaudited)
March 31,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$14,886 $16,601 
Marketable securities29,004 31,397 
Accounts receivable, net11,390 14,039 
Prepaid expenses and other current assets3,985 4,629 
Total current assets59,265 66,666 
Equity investments6,775 6,775 
Property and equipment, net61,582 57,809 
Operating lease right-of-use assets12,241 12,155 
Intangible assets, net910 634 
Goodwill19,923 19,197 
Other assets3,522 2,751 
Total assets$164,218 $165,987 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$3,246 $4,083 
Partners payable935 1,052 
Operating lease liabilities, current1,159 1,127 
Accrued expenses and other current liabilities15,226 14,312 
Deferred revenue and deposits520 561 
Total current liabilities21,086 21,135 
Operating lease liabilities, non-current12,894 12,746 
Other liabilities7,010 7,227 
Total liabilities40,990 41,108 
Commitments and contingencies
Stockholders' equity:
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,301 million and 2,328 million shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively; 4,141 million Class B shares authorized, 413 million and 413 million shares issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively
— — 
Additional paid-in capital57,512 55,811 
Accumulated other comprehensive loss(1,996)(693)
Retained earnings67,712 69,761 
Total stockholders' equity123,228 124,879 
Total liabilities and stockholders' equity$164,218 $165,987 
See Accompanying Notes to Condensed Consolidated Financial Statements.
7

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
 
 Three Months Ended March 31,
 20222021
Revenue$27,908 $26,171 
Costs and expenses:
Cost of revenue6,005 5,131 
Research and development7,707 5,197 
Marketing and sales3,312 2,843 
General and administrative2,360 1,622 
Total costs and expenses19,384 14,793 
Income from operations8,524 11,378 
Interest and other income, net384 125 
Income before provision for income taxes8,908 11,503 
Provision for income taxes1,443 2,006 
Net income$7,465 $9,497 
Earnings per share attributable to Class A and Class B common stockholders:
Basic$2.74 $3.34 
Diluted$2.72 $3.30 
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
Basic2,725 2,847 
Diluted2,742 2,882 
Share-based compensation expense included in costs and expenses:
Cost of revenue$160 $118 
Research and development1,941 1,408 
Marketing and sales216 174 
General and administrative181 130 
Total share-based compensation expense$2,498 $1,830 
See Accompanying Notes to Condensed Consolidated Financial Statements.
8

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 
 Three Months Ended March 31,
 20222021
Net income$7,465 $9,497 
Other comprehensive loss:
Change in foreign currency translation adjustment, net of tax(359)(601)
Change in unrealized gain (loss) on available-for-sale investments and other, net of tax(944)(172)
Comprehensive income$6,162 $8,724 
See Accompanying Notes to Condensed Consolidated Financial Statements.
9

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions)
(Unaudited)
Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Class A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Stockholders' EquityClass A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive IncomeRetained EarningsTotal Stockholders' Equity
SharesPar ValueSharesPar Value
Balances at beginning of period2,741 $— $55,811 $(693)$69,761 $124,879 2,849 $— $50,018 $927 $77,345 $128,290 
Issuance of common stock11 — — — — — 11 — — — — — 
Shares withheld related to net share settlement(4)— (797)— (128)(925)(4)— (688)— (389)(1,077)
Share-based compensation— — 2,498 — — 2,498 — — 1,830 — — 1,830 
Share repurchases(34)— — — (9,386)(9,386)(15)— — — (4,110)(4,110)
Other comprehensive loss— — — (1,303)— (1,303)— — — (773)— (773)
Net income— — — — 7,465 7,465 — — — — 9,497 9,497 
Balances at end of period2,714 $— $57,512 $(1,996)$67,712 $123,228 2,841 $— $51,160 $154 $82,343 $133,657 
See Accompanying Notes to Condensed Consolidated Financial Statements.
10

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Three Months Ended March 31,
 20222021
Cash flows from operating activities
Net income$7,465 $9,497 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,156 1,972 
Share-based compensation2,498 1,830 
Deferred income taxes(563)418 
Other(221)(66)
Changes in assets and liabilities:
Accounts receivable2,557 849 
Prepaid expenses and other current assets573 (461)
Other assets(108)(10)
Accounts payable(882)(250)
Partners payable(105)(72)
Accrued expenses and other current liabilities763 (1,681)
Deferred revenue and deposits(52)
Other liabilities(5)210 
Net cash provided by operating activities14,076 12,242 
Cash flows from investing activities
Purchases of property and equipment(5,441)(4,303)
Proceeds relating to property and equipment126 31 
Purchases of marketable securities(4,068)(6,231)
Sales of marketable securities5,065 1,650 
Maturities of marketable securities402 3,981 
Acquisitions of businesses and intangible assets(853)— 
Other investing activities(10)(2)
Net cash used in investing activities(4,779)(4,874)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards(925)(1,077)
Repurchases of Class A common stock(9,506)(3,939)
Principal payments on finance leases(233)(151)
Net change in overdraft in cash pooling entities20 (50)
Other financing activities(16)32 
Net cash used in financing activities(10,660)(5,185)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(149)(246)
Net increase (decrease) in cash, cash equivalents, and restricted cash(1,512)1,937 
Cash, cash equivalents, and restricted cash at beginning of the period16,865 17,954 
Cash, cash equivalents, and restricted cash at end of the period$15,353 $19,891 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents$14,886 $19,513 
Restricted cash, included in prepaid expenses and other current assets294 257 
Restricted cash, included in other assets173 121 
Total cash, cash equivalents, and restricted cash$15,353 $19,891 
See Accompanying Notes to Condensed Consolidated Financial Statements.
11

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 31,
20222021
Supplemental cash flow data
Cash paid for income taxes, net$502 $2,907 
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses and other current liabilities$3,709 $2,198 
Acquisition of businesses in accrued expenses and other current liabilities and other liabilities$73 $118 
Settlement of convertible notes in exchange of equity securities in other current assets$131 $— 
Other current assets through financing arrangement in accrued expenses and other current liabilities$659 $— 
Repurchases of Class A common stock in accrued expenses and other current liabilities$221 $240 
See Accompanying Notes to Condensed Consolidated Financial Statements.
12

META PLATFORMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Meta Platforms, Inc., its subsidiaries where we have controlling financial interests, and any variable interest entities for which we are deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2022.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, valuation of equity investments, income taxes, loss contingencies, valuation of long-lived assets including goodwill, intangible assets, and property and equipment, and their associated estimated useful lives, credit losses of available-for-sale debt securities, credit losses of accounts receivable, fair value of financial instruments, and leases. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

Significant Accounting Policies

There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Recently Adopted Accounting Pronouncements

On January 1, 2022, we early adopted Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606). The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

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Accounting Pronouncements Not Yet Adopted

In November 2021, the Financial Accounting Standards Board issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (ASU 2021-10), which requires the disclosure of government assistance received by most business entities relating to: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity's financial statements. This guidance will be effective for our annual financial statements for the year ended December 31, 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Note 2. Revenue

Revenue disaggregated by revenue source and by segment consists of the following (in millions). For comparative purposes, amounts in the prior period have been recast:
 Three Months Ended March 31,
 20222021
Advertising$26,998 $25,439 
Other revenue215 198 
Family of Apps27,213 25,637 
Reality Labs695 534 
Total revenue$27,908 $26,171 

Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions):
 Three Months Ended March 31,
 20222021
United States and Canada(1)
$11,780 $11,436 
Europe(2)
6,638 6,384 
Asia-Pacific6,722 6,101 
Rest of World(2)
2,768 2,250 
Total revenue$27,908 $26,171 
____________________________________
(1)    United States revenue was $11.10 billion and $10.75 billion for the three months ended March 31, 2022 and 2021, respectively.
(2)    Europe includes Russia and Turkey, and Rest of World includes Africa, Latin America, and the Middle East.

Our total deferred revenue was $565 million and $596 million as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022, we expect $472 million of our deferred revenue to be realized in less than a year.

Note 3. Earnings per Share

We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method. As the liquidation and dividend rights for both Class A and Class B common stock are identical, the undistributed earnings are allocated on a proportionate basis to the weighted-average number of common shares outstanding for the period.

Basic EPS is computed by dividing net income by the weighted-average number of shares of our Class A and Class B common stock outstanding.

For the calculation of diluted EPS, net income for basic EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans.

In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B
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common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS is computed by dividing the resulting net income by the weighted-average number of fully diluted common shares outstanding.

For the three months ended March 31, 2022, 48 million shares of Class A common stock equivalents of RSUs were excluded from the diluted EPS calculation as including them would have an anti-dilutive effect. RSUs with anti-dilutive effect were not material for the three months ended, March 31, 2021.

Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.

The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): 
 Three Months Ended March 31,
 20222021
 Class AClass BClass AClass B
Basic EPS:
Numerator
Net income$6,334 $1,131 $8,025 $1,472 
Denominator
Shares used in computation of basic earnings per share2,312 413 2,406 441 
Basic EPS$2.74 $2.74 $3.34 $3.34 
Diluted EPS:
Numerator
Net income$6,334 $1,131 $8,025 $1,472 
Reallocation of net income as a result of conversion of Class B to Class A common stock1,131 — 1,472 — 
Reallocation of net income to Class B common stock— (7)— (18)
Net income for diluted EPS$7,465 $1,124 $9,497 $1,454 
Denominator
Shares used in computation of basic earnings per share2,312 413 2,406 441 
Conversion of Class B to Class A common stock413 — 441 — 
Weighted-average effect of dilutive RSUs17 — 35 — 
Shares used in computation of diluted earnings per share2,742 413 2,882 441 
Diluted EPS$2.72 $2.72 $3.30 $3.30 
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Note 4. Cash and Cash Equivalents and Marketable Securities

The following table sets forth the cash and cash equivalents and marketable securities by major security type (in millions):
March 31, 2022December 31, 2021
Cash and cash equivalents:
Cash$7,090 $7,308 
Money market funds7,350 8,850 
U.S. government securities81 25 
U.S. government agency securities— 108 
Certificates of deposit and time deposits351 250 
Corporate debt securities14 60 
Total cash and cash equivalents14,886 16,601 
Marketable securities:
U.S. government securities9,721 10,901 
U.S. government agency securities5,434 5,927 
Corporate debt securities13,849 14,569 
Total marketable securities29,004 31,397 
Total cash and cash equivalents and marketable securities$43,890 $47,998 

The following table summarizes our available-for-sale marketable securities with unrealized losses as of March 31, 2022, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in millions):
March 31, 2022
Less than 12 months12 months or greaterTotal
Fair ValueUnrealized lossesFair ValueUnrealized lossesFair ValueUnrealized losses
U.S. government securities$7,488 $(218)$214 $(11)$7,702 $(229)
U.S. government agency securities3,345 (110)1,736 (111)5,081 (221)
Corporate debt securities11,953 (507)589 (39)12,542 (546)
Total$22,786 $(835)$2,539 $(161)$25,325 $(996)

The gross unrealized gains on our marketable securities were not material as of March 31, 2022 and December 31, 2021. The gross unrealized losses were $996 million and not material as of March 31, 2022 and December 31, 2021, respectively. The allowance for credit losses on our marketable securities was not material as of March 31, 2022 and December 31, 2021.

The following table classifies our marketable securities by contractual maturities (in millions):
March 31, 2022
Due within one year$2,452 
Due after one year to five years26,552 
Total$29,004 

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Note 5. Equity Investments

Our equity investments are investments in equity securities of privately-held companies without readily determinable fair values. The following table summarizes our equity investments that were measured using measurement alternative and equity method (in millions):
March 31, 2022December 31, 2021
Equity investments under measurement alternative:
Initial cost$6,480 $6,480 
Cumulative upward adjustments311 311 
Cumulative impairment/downward adjustments(50)(50)
Carrying value6,741 6,741 
Equity investments under equity method34 34 
Total equity investments$6,775 $6,775 

Note 6. Fair Value Measurements

The following table summarizes our assets measured at fair value and the classification by level of input within the fair value hierarchy (in millions):
  Fair Value Measurement at Reporting Date Using
DescriptionMarch 31, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Cash equivalents:
Money market funds$7,350 $7,350 $— 
U.S. government securities81 81 — 
Certificates of deposit and time deposits351 — 351 
Corporate debt securities14 — 14 
Marketable securities:
U.S. government securities9,721 9,721 — 
U.S. government agency securities5,434 5,434 — 
Corporate debt securities13,849 — 13,849 
Total cash equivalents and marketable securities$36,800 $22,586 $14,214 
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  Fair Value Measurement at Reporting Date Using
DescriptionDecember 31, 2021Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Cash equivalents:
Money market funds$8,850 $8,850 $— 
U.S. government securities25 25 — 
U.S. government agency securities108 108 — 
Certificates of deposit and time deposits250 — 250 
Corporate debt securities60 — 60 
Marketable securities:
U.S. government securities10,901 10,901 — 
U.S. government agency securities5,927 5,927 — 
Corporate debt securities14,569 — 14,569 
Total cash equivalents and marketable securities$40,690 $25,811 $14,879 

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

We also have assets and liabilities classified within Level 3 because factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. As of March 31, 2022, assets and liabilities remeasured at fair value within Level 3 during the three months ended March 31, 2022 were not material. As of December 31, 2021, included in the total $6.78 billion of equity investments, $913 million was remeasured at fair value during the year ended December 31, 2021 and was classified within Level 3 of the fair value measurement hierarchy on a non-recurring basis. The gains and losses as the result of the remeasurements were not material for the three months ended March 31, 2022 and 2021. For information regarding equity investments, see Note 5 — Equity Investments.

Note 7. Property and Equipment

Property and equipment, net consists of the following (in millions): 
March 31, 2022December 31, 2021
Land$1,713 $1,688 
Servers and network assets27,094 25,584 
Buildings23,154 22,531 
Leasehold improvements6,043 5,795 
Equipment and other5,045 4,764 
Finance lease right-of-use assets2,955 2,840 
Construction in progress17,031 14,687 
Property and equipment, gross83,035 77,889 
Less: Accumulated depreciation(21,453)(20,080)
Property and equipment, net$61,582 $57,809 

Construction in progress includes costs mostly related to construction of data centers, network infrastructure, and office buildings. Depreciation expense on property and equipment was $2.12 billion and $1.85 billion for the three months ended March 31, 2022 and 2021, respectively.
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Note 8. Leases

We have entered into various non-cancelable operating lease agreements mostly for certain of our offices, data centers, colocations, and land. We have also entered into various non-cancelable finance lease agreements for certain network infrastructure. Our leases have original lease periods expiring between the remainder of 2022 and 2093. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs are as follows (in millions):
Three Months Ended March 31,
20222021
Finance lease cost
Amortization of right-of-use assets$98 $81 
Interest
Operating lease cost411 362 
Variable lease cost and other, net90 66 
Total lease cost$603 $513 

Supplemental balance sheet information related to leases is as follows:
March 31, 2022December 31, 2021
Weighted-average remaining lease term
Finance leases13.9 years13.9 years
Operating leases12.8 years13.0 years
Weighted-average discount rate
Finance leases2.7 %2.7 %
Operating leases2.8 %2.8 %

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2022 (in millions):
Operating LeasesFinance Leases
The remainder of 2022$1,061 $78 
20231,600 69 
20241,565 47 
20251,403 47 
20261,344 47 
Thereafter10,312 434 
Total undiscounted cash flows17,285 722 
Less: Imputed interest(3,232)(117)
Present value of lease liabilities$14,053 $605 
Lease liabilities, current$1,159 $81 
Lease liabilities, non-current12,894 524 
Present value of lease liabilities$14,053 $605 

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The table above does not include lease payments that were not fixed at commencement or lease modification. As of March 31, 2022, we have additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $9.78 billion and $1.63 billion, respectively, mostly for offices, data centers, and network infrastructure. These operating and finance leases will commence between the remainder of 2022 and 2028 with lease terms of greater than one year to 30 years.

Supplemental cash flow information related to leases is as follows (in millions):
Three Months Ended March 31,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$389 $329 
Operating cash flows for finance leases$$
Financing cash flows for finance leases$233 $151 
Lease liabilities arising from obtaining right-of-use assets:
Operating leases$539 $1,282 
Finance leases$52 $24 

Note 9. Acquisitions, Goodwill and Intangible Assets

During the three months ended March 31, 2022, we completed several business acquisitions with total cash consideration transferred of $774 million, which in aggregate was allocated to $182 million of intangible assets, $759 million of goodwill, and $167 million of net liabilities assumed. Goodwill generated from all business acquisitions completed was primarily attributable to expected synergies from future growth and potential monetization opportunities. The amount of goodwill generated that was deductible for tax purposes was not material. Acquisition-related costs were immaterial and were expensed as incurred in the condensed consolidated statements of operations. Pro forma historical results of operations related to these business acquisitions have not been presented because they are not material to our condensed consolidated financial statements, either individually or in the aggregate. We have included the financial results of these acquired businesses in our condensed consolidated financial statements from their respective dates of acquisition.

Changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2022 are as follows (in millions): 

Family of AppsReality LabsTotal
Goodwill at December 31, 2021$18,458 $739 $19,197 
Acquisitions759 — 759 
Adjustments— (33)(33)
Goodwill at March 31, 2022$19,217 $706 $19,923 

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The following table sets forth the major categories of the intangible assets and the weighted‑average remaining useful lives for those assets that are not already fully amortized (in millions):

March 31, 2022December 31, 2021
Weighted-Average Remaining Useful Lives
(in years)
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Acquired technology4.2$1,534 $(1,194)$340 $1,412 $(1,169)$243 
Acquired patents3.2827 (731)96 827 (722)105 
Trade names4.1623 (602)21 644 (633)11 
Other9.6188 (99)89 176 (167)
Total finite-lived assets3,172 (2,626)546 3,059 (2,691)368 
Total indefinite-lived assetsN/A364 — 364 266 — 266 
Total intangible assets$3,536 $(2,626)$910 $3,325 $(2,691)$634 

Amortization expense of intangible assets was $40 million and $118 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as follows (in millions):

The remainder of 2022$142 
2023133 
2024105 
202567 
202627 
Thereafter72 
Total$546 

Note 10. Commitments and Contingencies

Guarantee

In 2018, we established a multi-currency notional cash pool for certain of our entities with a third-party bank provider. Actual cash balances are not physically converted and are not commingled between participating legal entities. As part of the notional cash pool agreement, the bank extends overdraft credit to our participating entities as needed, provided that the overall notionally pooled balance of all accounts in the pool at the end of each day is at least zero. In the unlikely event of a default by our collective entities participating in the pool, any overdraft balances incurred would be guaranteed by Meta Platforms, Inc.

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Contractual Commitments

We have $22.73 billion of non-cancelable contractual commitments as of March 31, 2022, which are primarily related to our investments in servers, network infrastructure, and Reality Labs. The following is a schedule, by years, of non-cancelable contractual commitments as of March 31, 2022 (in millions):
The remainder of 2022$13,940 
20233,851 
20241,804 
2025386 
2026205 
Thereafter2,542 
Total$22,728 

Additionally, as part of the normal course of business, we have entered into multi-year agreements to purchase renewable energy that do not specify a fixed or minimum volume commitment or to purchase certain server components that do not specify a fixed or minimum price commitment. We enter into these agreements in order to secure either volume or price. Using the projected market prices or expected volume consumption, the total estimated spend as of March 31, 2022 is approximately $8.75 billion, the majority of which is due beyond five years. The ultimate spend under these agreements may vary and will be based on prevailing market prices or actual volume purchased.

Legal and Related Matters

Beginning on March 20, 2018, multiple putative class actions and derivative actions were filed in state and federal courts in the United States and elsewhere against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with our platform and user data practices as well as the misuse of certain data by a developer that shared such data with third parties in violation of our terms and policies, and seeking unspecified damages and injunctive relief. Beginning on July 27, 2018, two putative class actions were filed in federal court in the United States against us and certain of our directors and officers alleging violations of securities laws in connection with the disclosure of our earnings results for the second quarter of 2018 and seeking unspecified damages. These two actions subsequently were transferred and consolidated in the U.S. District Court for the Northern District of California with the putative securities class action described above relating to our platform and user data practices. On September 25, 2019, the district court granted our motion to dismiss the consolidated putative securities class action, with leave to amend. On November 15, 2019, a second amended complaint was filed in the consolidated putative securities class action. On August 7, 2020, the district court granted our motion to dismiss the second amended complaint, with leave to amend. On October 16, 2020, a third amended complaint was filed in the consolidated putative securities class action. On December 20, 2021, the district court granted our motion to dismiss the third amended complaint, with prejudice. On January 17, 2022, the plaintiffs filed a notice of appeal of the order dismissing their case, and the appeal is now pending before the U.S. Court of Appeals for the Ninth Circuit. With respect to the multiple putative class actions filed against us beginning on March 20, 2018 alleging fraud and violations of consumer protection, privacy, and other laws in connection with the same matters, several of the cases brought on behalf of consumers in the United States were consolidated in the U.S. District Court for the Northern District of California. On September 9, 2019, the court granted, in part, and denied, in part, our motion to dismiss the consolidated putative consumer class action. In addition, our platform and user data practices, as well as the events surrounding the misuse of certain data by a developer, became the subject of U.S. Federal Trade Commission (FTC), state attorneys general, and other government inquiries in the United States, Europe, and other jurisdictions. We entered into a settlement and modified consent order to resolve the FTC inquiry, which took effect in April 2020. Among other matters, our settlement with the FTC required us to pay a penalty of $5.0 billion which was paid in April 2020 upon the effectiveness of the modified consent order. The state attorneys general inquiry and certain government inquiries in other jurisdictions remain ongoing. On July 16, 2021, a stockholder derivative action was filed in Delaware Chancery Court against certain of our directors and officers asserting breach of fiduciary duty and related claims relating to our historical platform and user data practices, as well as our settlement with the FTC. On July 20, 2021, other stockholders filed an amended derivative complaint in a related Delaware Chancery Court action, asserting breach of fiduciary duty and related claims against certain of our current and former directors and officers in connection with our historical platform and user data practices. On
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November 4, 2021, the lead plaintiffs filed a second amended and consolidated complaint in the stockholder derivative action. We believe the lawsuits described above are without merit, and we are vigorously defending them.

We also notify the Irish Data Protection Commission (IDPC), our lead European Union privacy regulator under the General Data Protection Regulation (GDPR), of certain other personal data breaches and privacy issues, and are subject to inquiries and investigations by the IDPC and other European regulators regarding various aspects of our regulatory compliance. The GDPR is still a relatively new law and draft decisions in investigations by the IDPC are subject to review by other European privacy regulators as part of the GDPR's consistency mechanism, which may lead to significant changes in the final outcome of such investigations. As a result, the interpretation and enforcement of the GDPR, as well as the imposition and amount of penalties for non-compliance, are subject to significant uncertainty. Although we are vigorously defending our regulatory compliance, we have accrued significant amounts for loss contingencies related to these inquiries and investigations in Europe, and we believe there is a reasonable possibility that additional accruals for losses related to these matters could be material in the aggregate.

We are also subject to other government inquiries and investigations relating to our business activities and disclosure practices. For example, beginning in September 2021, we became subject to government investigations and requests relating to a former employee's allegations and release of internal company documents concerning, among other things, our algorithms, advertising and user metrics, and content enforcement practices, as well as misinformation and other undesirable activity on our platform, and user well-being. Beginning on October 27, 2021, multiple putative class actions and derivative actions were filed in the U.S. District Court for the Northern District of California against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with the same matters. We believe these lawsuits are without merit, and we are vigorously defending them.

On March 8, 2022, a putative class action was filed in the U.S. District Court for the Northern District of California against us and certain of our directors and officers alleging violations of securities laws in connection with the disclosure of our earnings results for the fourth quarter of 2021 and seeking unspecified damages. We believe this lawsuit is without merit, and we are vigorously defending it.

Beginning on August 15, 2018, multiple putative class actions were filed against us alleging that we inflated our estimates of the potential audience size for advertisements, resulting in artificially increased demand and higher prices. The cases were consolidated in the U.S. District Court for the Northern District of California and seek unspecified damages and injunctive relief. In a series of rulings in 2019, 2021, and 2022, the court dismissed certain of the plaintiffs' claims, but permitted its fraud and unfair competition claims to proceed. On March 29, 2022, the court granted the plaintiffs' motion for class certification. We believe this lawsuit is without merit, and we are vigorously defending it.

In addition, we are subject to litigation and other proceedings involving law enforcement and other regulatory agencies, including in particular in Brazil, Russia, and other countries in Europe, in order to ascertain the precise scope of our legal obligations to comply with the requests of those agencies, including our obligation to disclose user information in particular circumstances. A number of such instances have resulted in the assessment of fines and penalties against us. We believe we have multiple legal grounds to satisfy these requests or prevail against associated fines and penalties, and we intend to vigorously defend such fines and penalties.

With respect to the cases, actions, and inquiries described above, we evaluate the associated developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in some of these matters. With respect to the matters described above that do not include an estimate of the amount of loss or range of possible loss, such losses or range of possible losses either cannot be estimated or are not individually material, but we believe there is a reasonable possibility that they may be material in the aggregate.

We are also party to various other legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. For example, we are subject to various litigation and government inquiries and investigations, formal or informal, by competition authorities in the United States, Europe, and other jurisdictions. Such investigations, inquiries, and lawsuits concern, among other things, our business practices in the areas of social networking or social media services, digital advertising, and/or mobile or online applications, as well as our acquisitions. For example, in June 2019 we were informed by the FTC that it had opened an antitrust investigation of our
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company. On December 9, 2020, the FTC filed a complaint against us in the U.S. District Court for the District of Columbia alleging that we engaged in anticompetitive conduct and unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and Section 2 of the Sherman Act, including by acquiring Instagram in 2012 and WhatsApp in 2014 and by maintaining conditions on access to our platform. In addition, beginning in the third quarter of 2019, we became the subject of antitrust investigations by the U.S. Department of Justice and state attorneys general. On December 9, 2020, the attorneys general from 46 states, the territory of Guam, and the District of Columbia filed a complaint against us in the U.S. District Court for the District of Columbia alleging that we engaged in anticompetitive conduct in violation of Section 2 of the Sherman Act, including by acquiring Instagram in 2012 and WhatsApp in 2014 and by maintaining conditions on access to our platform. The complaint also alleged that we violated Section 7 of the Clayton Act by acquiring Instagram and WhatsApp. The complaints of the FTC and attorneys general both sought a permanent injunction against our company's alleged violations of the antitrust laws, and other equitable relief, including divestiture or reconstruction of Instagram and WhatsApp. On June 28, 2021, the court granted our motions to dismiss the complaints filed by the FTC and attorneys general, dismissing the FTC's complaint with leave to amend and dismissing the attorneys general's case without prejudice. On July 28, 2021, the attorneys general filed a notice of appeal of the order dismissing their case and that appeal is now pending before the U.S. Court of Appeals for the District of Columbia Circuit. On August 19, 2021, the FTC filed an amended complaint, and on October 4, 2021, we filed a motion to dismiss this amended complaint. On January 11, 2022, the court denied our motion to dismiss the FTC's amended complaint. Multiple putative class actions have also been filed in state and federal courts in the United States and in the United Kingdom against us alleging violations of antitrust laws and other causes of action in connection with these acquisitions and/or other alleged anticompetitive conduct, and seeking damages and injunctive relief. Several of the cases brought on behalf of certain advertisers and users in the United States were consolidated in the U.S. District Court for the Northern District of California. On January 14, 2022, the court granted, in part, and denied, in part, our motion to dismiss the consolidated actions. We believe these lawsuits are without merit, and we are vigorously defending them.

Additionally, we are required to comply with various legal and regulatory obligations around the world. The requirements for complying with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any failure to comply with such obligations could eventually lead to asserted legal or regulatory action. With respect to these other legal proceedings, claims, regulatory, tax, or government inquiries and investigations, and other matters, asserted and unasserted, we evaluate the associated developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in some of these other matters. We believe that the amount of losses or any estimable range of possible losses with respect to these other matters will not, either individually or in the aggregate, have a material adverse effect on our business and condensed consolidated financial statements.

The ultimate outcome of the legal and related matters described in this section, such as whether the likelihood of loss is remote, reasonably possible, or probable, or if and when the reasonably possible range of loss is estimable, is inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management's estimates of loss, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.

For information regarding income tax contingencies, see Note 12 — Income Taxes.

Indemnifications

In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar indemnification obligations.

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It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material impact on our condensed consolidated financial statements. In our opinion, as of March 31, 2022, there was not a reasonable possibility we had incurred a material loss with respect to indemnification of such parties. We have not recorded any liability for costs related to indemnification through March 31, 2022.

Note 11. Stockholders' Equity

Share Repurchase Program

Our board of directors has authorized a share repurchase program of our Class A common stock, which commenced in January 2017 and does not have an expiration date. As of December 31, 2021, $38.79 billion remained available and authorized for repurchases under this program. During the three months ended March 31, 2022, we repurchased and subsequently retired 34 million shares of our Class A common stock for an aggregate amount of $9.39 billion. As of March 31, 2022, $29.41 billion remained available and authorized for repurchases.

The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

Share-based Compensation Plans

We have one active share-based employee compensation plan, the 2012 Equity Incentive Plan, which was amended in each of June 2016 and February 2018 (Amended 2012 Plan). Our Amended 2012 Plan provides for the issuance of incentive and nonqualified stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares, and stock bonuses to qualified employees, directors, and consultants. Shares that are withheld in connection with the net settlement of RSUs or forfeited under our stock plan are added to the reserves of the Amended 2012 Plan.

Effective January 1, 2022, there were 136 million shares of our Class A common stock reserved for future issuance under our Amended 2012 Plan. Pursuant to the automatic increase provision under our Amended 2012 Plan, the number of shares reserved for issuance increases automatically on January 1 of each of the calendar years during the term of the Amended 2012 Plan, which will continue through April 2026, by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total issued and outstanding shares of our Class A common stock as of the immediately preceding December 31st or (ii) a number of shares determined by our board of directors.

The following table summarizes the activities for our unvested RSUs for the three months ended March 31, 2022:
Number of SharesWeighted-Average Grant Date Fair Value Per Share
(in thousands)
Unvested at December 31, 202198,848 $244.32 
Granted66,724 $214.17 
Vested(11,156)$219.55 
Forfeited(3,259)$230.73 
Unvested at March 31, 2022151,157 $233.13 

The fair value as of the respective vesting dates of RSUs that vested during the three months ended March 31, 2022 and 2021 was $2.43 billion and $2.83 billion, respectively. The income tax benefit recognized related to awards vested during the three months ended March 31, 2022 and 2021 was $514 million and $605 million, respectively.

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As of March 31, 2022, there was $33.83 billion of unrecognized share-based compensation expense related to RSU awards. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years based on vesting under the award service conditions.

Note 12. Income Taxes

Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including our ability to accurately predict the proportion of our income (loss) before provision for income taxes in multiple jurisdictions, the U.S. tax benefits from foreign derived intangible income, the effects of tax law changes, the effects of acquisitions, and the integration of those acquisitions.

Our gross unrecognized tax benefits were $9.77 billion and $9.81 billion on March 31, 2022 and December 31, 2021, respectively. These unrecognized tax benefits were primarily accrued for the uncertainties related to transfer pricing with our foreign subsidiaries, which include licensing of intellectual property, providing services and other transactions, as well as for uncertainties with our research tax credits. If the gross unrecognized tax benefits as of March 31, 2022 were realized in a future period, this would result in a tax benefit of $5.81 billion within our provision of income taxes at such time. The amount of interest and penalties accrued was $889 million and $960 million as of March 31, 2022 and December 31, 2021, respectively. We expect to continue to accrue unrecognized tax benefits for certain recurring tax positions.

We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2014 through 2019 tax years. Our 2020 and subsequent tax years remain open to examination by the IRS and the Irish Revenue Commissioners.

In July 2016, we received a Statutory Notice of Deficiency (Notice) from the IRS related to transfer pricing with our foreign subsidiaries in conjunction with the examination of the 2010 tax year. While the Notice applies only to the 2010 tax year, the IRS stated that it will also apply its position for tax years subsequent to 2010 and has done so in years covered by the second Notice described below. We do not agree with the position of the IRS and have filed a petition in the Tax Court challenging the Notice. On January 15, 2020, the IRS's amendment to answer was filed stating that it planned to assert at trial an adjustment that is higher than the adjustment stated in the Notice. The first session of the trial was completed in March 2020 and a second session commenced in October 2021. Based on the information provided, we believe that, if the IRS prevails in its updated position, this could result in an additional federal tax liability of an estimated, aggregate amount of up to approximately $9.0 billion in excess of the amounts in our originally filed U.S. return, plus interest and any penalties asserted.

In March 2018, we received a second Notice from the IRS in conjunction with the examination of our 2011 through 2013 tax years. The IRS applied its position from the 2010 tax year to each of these years and also proposed new adjustments related to other transfer pricing with our foreign subsidiaries and certain tax credits that we claimed. If the IRS prevails in its position for these new adjustments, this could result in an additional federal tax liability of up to approximately $680 million in excess of the amounts in our originally filed U.S. returns, plus interest and any penalties asserted. We do not agree with the positions of the IRS in the second Notice and have filed a petition in the Tax Court challenging the second Notice.

We have previously accrued an estimated unrecognized tax benefit consistent with the guidance in ASC 740, Income Taxes (ASC 740), that is lower than the potential additional federal tax liability from the positions taken by the IRS in the two Notices and its Pretrial Memorandum. In addition, if the IRS prevails in its positions related to transfer pricing with our foreign subsidiaries, the additional tax that we would owe would be partially offset by a reduction in the tax that we owe under the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act. As of March 31, 2022, we have not resolved these matters and proceedings continue in the Tax Court.

We believe that adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes or other tax items that may ultimately result from these examinations. The timing of the resolution, settlement, and closure of any audits is highly uncertain, and it is reasonably possible that the balance of gross
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unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. If the taxing authorities prevail in the assessment of additional tax due, the assessed tax, interest, and penalties, if any, could have a material adverse impact on our financial position, results of operations, and cash flows.

Note 13. Segment and Geographical Information

We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes augmented and virtual reality related consumer hardware, software, and content. Our operating segments are the same as our reportable segments.

Our Chief Executive Officer is our chief operating decision maker (CODM), who allocates resources to and assesses the performance of each operating segment using information about the operating segment's revenue and income (loss) from operations. Our CODM does not evaluate operating segments using asset or liability information.

Revenue and costs and expenses are generally directly attributed to our segments. These costs and expenses include certain product development related operating expenses, costs associated with partnership arrangements, consumer hardware product costs, content costs, and legal-related costs. Indirect costs are allocated to segments based on a reasonable allocation methodology, when such costs are significant to the performance measures of the operating segments. Indirect cost of revenue is allocated to our segments based on usage, such as costs related to the operation of our data centers and technical infrastructure. Indirect operating expenses, such as facilities, information technology, certain shared research and development activities, recruiting, and physical security expenses, are mostly allocated based on headcount.

The following table sets forth our segment information of revenue and income (loss) from operations (in millions). For comparative purposes, amounts in the prior period have been recast:
 Three Months Ended March 31,
 20222021
Revenue:
Family of Apps $27,213 $25,637 
Reality Labs695 534 
Total revenue$27,908 $26,171 
Income (loss) from operations:
Family of Apps$11,484 $13,205 
Reality Labs(2,960)(1,827)
Total income from operations$8,524 $11,378 

For information regarding revenue disaggregated by geography, see Note 2 — Revenue.

The following table sets forth our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets (in millions):
March 31, 2022December 31, 2021
United States$59,080 $55,497 
Rest of the world(1)
14,743 14,467 
Total long-lived assets$73,823 $69,964 
____________________________________
(1)    No individual country, other than disclosed above, exceeded 10% of our total long-lived assets for any period presented.


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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A, "Risk Factors." For a discussion of limitations in the measurement of certain of our community metrics, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q.
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 present revenue on a constant currency basis, which is a non-GAAP financial measure. Revenue on a constant currency basis is presented in the section entitled "—RevenueForeign Exchange Impact on Revenue." To calculate revenue on a constant currency basis, we translated revenue for the three months ended March 31, 2022 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar.
This non-GAAP financial measure 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. This measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of revenue on a constant currency basis is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on our operating results. We believe this non-GAAP financial measure provides investors with useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business.
Executive Overview of First Quarter Results

Our financial results and key community metrics for the first quarter of 2022 are as follows:
Consolidated and segment results:

We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our augmented and virtual reality related consumer hardware, software, and content. For comparative purposes, amounts in the prior period have been recast:

Family of AppsReality LabsTotal
Three Months Ended March 31,Year-over-Year
% Change
Three Months Ended March 31,Year-over-Year
% Change
Three Months Ended March 31,Year-over-Year
% Change
202220212022202120222021
(dollars in millions)
Revenue$27,213 $25,637 6%$695 $534 30%$27,908 $26,171 7%
Costs and expenses$15,729 $12,432 27%$3,655 $2,361 55%$19,384 $14,793 31%
Income (loss) from operations$11,484 $13,205 (13)%$(2,960)$(1,827)(62)%$8,524 $11,378 (25)%
Operating margin42 %52 %(426)%(342)%31 %43 %

Net income was $7.47 billion, with diluted earnings per share of $2.72 for the three months ended March 31, 2022.
Capital expenditures, including principal payments on finance leases, were $5.55 billion for the three months ended March 31, 2022.
Effective tax rate was 16% for the three months ended March 31, 2022.
Cash and cash equivalents and marketable securities were $43.89 billion as of March 31, 2022.
Headcount was 77,805 as of March 31, 2022, an increase of 28% year-over-year.
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Family of Apps metrics:
Family daily active people (DAP) was 2.87 billion on average for March 2022, an increase of 6% year-over-year.
Family monthly active people (MAP) was 3.64 billion as of March 31, 2022, an increase of 6% year-over-year.
Facebook daily active users (DAUs) were 1.96 billion on average for March 2022, an increase of 4% year-over-year.
Facebook monthly active users (MAUs) were 2.94 billion as of March 31, 2022, an increase of 3% year-over-year.
Ad impressions delivered across our Family of Apps in the first quarter of 2022 increased by 15% year-over-year, and the average price per ad in the first quarter of 2022 decreased by 8% year-over-year.

Our mission is to give people the power to build community and bring the world closer together. All of our products, including our apps, share the vision of helping to bring the metaverse to life.

In the first quarter of 2022, we continued to focus on our main revenue growth priorities: (i) helping marketers use our products to connect with consumers and (ii) making our ads more relevant and effective. We also continued to invest based on the following company priorities: (i) continue making progress on the major social issues facing the internet and our company, including privacy, safety, and security; (ii) build new experiences that meaningfully improve people's lives today and set the stage for even bigger improvements in the future; (iii) keep building our business by supporting the millions of businesses that rely on our services to grow and create jobs; and (iv) communicate more transparently about what we're doing and the role our services play in the world.

Our advertising revenue growth in the first quarter of 2022 was adversely affected by reduced marketer spending as a result of limitations on our ad targeting and measurement tools arising from changes to the iOS operating system beginning in 2021. We expect that future advertising revenue growth will continue to be adversely affected by these and other limitations on our ad targeting and measurement tools arising from changes to the regulatory environment and third-party mobile operating systems and browsers.

The COVID-19 pandemic has also impacted our business and results of operations, with a varied impact on the demand for and pricing of our ads from period to period. While we experienced a reduction in advertising demand and a related decline in pricing during the onset of the pandemic, we believe the pandemic subsequently contributed to an acceleration in the growth of online commerce, and we experienced increasing demand for advertising as a result of this trend. More recently, we believe this growth has declined, and we saw continued softening of advertising demand in the first quarter of 2022 as many activities that shifted online during COVID-19 related lockdowns returned in person. We may experience reduced advertising demand and related declines in pricing in future periods to the extent this trend continues, which could adversely affect our advertising revenue growth. The impact of the pandemic on the demand for and pricing of our advertising services, as well as on our overall results of operations, remains uncertain for the foreseeable future.

Other global and regional business, macroeconomic, and geopolitical conditions also have had, and we believe will continue to have, an impact on our user growth and engagement and advertising revenue growth. For example, competitive products and services have reduced some users' engagement with our products and services. In response to competitive pressures, we have introduced new features such as Reels, which is growing in usage but is not currently monetized at the same rate as our feed or Stories products. We also have seen a deceleration in our community growth rates as the size of our community continues to increase. In addition, in connection with the war in Ukraine, access to Facebook and Instagram was restricted in Russia and the services were then prohibited by the Russian government, which adversely affected user growth and engagement in the first quarter of 2022. These trends adversely affected advertising revenue growth in the first quarter of 2022, including softness in the second half of the quarter that coincided with the war in Ukraine, and we expect will continue to affect our advertising revenue growth in the foreseeable future. In addition, the appreciation of the U.S. dollar relative to other foreign currencies had a negative impact on our advertising revenue in the first quarter of 2022. General economic uncertainty as a result of these conditions globally or regionally may adversely affect advertising demand and therefore our revenue and business.

We anticipate that additional investments in our servers, data center capacity, network infrastructure, and office facilities, as well as scaling our headcount to support our growth, including in our Reality Labs initiatives, will continue to drive expense growth in 2022. In 2022, we also expect that our year-over-year total expense growth rates may significantly exceed our year-over-year revenue growth rates, which would adversely affect our operating margin and profitability.
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Trends in Our Family Metrics

The numbers for our key Family metrics, our DAP, MAP, and average revenue per person (ARPP), do not include users on our other products unless they would otherwise qualify as DAP or MAP, respectively, based on their other activities on our Family products.

Trends in the number of people in our community affect our revenue and financial results by influencing the number of ads we are able to show, the value of our ads to marketers, the volume of Payments transactions, as well as our expenses and capital expenditures. Substantially all of our daily and monthly active people (as defined below) access our Family products on mobile devices.

Daily Active People (DAP). We define a daily active person as a registered and logged-in user of Facebook, Instagram, Messenger, and/or WhatsApp (collectively, our "Family" of products) who visited at least one of these Family products through a mobile device application or using a web or mobile browser on a given day. We do not require people to use a common identifier or link their accounts to use multiple products in our Family, and therefore must seek to attribute multiple user accounts within and across products to individual people. Our calculations of DAP rely upon complex techniques, algorithms, and machine learning models that seek to estimate the underlying number of unique people using one or more of these products, including by matching user accounts within an individual product and across multiple products when we believe they are attributable to a single person, and counting such group of accounts as one person. As these techniques and models require significant judgment, are developed based on internal reviews of limited samples of user accounts, and are calibrated against user survey data, there is necessarily some margin of error in our estimates. We view DAP, and DAP as a percentage of MAP, as measures of engagement across our products. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q.
meta-20220331_g2.jpg
DAP/MAP:79%79%79%79%79%79%78%79%79%

Note: We report the numbers of DAP and MAP as specific amounts, but these numbers are estimates of the numbers of unique people using our products and are subject to statistical variances and errors. While we expect the error margin for these estimates to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide MAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. In the second quarter of 2020, we updated our Family metrics calculations to reflect recent data from a periodic WhatsApp user survey and to incorporate certain methodology improvements, and we estimate such updates contributed an aggregate of approximately 40 million DAP to our reported worldwide DAP in June 2020. In the first quarter of 2021, we updated our Family metrics calculations to maintain calibration of our models against recent user survey data, and we estimate such update contributed an aggregate of approximately 60 million DAP to our reported worldwide DAP in March 2021.

Worldwide DAP increased 6% to 2.87 billion on average during March 2022 from 2.72 billion during March 2021.
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Monthly Active People (MAP). We define a monthly active person as a registered and logged-in user of one or more Family products who visited at least one of these Family products through a mobile device application or using a web or mobile browser in the last 30 days as of the date of measurement. We do not require people to use a common identifier or link their accounts to use multiple products in our Family, and therefore must seek to attribute multiple user accounts within and across products to individual people. Our calculations of MAP rely upon complex techniques, algorithms, and machine learning models that seek to estimate the underlying number of unique people using one or more of these products, including by matching user accounts within an individual product and across multiple products when we believe they are attributable to a single person, and counting such group of accounts as one person. As these techniques and models require significant judgment, are developed based on internal reviews of limited samples of user accounts, and are calibrated against user survey data, there is necessarily some margin of error in our estimates. We view MAP as a measure of the size of our global active community of people using our products. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q.
meta-20220331_g3.jpg
Note: We report the numbers of DAP and MAP as specific amounts, but these numbers are estimates of the numbers of unique people using our products and are subject to statistical variances and errors. While we expect the error margin for these estimates to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide MAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. In the second quarter of 2020, we updated our Family metrics calculations to reflect recent data from a periodic WhatsApp user survey and to incorporate certain methodology improvements, and we estimate such updates contributed an aggregate of approximately 50 million MAP to our reported worldwide MAP in June 2020. In the first quarter of 2021, we updated our Family metrics calculations to maintain calibration of our models against recent user survey data, and we estimate such update contributed an aggregate of approximately 70 million MAP to our reported worldwide MAP in March 2021.

As of March 31, 2022, we had 3.64 billion MAP, an increase of 6% from 3.45 billion as of March 31, 2021.
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Average Revenue Per Person (ARPP). We define ARPP as our total revenue during a given quarter, divided by the average of the number of MAP at the beginning and end of the quarter. While ARPP includes all sources of revenue, the number of MAP used in this calculation only includes users of our Family products as described in the definition of MAP above. We estimate that the share of revenue from users who are not also MAP was not material.
meta-20220331_g4.jpg
ARPP:$6.03$6.10$6.76$8.62$7.75$8.36$8.18$9.39$7.72
meta-20220331_g5.jpg
 Ad Revenue
meta-20220331_g6.jpg
Non-Ad Revenue
Note: Non-advertising revenue includes RL revenue generated from the delivery of consumer hardware products and FoA Other revenue, which consists of net fees we receive from developers using our Payments infrastructure and revenue from various other sources.

During the first quarter of 2022, worldwide ARPP was $7.72, a slight decrease compared to the first quarter of 2021.
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Trends in Our Facebook User Metrics

The numbers for our key Facebook metrics, our DAUs, MAUs, and average revenue per user (ARPU), do not include users on Instagram, WhatsApp, or our other products, unless they would otherwise qualify as DAUs or MAUs, respectively, based on their other activities on Facebook.

Trends in the number of users affect our revenue and financial results by influencing the number of ads we are able to show, the value of our ads to marketers, the volume of Payments transactions, as well as our expenses and capital expenditures. Substantially all of our daily and monthly active users (as defined below) access Facebook on mobile devices.

Daily Active Users (DAUs). We define a daily active user as a registered and logged-in Facebook user who visited Facebook through our website or a mobile device, or used our Messenger application (and is also a registered Facebook user), on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement on Facebook.


meta-20220331_g7.jpg
DAU/MAU:67%66%66%66%66%66%66%66%67%
meta-20220331_g8.jpg meta-20220331_g9.jpg
DAU/MAU:77%77%77%76%75%75%75%74%75%DAU/MAU:75%74%74%74%73%73%73%72%73%
meta-20220331_g10.jpg meta-20220331_g11.jpg
DAU/MAU:62%61%62%62%62%62%63%63%64%DAU/MAU:65%65%65%65%65%65%66%65%66%

Note: For purposes of reporting DAUs, MAUs, and ARPU by geographic region, Europe includes all users in Russia and Turkey and Rest of World includes all users in Africa, Latin America, and the Middle East.
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Worldwide DAUs increased 4% to 1.96 billion on average during March 2022 from 1.88 billion during March 2021. Users in India, Bangladesh, and Vietnam represented the top three sources of growth in DAUs during March 2022, relative to the same period in 2021.

Monthly Active Users (MAUs). We define a monthly active user as a registered and logged-in Facebook user who visited Facebook through our website or a mobile device, or used our Messenger application (and is also a registered Facebook user), in the last 30 days as of the date of measurement. MAUs are a measure of the size of our global active user community on Facebook.
meta-20220331_g12.jpg
meta-20220331_g13.jpg meta-20220331_g14.jpg
meta-20220331_g15.jpg meta-20220331_g16.jpg

As of March 31, 2022, we had 2.94 billion MAUs, an increase of 3% from March 31, 2021. Users in India, Bangladesh, and Vietnam represented the top three sources of growth in the first quarter of 2022, relative to the same period in 2021.
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Trends in Our Monetization by Facebook User Geography

We calculate our revenue by user geography based on our estimate of the geography in which ad impressions are delivered, virtual and digital goods are purchased, or consumer hardware products are shipped. We define ARPU as our total revenue in a given geography during a given quarter, divided by the average of the number of MAUs in the geography at the beginning and end of the quarter. While ARPU includes all sources of revenue, the number of MAUs used in this calculation only includes users of Facebook and Messenger as described in the definition of MAU above. While the share of revenue from users who are not also Facebook or Messenger MAUs has grown over time, we estimate that revenue from users who are Facebook or Messenger MAUs represents the substantial majority of our total revenue. See "Average Revenue Per Person (ARPP)" above for our estimates of trends in our monetization of our Family products. The geography of our users affects our revenue and financial results because we currently monetize users in different geographies at different average rates. Our revenue and ARPU in regions such as United States & Canada and Europe are relatively higher primarily due to the size and maturity of those online and mobile advertising markets. For example, ARPU in the first quarter of 2022 in the United States & Canada region was more than 10 times higher than in the Asia-Pacific region.
meta-20220331_g17.jpg
ARPU:$6.95$7.05$7.89$10.14$9.27$10.12$10.00$11.57$9.54
meta-20220331_g18.jpgmeta-20220331_g19.jpg
ARPU:$34.18 $36.49 $39.63 $53.56 $48.03 $53.01 $52.34 $60.57 $48.29 ARPU:$10.64$11.03$12.41$16.87$15.49$17.23$16.50$19.68$15.35
meta-20220331_g20.jpg meta-20220331_g21.jpg
ARPU:$3.06$2.99$3.67$4.05$3.94$4.16$4.30$4.89$4.47ARPU:$1.99$1.78$2.22$2.77$2.64$3.05$3.14$3.43$3.14
meta-20220331_g5.jpg
Ad Revenue
meta-20220331_g6.jpg
Non-Ad Revenue

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Note: Non-advertising revenue includes RL revenue generated from the delivery of consumer hardware products and FoA Other revenue, which consists of net fees we receive from developers using our Payments infrastructure and revenue from various other sources.

Our revenue by user geography in the charts above is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue-generating activity. This allocation differs from our revenue disaggregated by geography disclosure in Note 2 — Revenue in our condensed consolidated financial statements included in Part I, Item 1, "Financial Statements" where revenue is geographically apportioned based on the addresses of our customers.

During the first quarter of 2022, worldwide ARPU was $9.54, an increase of 3% from the first quarter of 2021. Over this period, ARPU increased by 19% in Rest of World, 13% in Asia-Pacific and 1% in United States & Canada, and decreased by 1% in Europe. In addition, user growth was more rapid in geographies with relatively lower ARPU, such as Asia-Pacific and Rest of World. We expect that user growth in the future will be primarily concentrated in those regions where ARPU is relatively lower, such that worldwide ARPU may continue to increase at a slower rate relative to ARPU in any geographic region, or potentially decrease even if ARPU increases in each geographic region.
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Components of Results of Operations

Revenue

Family of Apps (FoA)

Advertising. We generate substantially all of our revenue from advertising. Our advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. Marketers pay for ad products either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions, such as clicks, taken by users.

We recognize revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to a user. We recognize revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. The number of ads we show is subject to methodological changes as we continue to evolve our ads business and the structure of our ads products. We calculate price per ad as total advertising revenue divided by the number of ads delivered, representing the effective price paid per impression by a marketer regardless of their desired objective such as impression or action. For advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis.

Other revenue. Other revenue consists of net fees we receive from developers using our Payments infrastructure and revenue from various other sources.

Reality Labs (RL)

RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest, Facebook Portal, and wearables, and related software and content.

Cost of Revenue and Operating Expenses

Cost of revenue. Our cost of revenue consists primarily of expenses associated with the delivery and distribution of our products. These include expenses related to the operation of our data centers and technical infrastructure, such as depreciation expense from servers, network infrastructure and buildings, as well as payroll and related expenses which include share-based compensation for employees on our operations teams, and energy and bandwidth costs. Cost of revenue also includes costs associated with partner arrangements, including traffic acquisition costs and credit card and other fees related to processing customer transactions; RL cost of products sold; and content costs.

Research and development. Research and development expenses consist primarily of payroll and related expenses which include share-based compensation, facilities-related costs for employees on our engineering and technical teams who are responsible for developing new products as well as improving existing products, and professional services.

Marketing and sales. Marketing and sales expenses consist primarily of marketing and promotional expenses and payroll and related expenses which include share-based compensation for our employees engaged in sales, sales support, marketing, business development, and customer service functions. Our marketing and sales expenses also include professional services such as content reviewers to support our community and product operations.

General and administrative. General and administrative expenses consist primarily of legal-related costs, which include accruals for estimated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees; payroll and related expenses which include share-based compensation for certain of our executives as well as our legal, finance, human resources, corporate communications and policy, and other administrative employees; other taxes, such as digital services taxes, other tax levies, and gross receipts taxes; and professional services.

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Results of Operations

The following table sets forth our condensed consolidated statements of income data (in millions):
Three Months Ended March 31,
 20222021
Revenue$27,908 $26,171 
Costs and expenses:
Cost of revenue6,005 5,131 
Research and development7,707 5,197 
Marketing and sales3,312 2,843 
General and administrative2,360 1,622 
Total costs and expenses19,384 14,793 
Income from operations8,524 11,378 
Interest and other income, net384 125 
Income before provision for income taxes8,908 11,503 
Provision for income taxes1,443 2,006 
Net income$7,465 $9,497 

The following table sets forth our condensed consolidated statements of income data (as a percentage of revenue)(1): 
 Three Months Ended March 31,
 20222021
Revenue100 %100 %
Costs and expenses:
Cost of revenue22 20 
Research and development28 20 
Marketing and sales12 11 
General and administrative
Total costs and expenses69 57 
Income from operations31 43 
Interest and other income, net— 
Income before provision for income taxes32 44 
Provision for income taxes
Net income27 %36 %
____________________________________
(1)    Percentages have been rounded for presentation purposes and may differ from unrounded results.

Share-based compensation expense included in costs and expenses (in millions):
Three Months Ended March 31,
20222021
Cost of revenue$160 $118 
Research and development1,941 1,408 
Marketing and sales216 174 
General and administrative181 130 
Total share-based compensation expense$2,498 $1,830 
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Share-based compensation expense included in costs and expenses (as a percentage of revenue)(1): 
Three Months Ended March 31,
20222021
Cost of revenue%— %
Research and development
Marketing and sales
General and administrative— 
Total share-based compensation expense%%
____________________________________
(1)    Percentages have been rounded for presentation purposes and may differ from unrounded results.

Revenue

The following table sets forth our revenue by source and by segment. For comparative purposes, amounts in the prior period have been recast:
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Advertising$26,998 $25,439 %
Other revenue215 198 %
Family of Apps27,213 25,637 %
Reality Labs695 534 30 %
Total revenue$27,908 $26,171 %

Family of Apps

FoA revenue in the three months ended March 31, 2022 increased $1.58 billion, or 6%, compared to the same period in 2021. The increase was mostly driven by an increase in advertising revenue.

Advertising

Advertising revenue in the three months ended March 31, 2022 increased $1.56 billion or 6%, compared to the same period in 2021 as a result of an increase in the number of ads delivered, partially offset by a decrease in the average price per ad. During the three months ended March 31, 2022, the number of ads delivered increased by 15%, as compared with an increase of approximately 12% in the same period in 2021, driven by an increase in ads delivered in Asia-Pacific and Rest of World and partially offset by a decrease in ads delivered in the United States and Canada region. The increase in the ads delivered during the three months ended March 31, 2022 was driven by increases in the number and frequency of ads displayed across our products and an increase in users. During the three months ended March 31, 2022, the average price per ad decreased by 8%, as compared with an increase of approximately 30% in the same period in 2021. The decrease in average price per ad was primarily driven by an increasing proportion of the number of ads delivered in geographies and in products such as video and Stories that monetize at lower rates, as well as an unfavorable foreign exchange impact. We anticipate that future advertising revenue growth will be driven by a combination of price and the number of ads delivered.

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Reality Labs

RL revenue in the three months ended March 31, 2022 increased $161 million, or 30%, compared to the same period in 2021. The increase in RL revenue was primarily driven by an increase in the volume of our consumer hardware products sold.

Foreign Exchange Impact on Revenue

The general strengthening of the U.S. dollar relative to certain foreign currencies for the three months ended March 31, 2022 compared to the same period in 2021 had an unfavorable impact on revenue. If we had translated revenue for the three months ended March 31, 2022 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, our total revenue and advertising revenue would have been $28.80 billion and $27.89 billion, respectively. Using these constant rates, total revenue and advertising revenue would have been $893 million and $888 million higher than actual total revenue and advertising revenue, respectively, for the three months ended March 31, 2022.

Cost of revenue
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Cost of revenue$6,005 $5,131 17 %
Percentage of revenue22 %20 %

Cost of revenue in the three months ended March 31, 2022 increased $874 million, or 17%, compared to the same period in 2021. The increase was primarily due to an increase in operational expenses related to our data centers and technical infrastructure; higher costs associated with partner arrangements, including traffic acquisition and payment processing costs; and an increase in content costs.

Research and development
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Research and development$7,707 $5,197 48 %
Percentage of revenue28 %20 %

Research and development expenses in the three months ended March 31, 2022 increased $2.51 billion, or 48%, compared to the same period in 2021. The increase was mainly due to higher payroll and related expenses as a result of a 35% growth in employee headcount from March 31, 2021 to March 31, 2022 in engineering and other technical functions supporting our continued investment in our family of products and Reality Labs.

Marketing and sales
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Marketing and sales$3,312 $2,843 16 %
Percentage of revenue12 %11 %

Marketing and sales expenses in the three months ended March 31, 2022 increased $469 million, or 16%, compared to the same period in 2021. The increase was mainly due to increases in payroll and related expenses and marketing and
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promotional expenses. Our payroll and related expenses increased as a result of a 14% increase in employee headcount from March 31, 2021 to March 31, 2022 in our marketing and sales functions.

General and administrative
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
General and administrative$2,360 $1,622 45 %
Percentage of revenue%%

General and administrative expenses in the three months ended March 31, 2022 increased $738 million, or 45%, compared to the same period in 2021. The increase was mainly due to increases in legal-related costs as well as payroll and related expenses. Our payroll and related expenses increased mainly due to a 29% increase in employee headcount from March 31, 2021 to March 31, 2022 in our general and administrative functions.

See Note 10 — Commitments and Contingencies in the notes to the condensed consolidated financial statements included in Part I, Item 1, and "Legal Proceedings" contained in Part II, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding estimated fines, settlements, or other losses in connection with legal-related costs.

Segment profitability

The following table sets forth income (loss) from operations by segment. For comparative purposes, amounts in the prior period have been recast:
Three Months Ended March 31,
20222021% change
(dollars in millions)
Family of Apps$11,484 $13,205 (13)%
Reality Labs(2,960)(1,827)(62)%
Total income from operations$8,524 $11,378 (25)%

Family of Apps

FoA income from operations in the three months ended March 31, 2022 decreased $1.72 billion, or 13%, compared to the same period in 2021. The decrease was due to an increase in costs and expenses, mainly due to an increase in payroll and related expenses as a result of higher employee headcount, increases in costs related to our data centers and technical infrastructure and higher legal-related costs.

Reality Labs

RL loss from operations in the three months ended March 31, 2022 increased $1.13 billion, or 62%, compared to the same period in 2021. The increase in loss from operations was primarily driven by increases in payroll and related expenses due to a growth in RL headcount, research and development expenses, and cost of consumer hardware products sold.

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Interest and other income, net
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Interest income, net$76 $118 (36)%
Foreign currency exchange gains (losses), net54 (93)158 %
Other income, net254 100 154 %
Interest and other income, net$384 $125 207 %

Interest and other income, net in the three months ended March 31, 2022 increased $259 million compared to the same period in 2021. The increase was mainly due to an increase in other income, net from a gain on the sale of certain intangible assets in the three months ended March 31, 2022.

Provision for income taxes
 Three Months Ended March 31, 
 20222021% change
 (dollars in millions)
Provision for income taxes$1,443 $2,006 (28)