Facebook Reports Third Quarter 2014 Results

Facebook Reports Third Quarter 2014 Results
Mark Zuckerberg, Facebook Founder and CEO

MENLO PARK, Calif., /PRNewswire/ — Facebook, Inc. (NASDAQ: FB) on Oct. 28, 2014 reported financial results for the quarter ended September 30, 2014.

“This has been a good quarter with strong results,” said Mark Zuckerberg, Facebook founder and CEO. “We continue to focus on serving our community well and continue to invest in connecting the world over the next decade.”

Facebook Reports Third Quarter 2014 Results

* Non-GAAP information for the three and nine months ended September 30, 2013 has been updated to exclude amortization of intangible assets to conform to our current period presentation. See the table below titled “Reconciliation of Non-GAAP Results to Nearest GAAP Measures.”

Third Quarter 2014 Operational Highlights

Daily active users (DAUs) were 864 million on average for September 2014, an increase of 19% year-over-year.
Mobile DAUs were 703 million on average for September 2014, an increase of 39% year-over-year.
Monthly active users (MAUs) were 1.35 billion as of September 30, 2014, an increase of 14% year-over-year.
Mobile MAUs were 1.12 billion as of September 30, 2014, an increase of 29% year-over-year.

Third Quarter 2014 Financial Highlights

Revenue – Revenue for the third quarter of 2014 totaled $3.20 billion, an increase of 59%, compared with $2.02 billion in the third quarter of 2013. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 58%.

Revenue from advertising was $2.96 billion, a 64% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 63%.
Mobile advertising revenue represented approximately 66% of advertising revenue for the third quarter of 2014, up from approximately 49% of advertising revenue in the third quarter of 2013.
Payments and other fees revenue was $246 million, a 13% increase from the same quarter last year.

Costs and expenses – GAAP costs and expenses for the third quarter of 2014 were $1.81 billion, an increase of 41% from the third quarter of 2013. Non-GAAP information for 2013 has been updated to exclude amortization of intangible assets to conform to our current period presentation. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP costs and expenses were $1.38 billion in the third quarter of 2014, up 39% compared to $992 million for the third quarter of 2013.

Income from operations – GAAP income from operations for the third quarter of 2014 was $1.40 billion, up 90% compared to $736 million in the third quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP income from operations for the third quarter of 2014 was $1.82 billion, up 78% compared to $1.02 billion for the third quarter of 2013.

Operating margin – GAAP operating margin was 44% for the third quarter of 2014, compared to 37% in the third quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, non-GAAP operating margin was 57% for the third quarter of 2014, compared to 51% for the third quarter of 2013.

Provision for income taxes – GAAP income tax expense for the third quarter of 2014 was $530 million, representing a 40% effective tax rate. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 35%.

Net income and EPS – GAAP net income for the third quarter of 2014 was $806 million, up 90% compared to $425 million for the third quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, and income tax adjustments, non-GAAP net income for the third quarter of 2014 was $1.15 billion, up 73% compared to $666 million for the third quarter of 2013. GAAP diluted EPS was $0.30 in the third quarter of 2014, up 76% compared to $0.17 in the third quarter of 2013. Excluding amortization of intangible assets, share-based compensation and related payroll tax expenses, and income tax adjustments, non-GAAP diluted EPS for the third quarter of 2014 was $0.43, up 59% compared to $0.27 in the third quarter of 2013.

Capital expenditures – Capital expenditures for the third quarter of 2014 were $482 million.

Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $14.25 billion at the end of the third quarter of 2014.

Free cash flow – Free cash flow for the third quarter of 2014 was $766 million.

Webcast and Conference Call Information

Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Facebook’s earnings release call can be accessed at investor.fb.com, along with the earnings press release, financial tables and slide presentation. Facebook uses the investor.fb.com website and Mark Zuckerberg’s Facebook Page (https://www.facebook.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (404) 537-3406 or +1 (855) 859-2056, conference ID 11108302.

About Facebook

Founded in 2004, Facebook’s mission is to give people the power to share and make the world more open and connected. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.