Please see Facebook's Form 10-Q for the quarter ended March 31, 2013 for definitions of user activity used to .... Adver
Quarterly Earnings Slides Q1 2013
Non-GAAP Measures In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of non-GAAP financial measures to the corresponding GAAP measures is provided in the appendix to this presentation.
2
Daily Active Users (DAUs) Millions of DAUs Rest of World
526
Asia Europe US & Canada
372 74 72
457 417 87 85
100 98
483 109 105
126
552 139
618
584
161
152
153
665 180
167
119
129
141
154
160
169
179
120
127
135
143
152
105
117
124
126
129
130
132
135
139
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
DAUs / MAUs Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
55%
56%
57%
57%
58%
58%
58%
59%
60%
Please see Facebook's Form 10-Q for the quarter ended March 31, 2013 for definitions of user activity used to determine the number of our MAUs, DAUs and mobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and mobile MAUs based on activity that is shared back to Facebook.
3
Monthly Active Users (MAUs) Millions of MAUs Rest of World Asia Europe US & Canada
680 161
739 183
800 207
845 225
901 245
955 268
1,056
1,007
304
288
255
277
298
1,110 327
319
174
196
212
234
201
212
221
229
239
246
253
261
269
163
169
176
179
183
186
189
193
195
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
156
Please see Facebook's Form 10-Q for the quarter ended March 31, 2013 for definitions of user activity used to determine the number of our MAUs, DAUs and mobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and mobile MAUs based on activity that is shared back to Facebook.
4
Mobile Monthly Active Users (Mobile MAUs) Millions of Mobile MAUs 751 680 604 543 488 432 288
Q1'11
325
Q2'11
376
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Please see Facebook's Form 10-Q for the quarter ended March 31, 2013 for definitions of user activity used to determine the number of our MAUs, DAUs and mobile MAUs. The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and mobile MAUs based on activity that is shared back to Facebook.
5
Mobile Only Monthly Active Users (Mobile Only MAUs) Millions of Mobile Only MAUs 189 157 126 102 83
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Mobile Only MAUs are mobile MAUs that accessed Facebook solely through mobile apps or our mobile website.
6
Revenue Millions of Dollars
$1,585
Payments and other fees Advertising
$256* $1,184
$1,131
$895 $731 $94
$119
$954
$188
Q1'11
$213
$1,262 $176
$192
$186
$156 $1,329 $943
$637
$1,058
$1,458
$776
$798
Q2'11
Q3'11
Q4'11
$872
Q1'12
$992
Q2'12
$1,245
$1,086
Q3'12
Q4'12
Q1'13
*In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 of our Form 10-K filed on February 1, 2013.
7
Revenue by User Geography Millions of Dollars
$1,585
Rest of World
$167
Asia Europe US & Canada
$731 $47 $62
$1,131 $895 $65 $82 $275
$954 $78 $104
$87 $115 $361
$290
$1,184 $1,058
$113
$87 $118
$135
$328
$346
$1,262
$198
$159 $197
$130 $154
$1,458
$440 $423
$341
$229
$394
Q1'11
$471
$482
Q2'11
Q3'11
$567
Q4'11
$525
$590
$637
Q1'12
Q2'12
Q3'12
$780
Q4'12
$679
Q1'13
Revenue by user geography 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 by geography disclosure in our consolidated financial statements where revenue is geographically apportioned based on the location of the advertiser or developer.
8
Advertising Revenue by User Geography $1,329
Millions of Dollars
$156
Rest of World Asia
$1,086
Europe US & Canada
$776 $637 $44 $56
$61 $74
$798 $71 $88
$245
$245
$943 $79 $95 $306
$992 $872
$104
$79 $99
$115
$274
$294
$120
$1,245 $150
$168 $176
$133 $374 $367
$295
$206
$332 Q1'11
$394
$395
Q2'11
Q3'11
$462
Q4'11
$419
$479
$538
Q1'12
Q2'12
Q3'12
$631
Q4'12
$552
Q1'13
Revenue by user geography 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 by geography disclosure in our consolidated financial statements where revenue is geographically apportioned based on the location of the advertiser or developer.
9
Payments & Other Revenue by User Geography Millions of Dollars
$256 $11
Rest of World
$30
Asia Europe US & Canada
$119 $94 $3 $6 $23 $62 Q1'11
$4 $8
$156 $7 $16
$188 $8 $20 $55
$186 $8 $19 $54
$192 $9 $20
$176 $10 $21
$66
$213 $9 $21 $56
$52 $46
$45
$30 $149 $77
$87
Q2'11
Q3'11
$105
$106
$111
Q4'11
Q1'12
Q2'12
$99
Q3'12
Q4'12*
$127
Q1'13
Revenue by user geography 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 by geography disclosure in our consolidated financial statements where revenue is geographically apportioned based on the location of the advertiser or developer. *In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 of our Form 10-K filed on February 1, 2013. 10
Average Revenue per User (ARPU) Worldwide $1.54
Payments* Advertising
$1.21 $0.21
$0.23
$1.17
Q1'12
$1.43 $0.21
$1.21
Q2'12
$1.28
$1.29
$0.21
$0.18
$1.07
$1.11
Q1'12
Q2'12
Q3'12
$1.71 $1.37
$0.25
$4.08 $1.35 $0.20
$0.26
$1.29
Q3'12
$2.90
Q4'12
$1.15
$1.46
Q4'12
$2.32
Q1'13
Q1'12
Asia
$0.60
$2.59
Q2'12
$3.40
$3.50
$0.78
$0.65
$0.53
$3.30
$2.87
Q3'12
$2.85
Q4'12
Q1'13
Rest of World
$1.60 $0.21
$0.69
$0.18
$1.18
$3.20 $0.58
$1.00
Europe $1.40
US & Canada
$0.53 $0.08
$0.55 $0.08
$0.58 $0.08
$0.10
$0.64 $0.07
$0.58
$0.57
Q4'12
Q1'13
$0.37 $0.03
$0.47
$0.44 $0.03
$0.04
$0.40
$0.43
Q2'12
Q3'12
$1.38
Q1'13
$0.44
$0.47
$0.50
Q1'12
Q2'12
Q3'12
$0.34
Q1'12
$0.56 $0.04
$0.53
Q4'12
$0.50 $0.03
$0.48
Q1'13
Revenue by user geography 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 by geography disclosure in our consolidated financial statements where revenue is geographically apportioned based on the location of the advertiser or developer. Please see Facebook’s Form 10-Q for the quarter ended March 31, 2013 for the definition of ARPU. *In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 of our Form 10-K filed on February 1, 2013. 11
Share-Based Compensation Expense $1,106
(in millions) Pre-2011 RSUs Post-2011 RSUs Options & Other
$986
$64
$70
$7
$58
$59
Q1'11
Q2'11
Q3'11
$76
$103
$179 $28
$184 $24
$170 $9
$113
$138
$137
$135
$74
$97
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
12
Expenses as a % of Revenue Share-based compensation + Payroll tax related to share-based compensation
Research & Development
Cost of Revenue 31%
26%
26%
Q1'12
25%
Q2'12
26%
25%
25%
24%
Q3'12
Q4'12
60%
28%
28% 14%
Q1'13
Marketing & Sales
19%
19%
20%
9%
9%
11%
10%
11%
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
General & Administrative
33%
14%
All other expenses
39%
13%
12%
14% 10%
12%
11%
12%
10%
12%
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
12%
11%
12%
8%
11%
10%
9%
10%
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
13
Income (Loss) from Operations GAAP Income (Loss) from Operations (in millions) $388
$407
$414
$548
$381
$377
$523
$373
($743) Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Non-GAAP Income from Operations (in millions) $736
$624 $396
Q1'11
$477
$484
Q2'11
Q3'11
Q4'11
$485
$515
$525
Q1'12
Q2'12
Q3'12
$563
Q4'12
Q1'13
Non-GAAP income (loss) from operations excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and related income tax adjustments—see the Appendix for a reconciliation of this non-GAAP measure to GAAP income (loss) from operations.
14
Operating Margin GAAP Operating Margin 53%
45%
43%
48%
36%
30%
33%
26%
Q4'12
Q1'13
(63%) Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
46%
43%
42%
Q1'12
Q2'12
Q3'12
Non-GAAP Operating Margin 54%
Q1'11
53%
Q2'11
51%
Q3'11
55%
Q4'11
46%
Q4'12
39%
Q1'13
Non-GAAP operating margin excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and related income tax adjustments—see the Appendix for a reconciliation of this non-GAAP measure to GAAP operating margin.
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Effective Tax Rate GAAP Effective Tax Rate
($ in millions) GAAP income (loss) before provision for income taxes GAAP provision for (benefit from) income taxes Effective Tax Rate
Q1 2012 382 177 46%
Q2 2012 (765) (608) 79%
Q3 2012 372 431 116%
Q4 2012 505 441 87%
Q1 2013 353 134 38%
FY 2011 1,695 695 41%
FY 2012 494 441 89%
Non-GAAP Effective Tax Rate ($ in millions) Non-GAAP income before provision for income taxes Non-GAAP provision for income taxes Effective Tax Rate
Q1 2012 486 199 41%
Q2 2012 493 198 40%
Q3 2012 520 209 40%
Q4 2012 718 292 41%
Q1 2013 543 231 43%
FY 2011 1,919 755 39%
FY 2012 2,217 900 41%
Q2’12 through Q4’12 GAAP effective tax rates were influenced by significant share-based compensation expense resulting from our initial public offering, a portion of which is not tax-deductible
16
Net Income (Loss) GAAP Net Income (Loss) (in millions)
$233
$240
$227
$302
$219
$205 $64
Q1'11
Q2'11
Q3'11
Q4'11
($59)
Q1'12
($157) Q2'12
Q3'12
$287
$295
$311
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Non-GAAP Net Income (in millions)
$247
$285
$273
Q1'11
Q2'11
Q3'11
$360
Q4'11
$426
Q4'12
$312
Q1'13
Non-GAAP net income excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and related income tax adjustments—see the Appendix for a reconciliation of this non-GAAP measure to GAAP net income.
17
Diluted EPS GAAP Diluted EPS
$0.11
$0.11
$0.10
$0.14 $0.09
$0.09 $0.03 ($0.02)
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
($0.08) Q2'12
Q3'12
Q4'12
Q1'13
Non-GAAP Diluted EPS
$0.11
$0.12
$0.12
Q1'11
Q2'11
Q3'11
$0.15
Q4'11
$0.17 $0.12
$0.12
$0.12
Q1'12
Q2'12
Q3'12
$0.12
Q4'12
Q1'13
Non-GAAP diluted EPS excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and related income tax adjustments—see the Appendix for a reconciliation of this non-GAAP measure to GAAP diluted EPS.
18
Capital Investments Millions of Dollars $1,575
Property and equipment acquired under capital leases Purchases of property
$340
and equipment
$1,079 $473 $491
$1,235
$510
$38
$338 $11
$453
Q1'12 Quarterly
$217 $606
$327
$293
Q1'13
2010
2011
2012
Annual
19
Appendix
Reconciliations Income from Operations (in millions) GAAP income (loss) from operations Share-based compensation expense Payroll tax expenses related to share-based compensation Non-GAAP income from operations
Q1'11 388 7 1 $ 396
Operating Margins GAAP operating margin Share-based compensation expense Payroll tax expenses related to share-based compensation Non-GAAP operating margin
Q1'11 53% 1% 0% 54%
Net Income (Loss) (in millions) GAAP net income (loss) Share-based compensation expense Payroll tax expenses related to share-based compensation Income tax adjustments Non-GAAP net income
Q1'11 233 7 1 6 $ 247
Q4'11 548 76 $ 624
Q1'12 381 103 1 $ 485
Q2'12 (743) 1,106 152 $ 515
Q3'12 377 179 (31) $ 525
Q4'12 523 184 29 $ 736
Q1'13 373 170 20 $ 563
Q3'11 43% 7% 0% 51%
Q4'11 48% 7% 0% 55%
Q1'12 36% 10% 0% 46%
Q2'12 (63%) 93% 13% 43%
Q3'12 30% 14% (2%) 42%
Q4'12 33% 12% 2% 46%
Q1'13 26% 12% 1% 39%
Q2'11 240 64 6 (25) $ 285
Q3'11 227 70 (24) $ 273
Q4'11 302 76 (18) $ 360
Q1'12 205 103 1 (22) $ 287
Q2'12 (157) 1,106 152 (806) $ 295
Q3'12 (59) 179 (31) 222 $ 311
Q4'12 64 184 29 149 $ 426
Q1'11 1,488 548 245 2,281
Q2'11 1,510 550 277 2,337
Q3'11 1,520 548 278 2,346
Q4'11 1,519 545 286 2,350
Q1'12 1,527 546 233 2,306
Q2'12 1,879 273 177 122 2,451
Q3'12 2,420 159 2,579
Q1'11 0.11 0.05 0.01 (0.06) $ 0.11
Q2'11 0.11 0.05 0.03 (0.07) $ 0.12
Q3'11 0.10 0.05 0.03 (0.06) $ 0.12
Q4'11 0.14 0.05 0.04 (0.08) $ 0.15
Q1'12 0.09 0.04 0.05 (0.06) $ 0.12
Q2'12 (0.08) 0.24 (0.04) $ 0.12
Q3'12 (0.02) 0.15 (0.01) $ 0.12
$
$
Diluted Share Count GAAP diluted shares Assumed preferred stock conversion Dilutive securities excluded due to net loss Dilutive equity awards excluded from GAAP1 Non-GAAP diluted shares
Diluted Earnings (Loss) Per Share GAAP diluted earnings (loss) per share Net income attributable to participating securities Non-GAAP adjustments to net income Non-GAAP adjustments to diluted shares Non-GAAP diluted earnings per share
$
Q2'11 407 64 6 $ 477
Q3'11 414 70 $ 484
Q2'11 45% 7% 1% 53%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Q1'13 219 170 20 (97) $ 312 $
Q4'12 2,506 2,506
Q4'12 0.03 0.14 $ 0.17
$
Q1'13 2,499 2,499
Q1'13 0.09 0.03 $ 0.12
$
21
Reconciliations (continued) Effective Tax Rate (in millions) GAAP profit (loss) before tax GAAP provision for (benefit from) income taxes GAAP effective tax rate GAAP profit (loss) before tax Share-based compensation and related payroll tax expenses Non-GAAP profit before tax Non-GAAP provision for income taxes Non-GAAP effective tax rate
$
$ $
Q1'12 382 177 46% 382 104 486 199 41%
$
$
Q2'12 (765) (608) 79%
(765) 1,258 $ 493 198 40%
$
$ $
Q3'12 372 431 116% 372 148 520 209 40%
$
$ $
Q4'12 505 441 87% 505 213 718 292 41%
$
$ $
Q1'13 353 134 38%
FY2011 $ 1,695 695 41%
FY2012 $ 494 441 89%
353 190 543 231 43%
$ 1,695 224 $ 1,919 755 39%
$
494 1,723 $ 2,217 900 41%
22
Limitations of Key Metrics The numbers of our monthly active users (MAUs) and daily active users (DAUs) and average revenue per user (ARPU) are calculated using internal company data based on the activity of user accounts. 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. For example, there may be individuals who maintain one or more Facebook accounts in violation of our terms of service, despite our efforts to detect and suppress such behavior. We estimate, for example, that “duplicate” accounts (an account that a user maintains in addition to his or her principal account) may have represented approximately 5.0% of our worldwide MAUs as of December 31, 2012. We also seek to identify “false” accounts, which we divide 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) undesirable accounts, which represent user profiles that we determine are intended to be used for purposes that violate our terms of service, such as spamming. As of December 31, 2012, for example, we estimate user-misclassified accounts may have represented approximately 1.3% of our worldwide MAUs and undesirable accounts may have represented approximately 0.9% of our worldwide MAUs. We believe the percentage of accounts that are duplicate or false is meaningfully lower in developed markets such as the United States or Australia and higher in developing markets such as Indonesia and Turkey. However, these estimates are based on an internal review of a limited sample of accounts and we apply significant judgment in making this determination, such as identifying names that appear to be fake or other behavior that appears inauthentic to the reviewers. As such, our estimation of duplicate or false accounts may not accurately represent the actual number of such accounts. We are continually seeking to improve our ability to identify duplicate or false accounts and estimate the total number of such accounts, and such estimates may be affected by improvements or changes in our methodology.
23
Limitations of Key Metrics (continued) Some of our historical metrics through the second quarter of 2012 have also been affected by applications on certain mobile devices that automatically contact our servers for regular updates with no user action involved, and this activity can cause our system to count the user associated with such a device as an active user on the day such contact occurs. For example, we estimate that less than 5% of our estimated worldwide DAUs as of December 31, 2011 and 2010 resulted from this type of automatic mobile activity, and that this type of activity had a substantially smaller effect on our estimate of worldwide MAUs and mobile MAUs. The impact of this automatic activity on our metrics varies by geography because mobile usage varies in different regions of the world. In addition, 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 mobile-only 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 user metrics may also be susceptible to algorithm or other technical errors. For example, in early June 2012, we discovered an error in the algorithm we used to estimate the geographic location of our users that affected our attribution of certain user locations for the period ended March 31, 2012. While this issue did not affect our overall worldwide MAU and DAU numbers, it did affect our attribution of users to different geographic regions. We estimate that the number of MAUs as of March 31, 2012 for the United States & Canada region was overstated as a result of the error by approximately 3% and this overstatement was offset by understatements in other regions. In addition, our estimates for revenue by user location are also affected by these factors. We regularly review and may adjust our processes for calculating these metrics to improve their accuracy. In addition, our MAU and DAU estimates will differ from estimates published by third parties due to differences in methodology. For example, some third parties are not able to accurately measure mobile users or do not count mobile users for certain user groups or at all in their analyses. The number of MAUs, DAUs, mobile MAUs, and ARPU discussed in these slides do not include users of Instagram unless such users would otherwise quality as MAUs, DAUs, and mobile MAUs, respectively, based on activity that is shared back to Facebook.
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