Quarterly Earnings Slides
Q1 2014
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)
In Millions
Rest of World
Asia
Europe
US & Canada
526
552
126
139
119
129
584
152
618
161
665
180
699
195
728
208
181
189
757
216
802
233
200
216
141
153
167
179
182
188
195
203
152
154
160
169
129
130
132
135
139
142
144
147
150
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
DAUs / MAUs
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3’13
Q4'13
Q1'14
58%
58%
58%
59%
60%
61%
61%
62%
63%
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile
DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify
as such users, respectively, based on their other activities on Facebook.
3
Mobile Daily Active Users (Mobile DAUs)
In Millions
609
556
425
266
Q1'12
293
Q2'12
329
Q3'12
469
507
374
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile
DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify
as such users, respectively, based on their other activities on Facebook.
4
Monthly Active Users (MAUs)
In Millions
Rest of World
Asia
Europe
US & Canada
901
245
955
268
1,007
288
1,056
304
1,110
327
1,155
1,189
1,228
1,276
395
346
362
376
351
368
390
298
319
339
234
255
277
239
246
253
261
269
272
276
282
289
183
186
189
193
195
198
199
201
202
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile
DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify
as such users, respectively, based on their other activities on Facebook.
5
Mobile Monthly Active Users (Mobile MAUs)
In Millions
488
Q1'12
543
Q2'12
604
Q3'12
680
Q4'12
751
Q1'13
819
Q2'13
874
Q3'13
945
Q4'13
1,008
Q1'14
Please see Facebook's most recent quarterly or annual report filed with the SEC for definitions of user activity used to determine the number of our DAUs, mobile
DAUs, MAUs, and mobile MAUs. The number of DAUs, mobile DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify
as such users, respectively, based on their other activities on Facebook.
6
Mobile-Only Monthly Active Users (Mobile-Only MAUs)
In Millions
341
296
254
219
189
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Mobile-only MAUs are defined as users who accessed Facebook solely through mobile apps or our mobile website, or used our Messenger app, in the last 30 days
of the given quarter. The number of mobile-only MAUs do not include Instagram users unless they would otherwise qualify as such users based on their other
activities on Facebook.
7
Revenue
In Millions
$2,585
Payments and other fees
$241
Advertising
$2,502
$237
$2,016
$1,813
$1,585
$1,184
$1,058
$186
$192
$1,262
$256 *
$1,458
$214
$213
$176
$1,599
$872
Q1'12
$218
$992
$1,086
Q2'12
Q3'12
$1,329
$1,245
Q4'12
Q1'13
Q2'13
$2,344
$2,265
Q4'13
Q1'14
$1,798
Q3'13
*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.
8
Revenue by User Geography
In Millions
$2,585
Rest of World
$311
Asia
Europe
$2,016
US & Canada
$1,813
$1,585
$1,058
$87
$118
$328
$1,184
$113
$135
$346
$1,262
$130
$154
$167
$198
$440
$341
$525
$590
$637
Q1'12
Q2'12
Q3'12
$213
$1,458
$159
$197
$271
$341
$354
$727
$698
$1,206
$1,179
Q4'13
Q1'14
$238
$278
$247
$505
$2,502
$538
$423
$780
$679
Q4'12
Q1'13
$848
Q2'13
$962
Q3'13
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenuegenerating 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 marketer or developer.
9
Advertising Revenue by User Geography
In Millions
$2,344
$300
Rest of World
Asia
Europe
$1,798
US & Canada
$1,599
$1,329
$872
$79
$99
$274
$992
$104
$115
$294
$1,086
$120
$133
$295
$156
$168
$374
$202
$1,245
$150
$176
$262
$318
$333
$658
$631
$1,068
$1,039
Q4'13
Q1'14
$229
$255
$225
$451
$2,265
$482
$367
$419
$479
$538
$631
$552
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
$721
Q2'13
$832
Q3'13
Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenuegenerating 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 marketer or developer.
10
Payments & Other Fees Revenue by User Geography
In Millions
Rest of World
$256
$11
$30
Asia
Europe
US & Canada
$186
$8
$19
$192
$9
$20
$54
$52
$176
$10
$66
$21
$213
$9
$21
$214
$11
$22
$218
$9
$23
$241
$11
$23
$237
$9
$21
$69
$67
$56
$54
$56
$127
$127
$130
$138
$140
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
$46
$149
$106
$111
$99
Q1'12
Q2'12
Q3'12
Q4'12*
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 marketer 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.
11
Average Revenue per User (ARPU)
Worldwide
US & Canada
Payments
Advertising
$1.35
$0.20
$1.60
$0.19
$1.72
$2.14
$0.20
$3.50
$1.41
$1.53
Q2'13
Q3'13
$2.61
$0.25
$1.87
$1.60
$0.21
$0.20
$1.96
$1.38
Q1'13
Q2'13
Q3'13
$2.85
Q4'13
Q1'14
$0.69
$0.65
$0.65
$2.44
$0.23
$0.64
$0.07
$0.07
$2.21
$0.57
Q4'13
Q1'13
Q1'14
Q1'13
$3.67
Q2'13
$5.34
$5.16
Q4'13
Q1'14
$4.19
Q3'13
Rest of World
$0.75
$2.36
$1.67
$1.81
Asia
$0.20
$1.76
$4.85
$5.85
$0.69
$0.65
Q1'13
Europe
$4.32
$0.19
$0.19
$1.94
$1.15
$2.00
$6.03
$0.81
$0.95
$0.06
$0.84
$0.03
$0.93
$0.06
$0.07
$0.50
$0.03
$0.68
$0.74
Q2'13
Q3'13
$0.88
$0.88
$0.48
Q4'13
$0.63
$0.03
Q1'14
Q1'13
$0.67
$0.03
$0.60
$0.65
Q2'13
Q3'13
$0.70
$0.02
$0.81
Q4'13
$0.68
Q1'14
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 marketer or developer. Please see Facebook’s most recent quarterly or annual report filed with the
SEC for the definition of ARPU.
12
Share-Based Compensation Expense
In Millions
Pre-2011 RSUs
Post-2011 RSUs
Options & Other
$1,106
$986
$97
$113
$179
$28
$138
Q1'12
Q2'12
Q3'12
$103
$184
$24
$137
$170
$9
$135
Q4'12
Q1'13
$273
$11
$274
$11
$193
$228
$231
Q3'13
Q4'13
Q1'14
$224
$17
$239
$14
$175
Q2'13
13
Expenses as a % of Revenue
Share-based compensation + Payroll tax related to share-based compensation
Research & Development
Cost of Revenue
28%
26%
20%
25%
19%
28%
Q1'13
25%
Q2'13
25%
Q3'13
18%
15%
12%
13%
Q1'13
Q2'13
12%
9%
19%
18%
9%
9%
16%
7%
18%
8%
19%
18%
11%
10%
10%
9%
10%
Q4'13
Q1'14
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
General & Administrative
Marketing & Sales
14%
All other expenses
11%
13%
12%
10%
8%
10%
7%
10%
10%
11%
10%
8%
7%
6%
6%
Q3'13
Q4'13
Q1'14
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
14
Income (Loss) from Operations
GAAP Income (Loss) from Operations (In Millions)
$381
Q1'12
($743)
Q2'12
$377
$523
$373
Q3'12
Q4'12
Q1'13
$562
Q2'13
$736
Q3'13
$1,133
$1,075
Q4'13
Q1'14
$1,459
$1,374
Q4'13
Q1'14
Non-GAAP Income from Operations (In Millions)
$485
$515
$525
Q1'12
Q2'12
Q3'12
$736
Q4'12
$563
Q1'13
$794
Q2'13
$987
Q3'13
Non-GAAP income from operations excludes share-based compensation expense and payroll tax expenses related to share-based compensation—see the
Appendix for a reconciliation of this non-GAAP measure to GAAP income (loss) from operations.
15
Operating Margin
GAAP Operating Margin
36%
30%
33%
26%
31%
37%
44%
43%
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
56%
55%
Q4'13
Q1'14
(63%)
Q1'12
Q2'12
Non-GAAP Operating Margin
46%
43%
42%
46%
Q1'12
Q2'12
Q3'12
Q4'12
39%
Q1'13
44%
Q2'13
49%
Q3'13
Non-GAAP operating margin excludes share-based compensation expense and payroll tax expenses related to share-based compensation—see the Appendix for a
reconciliation of this non-GAAP measure to GAAP operating margin.
16
Effective Tax Rate
GAAP Effective Tax Rate
($ in millions)
GAAP income before provision for income taxes
GAAP provision for from income taxes
Effective Tax Rate
Q1
2013
$
353
134
38%
Q2
2013
$
545
212
39%
Q3
2013
$
726
301
41%
Q4
2013
$ 1,130
607
54%
Q1
2014
$ 1,075
433
40%
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
2013
543
231
43%
Q2
2013
777
289
37%
Q3
2013
977
356
36%
Q4
2013
1,456
676
46%
Q1
2014
1,374
489
36%
17
Net Income (Loss)
GAAP Net Income (Loss) (In Millions)
$205
Q1'12
$64
($157)
($59)
Q2'12
Q3'12
Q4'12
$642
$219
$333
$425
$523
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
$780
$885
Q4'13
Q1'14
Non-GAAP Net Income (In Millions)
$287
$295
$311
Q1'12
Q2'12
Q3'12
$426
Q4'12
$312
Q1'13
$488
Q2'13
$621
Q3'13
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 (loss).
18
Diluted Earnings (Loss) Per Share
GAAP Diluted Earnings (Loss) Per Share
$0.09
$0.03
$0.09
$0.13
$0.17
$0.20
$0.25
($0.02)
Q1'12
($0.08)
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
$0.31
$0.34
Q4'13
Q1'14
Non-GAAP Diluted EPS
$0.12
$0.12
$0.12
Q1'12
Q2'12
Q3'12
$0.17
Q4'12
$0.12
Q1'13
$0.19
Q2'13
$0.25
Q3'13
Non-GAAP diluted earnings per share 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 earnings (loss) per share.
19
Capital Investments
In Millions
$1,575
Property and equipment acquired
under capital leases
Purchases of property
$340
$1,373
and equipment
$1,079
$473
$1,235
$1,362
$363
$338
$606
$327
$363
Q1'13
Q1'14
Quarterly
2011
2012
2013
Annual
20
Appendix
Reconciliations
Income (Loss) 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
Q1'12
381
103
1
$
485
$
Operating Margin
GAAP operating margin
Share-based compensation expense
Payroll tax expenses related to share-based compensation
Non-GAAP operating margin
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
Diluted Earnings (Loss) Per Share
GAAP diluted earnings (loss) per share
Net income attributable to participating securities
Non-GAAP adjustments to net income (loss)
Non-GAAP adjustments to diluted shares
Non-GAAP diluted earnings per share
Q2'12
(743)
1,106
152
$
515
$
Q1'12
36%
10%
0%
46%
Q1'12
205
103
1
(22)
$
287
$
Q1'12
0.09
0.04
0.05
(0.06)
$
0.12
$
Q3'12
377
179
(31)
$
525
$
Q2'12
(63%)
93%
13%
43%
Q2'12
(157)
1,106
152
(806)
$
295
$
Q2'12
(0.08)
0.24
(0.04)
$
0.12
$
Q4'12
523
184
29
$
736
$
Q3'12
30%
14%
(2%)
42%
Q3'12
(59)
179
(31)
222
$
311
$
Q3'12
(0.02)
0.15
(0.01)
$
0.12
$
Q1'13
373
170
20
$
563
$
Q4'12
33%
12%
2%
46%
Q4'12
64
184
29
149
$
426
$
Q4'12
0.03
0.14
$
0.17
$
Q2'13
562
224
8
$
794
$
Q1'13
26%
12%
1%
39%
Q1'13
219
170
20
(97)
$
312
$
Q1'13
0.09
0.03
$
0.12
$
Q3'13
736
239
12
$
987
Q4'13
$ 1,133
273
53
$ 1,459
Q1'14
$ 1,075
274
25
$ 1,374
Q3'13
37%
12%
1%
49%
Q4'13
44%
11%
2%
56%
Q1'14
43%
11%
1%
55%
Q4'13
523
273
53
(69)
$
780
Q1'14
642
274
25
(56)
885
$
$
Q2'13
31%
12%
0%
44%
Q2'13
333
224
8
(77)
$
488
$
Q2'13
0.13
0.06
$
0.19
$
Q3'13
425
239
12
(55)
$
621
$
Q3'13
0.17
0.08
$
0.25
$
$
Q4'13
0.20
0.11
$
0.31
$
$
Q1'14
0.25
0.09
$
0.34
$
22
Reconciliations (continued)
Effective Tax Rate (in millions)
GAAP income before provision for income taxes
GAAP provision for income taxes
GAAP effective tax rate
Q1'13
$
353
134
38%
Q2'13
$
545
212
39%
Q3'13
$
726
301
41%
Q4'13
$ 1,130
607
54%
Q1'14
$ 1,075
433
40%
GAAP income before provision for income taxes
Share-based compensation and related payroll tax expenses
Non-GAAP income before provision for income taxes
Non-GAAP provision for income taxes
Non-GAAP effective tax rate
$
$
$
$ 1,130
326
$ 1,456
676
46%
$ 1,075
299
$ 1,374
489
36%
$
353
190
543
231
43%
$
545
232
777
289
37%
$
726
251
977
356
36%
23
Reconciliations (continued)
Free Cash Flow (in millions)
Net cash provided by operating activities
Purchases of property and equipment
Property and equpiment acquired under capital leases
Free Cash Flow
Q1'12
441
453
38
$
(50)
$
Q2'12
240
413
52
$ (225)
$
Q3'12
250
171
161
$
(82)
$
Q4'12
681
198
89
$
394
$
Q1'13
719
327
11
$
381
$
Q2'13
$ 1,322
268
$ 1,054
Q3'13
950
284
$
666
$
Q4'13
$ 1,231
483
$
748
Q1'14
$ 1,285
363
$
922
24
Limitations of Key Metrics and Other Data
The numbers for our key metrics, which include our daily active users (DAUs), mobile DAUs, monthly active users (MAUs),
mobile MAUs, and average revenue per user (ARPU), as well as certain other metrics such as mobile-only MAUs, 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 between approximately 4.3% and
7.9% of our worldwide MAUs in 2013. 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. In 2013, for example, we estimate user-misclassified accounts may
have represented between approximately 0.8% and 2.1% of our worldwide MAUs and undesirable accounts may have
represented between approximately 0.4% and 1.2% 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 the United Kingdom and higher in
developing markets such as India 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. Due to inherent variability in such estimates at particular dates of
measurement, we disclose these estimates as a range over a recent period.
25
Limitations of Key Metrics and Other Data (cont.)
Our data limitations may affect our understanding of certain details of our business. For example, while user-provided data indicates a
decline in usage among younger users, this age data is unreliable because a disproportionate number of our younger users register
with an inaccurate age. In the third quarter of 2013, we worked with third parties to develop models to analyze user data by age in the
United States. These models suggested that usage by U.S. teens overall was stable, but that DAUs among younger U.S. teens had
declined. The data and models we are using are not precise and our understanding of usage by age group may not be complete.
Some of our historical metrics through the second quarter of 2012 were also 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 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 DAU and MAU numbers, it did affect
our attribution of users across 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. The number of such users for the period ended March 31, 2012 presented herein reflect the
reclassification to more correctly attribute users by geographic region. 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 numbers of DAUs, mobile DAUs, MAUs, mobile MAUs, and mobile-only MAUs represented in these slides, as well as ARPU, do
not include users of Instagram unless they would otherwise qualify as such users, respectively, based on their other activities on
Facebook.
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