Facebook Revenue Up 61% - 2014

Facebook just released its Q2 earnings report with revenue of $2.91 billion, up 61% year-over-year. Revenue from advertising was $2.68 billion, up 67%, with mobile ad revenue representing 62% of all ad revenue. Payments and other fees accounted for $234 million, up 9% from last year.

CEO Mark Zuckerberg gave pretty much the most generic statement possible: “We had a good second quarter. Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.”

Daily active users were 829 million on average in June (up 19% year-over-year), while mobile DAUs were 654 million on average (up 39%).

 

Monthly active users were 1.32 billion, up 14% year-over-year, and mobile monthly actives were 1.07 billion (up 31%).

 

Stock has reportedly reached an all-time high.

On the conference call, Zuckerberg noted that people on Facebook in the U.S. spend 40 minutes each day using Facebook.

He said Facebook has deepened partnerships for Internet.org, and is running tests in more counties. He’s proud of the early results. Later this year, they will launch a broader set of Internet services in more countries.

12 billion messages are sent per day on Facebook. More than one billion search queries are made every day on Facebook.Public content is a growing focus, as is supporting developers. App Links are being used by “hundreds of apps.” 30 million small businesses use Facebook Pages.

Sheryl Sandberg announced that Facebook now has 1.5 million active advertisers.

The company refused to get into specifics on employee headcounts related to Oculus and WhatsApp.

Here’s the release in its entirety:

MENLO PARK, Calif., July 23, 2014 /PRNewswire/ – Facebook, Inc. (NASDAQ: FB) today reported financial results for the quarter ended June 30, 2014.

“We had a good second quarter,” said Mark Zuckerberg, Facebook founder and CEO. “Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world.”

Second Quarter 2014 Financial Summary

	Three Months Ended June 30,				Six Months Ended June 30,
In millions, except percentages and per share amounts	2013		2014		2013		2014
Revenue	$ 1,813		$ 2,910		$ 3,271		$ 5,412
Income from Operations
GAAP	$    562		$ 1,390		$    935		$ 2,464
Non-GAAP	$    794		$ 1,712		$ 1,357		$ 3,085
Operating Margin
GAAP	31 %		48 %		29 %		46 %
Non-GAAP	44 %		59 %		41 %		57 %
Net Income
GAAP	$    333		$    791		$    552		$ 1,433
Non-GAAP	$    488		$ 1,091		$    800		$ 1,976
Diluted Earnings per Share (EPS)
GAAP	$   0.13		$   0.30		$   0.22		$   0.55
Non-GAAP	$   0.19		$   0.42		$   0.32		$   0.76

Second Quarter 2014 Operational Highlights

• Daily active users (DAUs) were 829 million on average for June 2014, an increase of 19% year-over-year.
• Mobile DAUs were 654 million on average for June 2014, an increase of 39% year-over-year.
• Monthly active users (MAUs) were 1.32 billion as of June 30, 2014, an increase of 14% year-over-year.
• Mobile MAUs were 1.07 billion as of June 30, 2014, an increase of 31% year-over-year.

Second Quarter 2014 Financial Highlights

 

Revenue - Revenue for the second quarter of 2014 totaled $2.91 billion, an increase of 61%, compared with $1.81 billion in the second quarter of 2013. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 59%.

• Revenue from advertising was $2.68 billion, a 67% 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 65%.
• Mobile advertising revenue represented approximately 62% of advertising revenue for the second quarter of 2014, up from approximately 41% of advertising revenue in the second quarter of 2013.
• Payments and other fees revenue was $234 million, a 9% increase from the same quarter last year.

Costs and expenses - GAAP costs and expenses for the second quarter of 2014 were $1.52 billion, an increase of 22% from the second quarter of 2013. Excluding share-based compensation and related payroll tax expenses, non-GAAP costs and expenses were $1.2 billion in the second quarter of 2014, up 18% compared to $1.02 billion for the second quarter of 2013.

Income from operations - For the second quarter of 2014, GAAP income from operations was $1.39 billion, up 147% compared to$562 million in the second quarter of 2013. Excluding share-based compensation and related payroll tax expenses, non-GAAP income from operations for the second quarter of 2014 was $1.71 billion, up 116% compared to $794 million for the second quarter of 2013.

Operating margin - GAAP operating margin was 48% for the second quarter of 2014, compared to 31% in the second quarter of 2013. Excluding share-based compensation and related payroll tax expenses, non-GAAP operating margin was 59% for the second quarter of 2014, compared to 44% for the second quarter of 2013.

 

Provision for income taxes - GAAP income tax expense for the second quarter of 2014 was $595 million, representing a 43% effective tax rate. Excluding share-based compensation and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 36%.

Net income and EPS - For the second quarter of 2014, GAAP net income was $791 million, up 138% compared to $333 million for the second quarter of 2013. Excluding share-based compensation and related payroll tax expenses and income tax adjustments, non-GAAP net income for the second quarter of 2014 was $1.09 billion, up 124% compared to $488 million for the second quarter of 2013. GAAP diluted EPS was $0.30 in the second quarter of 2014, up 131% compared to $0.13 in the second quarter of 2013. Excluding share-based compensation and related payroll tax expenses and income tax adjustments, non-GAAP diluted EPS for the second quarter of 2014 was $0.42, up 121% compared to $0.19 in the second quarter of 2013.

Capital expenditures - Capital expenditures for the second quarter of 2014 were $469 million.

Cash and marketable securities - Cash and marketable securities were $13.96 billion at the end of the second quarter of 2014.

Free cash flow - Free cash flow for the second quarter of 2014 was $872 million.