Delaware
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20-1665019
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large accelerated filer
|
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x
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Accelerated filer
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¨
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Non-accelerated filer
|
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Class
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Number of Shares Outstanding
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Class A Common Stock $0.000006 par value
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2,223,936,268 shares outstanding as of October 27, 2014
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Class B Common Stock $0.000006 par value
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563,911,667 shares outstanding as of October 27, 2014
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Page No.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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Financial Statements
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September 30,
2014 |
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December 31,
2013 |
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Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
8,999
|
|
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$
|
3,323
|
|
Marketable securities
|
5,251
|
|
|
8,126
|
|
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Accounts receivable, net of allowances for doubtful accounts of $35 and $38 as of September 30, 2014 and December 31, 2013, respectively
|
1,363
|
|
|
1,109
|
|
||
Prepaid expenses and other current assets
|
502
|
|
|
512
|
|
||
Total current assets
|
16,115
|
|
|
13,070
|
|
||
Property and equipment, net
|
3,703
|
|
|
2,882
|
|
||
Intangible assets, net
|
1,317
|
|
|
883
|
|
||
Goodwill
|
2,612
|
|
|
839
|
|
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Other assets
|
441
|
|
|
221
|
|
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Total assets
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$
|
24,188
|
|
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$
|
17,895
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
120
|
|
|
$
|
87
|
|
Partners payable
|
208
|
|
|
181
|
|
||
Accrued expenses and other current liabilities
|
709
|
|
|
555
|
|
||
Deferred revenue and deposits
|
48
|
|
|
38
|
|
||
Current portion of capital lease obligations
|
149
|
|
|
239
|
|
||
Total current liabilities
|
1,234
|
|
|
1,100
|
|
||
Capital lease obligations, less current portion
|
129
|
|
|
237
|
|
||
Other liabilities
|
1,587
|
|
|
1,088
|
|
||
Total liabilities
|
2,950
|
|
|
2,425
|
|
||
Stockholders' equity:
|
|
|
|
||||
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,044 million and 1,970 million shares issued and outstanding, including 4 million and 6 million outstanding shares subject to repurchase, as of September 30, 2014 and December 31, 2013, respectively; 4,141 million Class B shares authorized, 564 million and 577 million shares issued and outstanding, including 8 million and 6 million outstanding shares subject to repurchase, as of September 30, 2014 and December 31, 2013, respectively
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—
|
|
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—
|
|
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Additional paid-in capital
|
15,949
|
|
|
12,297
|
|
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Accumulated other comprehensive (loss) income
|
(109
|
)
|
|
14
|
|
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Retained earnings
|
5,398
|
|
|
3,159
|
|
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Total stockholders' equity
|
21,238
|
|
|
15,470
|
|
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Total liabilities and stockholders' equity
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$
|
24,188
|
|
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$
|
17,895
|
|
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Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue
|
$
|
3,203
|
|
|
$
|
2,016
|
|
|
$
|
8,615
|
|
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$
|
5,286
|
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Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
565
|
|
|
507
|
|
|
1,501
|
|
|
1,384
|
|
||||
Research and development
|
608
|
|
|
369
|
|
|
1,555
|
|
|
1,006
|
|
||||
Marketing and sales
|
374
|
|
|
233
|
|
|
1,055
|
|
|
704
|
|
||||
General and administrative
|
259
|
|
|
171
|
|
|
643
|
|
|
520
|
|
||||
Total costs and expenses
|
1,806
|
|
|
1,280
|
|
|
4,754
|
|
|
3,614
|
|
||||
Income from operations
|
1,397
|
|
|
736
|
|
|
3,861
|
|
|
1,672
|
|
||||
Interest and other income/(expense), net
|
(61
|
)
|
|
(10
|
)
|
|
(65
|
)
|
|
(48
|
)
|
||||
Income before provision for income taxes
|
1,336
|
|
|
726
|
|
|
3,796
|
|
|
1,624
|
|
||||
Provision for income taxes
|
530
|
|
|
301
|
|
|
1,557
|
|
|
647
|
|
||||
Net income
|
$
|
806
|
|
|
$
|
425
|
|
|
$
|
2,239
|
|
|
$
|
977
|
|
Less: Net income attributable to participating securities
|
4
|
|
|
3
|
|
|
10
|
|
|
6
|
|
||||
Net income attributable to Class A and Class B common stockholders
|
$
|
802
|
|
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$
|
422
|
|
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$
|
2,229
|
|
|
$
|
971
|
|
Earnings per share attributable to Class A and Class B common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.31
|
|
|
$
|
0.17
|
|
|
$
|
0.87
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.17
|
|
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$
|
0.86
|
|
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$
|
0.39
|
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Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
|
|
|
|
|
|
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|
||||||||
Basic
|
2,587
|
|
|
2,430
|
|
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2,565
|
|
|
2,408
|
|
||||
Diluted
|
2,644
|
|
|
2,528
|
|
|
2,616
|
|
|
2,504
|
|
||||
Share-based compensation expense included in costs and expenses:
|
|
|
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Cost of revenue
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
31
|
|
Research and development
|
243
|
|
|
164
|
|
|
643
|
|
|
432
|
|
||||
Marketing and sales
|
53
|
|
|
34
|
|
|
146
|
|
|
91
|
|
||||
General and administrative
|
41
|
|
|
29
|
|
|
108
|
|
|
79
|
|
||||
Total share-based compensation expense
|
$
|
353
|
|
|
$
|
239
|
|
|
$
|
941
|
|
|
$
|
633
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net income
|
$
|
806
|
|
|
$
|
425
|
|
|
$
|
2,239
|
|
|
$
|
977
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Change in foreign currency translation adjustment
|
(102
|
)
|
|
38
|
|
|
(123
|
)
|
|
7
|
|
||||
Change in unrealized gain/loss on available-for-sale investments, net of tax
|
(2
|
)
|
|
4
|
|
|
—
|
|
|
1
|
|
||||
Change in unrealized gain/loss on derivative, net of tax
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
3
|
|
||||
Comprehensive income
|
$
|
702
|
|
|
$
|
466
|
|
|
$
|
2,116
|
|
|
$
|
988
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
2,239
|
|
|
$
|
977
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
810
|
|
|
737
|
|
||
Lease abandonment
|
(31
|
)
|
|
108
|
|
||
Share-based compensation
|
941
|
|
|
633
|
|
||
Deferred income taxes
|
(30
|
)
|
|
21
|
|
||
Tax benefit from share-based award activity
|
1,354
|
|
|
277
|
|
||
Excess tax benefit from share-based award activity
|
(1,365
|
)
|
|
(285
|
)
|
||
Other
|
5
|
|
|
39
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(264
|
)
|
|
(145
|
)
|
||
Prepaid expenses and other current assets
|
(45
|
)
|
|
433
|
|
||
Other assets
|
(158
|
)
|
|
(35
|
)
|
||
Accounts payable
|
12
|
|
|
(17
|
)
|
||
Partners payable
|
(22
|
)
|
|
2
|
|
||
Accrued expenses and other current liabilities
|
198
|
|
|
(105
|
)
|
||
Deferred revenue and deposits
|
3
|
|
|
6
|
|
||
Other liabilities
|
227
|
|
|
345
|
|
||
Net cash provided by operating activities
|
3,874
|
|
|
2,991
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment
|
(1,314
|
)
|
|
(879
|
)
|
||
Purchases of marketable securities
|
(6,215
|
)
|
|
(4,364
|
)
|
||
Sales of marketable securities
|
7,391
|
|
|
2,433
|
|
||
Maturities of marketable securities
|
1,710
|
|
|
2,954
|
|
||
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
|
(754
|
)
|
|
(237
|
)
|
||
Change in restricted cash and deposits
|
(113
|
)
|
|
4
|
|
||
Other investing activities, net
|
(2
|
)
|
|
(1
|
)
|
||
Net cash provided by (used in) investing activities
|
703
|
|
|
(90
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Taxes paid related to net share settlement of equity awards
|
(3
|
)
|
|
(706
|
)
|
||
Proceeds from exercise of stock options
|
7
|
|
|
20
|
|
||
Repayment of long-term debt
|
—
|
|
|
(1,500
|
)
|
||
Principal payments on capital lease obligations
|
(199
|
)
|
|
(291
|
)
|
||
Excess tax benefit from share-based award activity
|
1,365
|
|
|
285
|
|
||
Net cash provided by (used in) financing activities
|
1,170
|
|
|
(2,192
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(71
|
)
|
|
7
|
|
||
Net increase in cash and cash equivalents
|
5,676
|
|
|
716
|
|
||
Cash and cash equivalents at beginning of period
|
3,323
|
|
|
2,384
|
|
||
Cash and cash equivalents at end of period
|
$
|
8,999
|
|
|
$
|
3,100
|
|
|
Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Supplemental cash flow data
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
11
|
|
|
$
|
33
|
|
Income taxes
|
$
|
107
|
|
|
$
|
61
|
|
Cash received during the period for:
|
|
|
|
||||
Income taxes
|
$
|
6
|
|
|
$
|
419
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions
|
$
|
38
|
|
|
$
|
31
|
|
Property and equipment acquired under capital leases
|
$
|
—
|
|
|
$
|
11
|
|
Fair value of shares issued related to acquisitions of businesses
|
$
|
1,368
|
|
|
$
|
77
|
|
Note 1.
|
Summary of Significant Accounting Policies
|
Note 2.
|
Acquisitions
|
Cash
|
$
|
400
|
|
Common stock
|
1,601
|
|
|
Less: post-acquisition share-based compensation and other compensation expense
|
(297
|
)
|
|
Less: cash acquired on acquisition date
|
(20
|
)
|
|
Total purchase consideration, excluding contingent consideration
|
$
|
1,684
|
|
Contingent consideration
|
169
|
|
|
Purchase consideration
|
$
|
1,853
|
|
|
Oculus
|
|
Other
|
||||||||
|
(in millions)
|
|
Useful lives (in years)
|
|
(in millions)
|
|
Useful lives (in years)
|
||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
||||
Acquired technology
|
$
|
235
|
|
|
5
|
|
$
|
62
|
|
|
3 - 5
|
Tradename and other
|
132
|
|
|
2 - 7
|
|
87
|
|
|
3 - 5
|
||
IPR&D intangible assets
|
60
|
|
|
|
|
—
|
|
|
|
||
Net assets acquired
|
—
|
|
|
|
|
104
|
|
|
|
||
Deferred tax liabilities
|
(107
|
)
|
|
|
|
(41
|
)
|
|
|
||
Net assets acquired
|
$
|
320
|
|
|
|
|
$
|
212
|
|
|
|
Goodwill
|
1,533
|
|
|
|
|
244
|
|
|
|
||
Total fair value
|
$
|
1,853
|
|
|
|
|
$
|
456
|
|
|
|
Note 3.
|
Earnings per Share
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||||||||||
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
|
Class A
|
|
Class B
|
||||||||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income
|
$
|
632
|
|
|
$
|
174
|
|
|
$
|
320
|
|
|
$
|
105
|
|
|
$
|
1,747
|
|
|
$
|
492
|
|
|
$
|
717
|
|
|
$
|
260
|
|
Less: Net income attributable to participating securities
|
3
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
8
|
|
|
2
|
|
|
4
|
|
|
2
|
|
||||||||
Net income attributable to common stockholders
|
$
|
629
|
|
|
$
|
173
|
|
|
$
|
318
|
|
|
$
|
104
|
|
|
$
|
1,739
|
|
|
$
|
490
|
|
|
$
|
713
|
|
|
$
|
258
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average shares outstanding
|
2,032
|
|
|
567
|
|
|
1,833
|
|
|
611
|
|
|
2,006
|
|
|
570
|
|
|
1,773
|
|
|
649
|
|
||||||||
Less: Shares subject to repurchase
|
4
|
|
|
8
|
|
|
6
|
|
|
8
|
|
|
5
|
|
|
6
|
|
|
5
|
|
|
9
|
|
||||||||
Number of shares used for basic EPS computation
|
2,028
|
|
|
559
|
|
|
1,827
|
|
|
603
|
|
|
2,001
|
|
|
564
|
|
|
1,768
|
|
|
640
|
|
||||||||
Basic EPS
|
$
|
0.31
|
|
|
$
|
0.31
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.87
|
|
|
$
|
0.87
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net income attributable to common stockholders
|
$
|
629
|
|
|
$
|
173
|
|
|
$
|
318
|
|
|
$
|
104
|
|
|
$
|
1,739
|
|
|
$
|
490
|
|
|
$
|
713
|
|
|
$
|
258
|
|
Reallocation of net income attributable to participating securities
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||||||
Reallocation of net income as a result of conversion of Class B to Class A common stock
|
173
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|
258
|
|
|
—
|
|
||||||||
Reallocation of net income to Class B common stock
|
—
|
|
|
7
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
29
|
|
||||||||
Net income attributable to common stockholders for diluted EPS
|
$
|
806
|
|
|
$
|
180
|
|
|
$
|
425
|
|
|
$
|
117
|
|
|
$
|
2,239
|
|
|
$
|
508
|
|
|
$
|
977
|
|
|
$
|
287
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Number of shares used for basic EPS computation
|
2,028
|
|
|
559
|
|
|
1,827
|
|
|
603
|
|
|
2,001
|
|
|
564
|
|
|
1,768
|
|
|
640
|
|
||||||||
Conversion of Class B to Class A common stock
|
559
|
|
|
—
|
|
|
603
|
|
|
—
|
|
|
564
|
|
|
—
|
|
|
640
|
|
|
—
|
|
||||||||
Weighted average effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Employee stock options
|
13
|
|
|
13
|
|
|
59
|
|
|
59
|
|
|
13
|
|
|
13
|
|
|
69
|
|
|
69
|
|
||||||||
RSUs
|
36
|
|
|
14
|
|
|
33
|
|
|
33
|
|
|
32
|
|
|
13
|
|
|
21
|
|
|
21
|
|
||||||||
Shares subject to repurchase
|
8
|
|
|
5
|
|
|
6
|
|
|
6
|
|
|
6
|
|
|
3
|
|
|
6
|
|
|
6
|
|
||||||||
Number of shares used for diluted EPS computation
|
2,644
|
|
|
591
|
|
|
2,528
|
|
|
701
|
|
|
2,616
|
|
|
593
|
|
|
2,504
|
|
|
736
|
|
||||||||
Diluted EPS
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
|
$
|
0.86
|
|
|
$
|
0.86
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
Note 4.
|
Cash, Cash Equivalents and Marketable Securities
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Cash and cash equivalents:
|
|
|
|
||||
Cash
|
$
|
1,344
|
|
|
$
|
1,044
|
|
Cash equivalents:
|
|
|
|
||||
Money market funds
|
7,655
|
|
|
2,279
|
|
||
Total cash and cash equivalents
|
8,999
|
|
|
3,323
|
|
||
Marketable securities:
|
|
|
|
||||
U.S. government securities
|
2,062
|
|
|
5,687
|
|
||
U.S. government agency securities
|
2,330
|
|
|
2,439
|
|
||
Corporate debt securities
|
859
|
|
|
—
|
|
||
Total marketable securities
|
5,251
|
|
|
8,126
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
14,250
|
|
|
$
|
11,449
|
|
|
September 30, 2014
|
||
Due in one year
|
$
|
2,747
|
|
Due in one to two years
|
2,504
|
|
|
Total
|
$
|
5,251
|
|
Note 5.
|
Fair Value Measurements
|
|
|
|
Fair Value Measurement at
Reporting Date Using
|
||||||||||||
Description
|
September 30, 2014
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
7,655
|
|
|
$
|
7,655
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
2,062
|
|
|
2,062
|
|
|
—
|
|
|
—
|
|
||||
U.S. government agency securities
|
2,330
|
|
|
2,330
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
859
|
|
|
—
|
|
|
859
|
|
|
—
|
|
||||
Total cash equivalents and marketable securities
|
$
|
12,906
|
|
|
$
|
12,047
|
|
|
$
|
859
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
192
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
192
|
|
|
|
|
Fair Value Measurement at
Reporting Date Using
|
||||||||||||
Description
|
December 31, 2013
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
2,279
|
|
|
$
|
2,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. government securities
|
5,687
|
|
|
5,687
|
|
|
—
|
|
|
—
|
|
||||
U.S. government agency securities
|
2,439
|
|
|
2,439
|
|
|
—
|
|
|
—
|
|
||||
Total cash equivalents and marketable securities
|
$
|
10,405
|
|
|
$
|
10,405
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Note 6.
|
Property and Equipment
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
Land
|
$
|
153
|
|
|
$
|
45
|
|
Buildings
|
1,347
|
|
|
1,071
|
|
||
Leasehold improvements
|
279
|
|
|
203
|
|
||
Network equipment
|
2,704
|
|
|
2,351
|
|
||
Computer software, office equipment and other
|
134
|
|
|
95
|
|
||
Construction in progress
|
702
|
|
|
377
|
|
||
Total
|
5,319
|
|
|
4,142
|
|
||
Less: Accumulated depreciation
|
(1,616
|
)
|
|
(1,260
|
)
|
||
Property and equipment, net
|
$
|
3,703
|
|
|
$
|
2,882
|
|
Note 7.
|
Goodwill and Intangible Assets
|
Balance as of December 31, 2013
|
$
|
839
|
|
Goodwill acquired
|
1,777
|
|
|
Effect of currency translation adjustment
|
(4
|
)
|
|
Balance as of September 30, 2014
|
$
|
2,612
|
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
Useful lives from date of acquisitions (in years)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired patents
|
2 - 18
|
|
$
|
773
|
|
|
$
|
(215
|
)
|
|
$
|
558
|
|
|
$
|
773
|
|
|
$
|
(142
|
)
|
|
$
|
631
|
|
Acquired technology
|
2 - 10
|
|
518
|
|
|
(104
|
)
|
|
414
|
|
|
227
|
|
|
(65
|
)
|
|
162
|
|
||||||
Tradename and other
|
2 - 10
|
|
357
|
|
|
(72
|
)
|
|
285
|
|
|
138
|
|
|
(48
|
)
|
|
90
|
|
||||||
Total finite-lived intangible assets:
|
|
|
$
|
1,648
|
|
|
$
|
(391
|
)
|
|
$
|
1,257
|
|
|
$
|
1,138
|
|
|
$
|
(255
|
)
|
|
$
|
883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
IPR&D
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total intangible assets
|
|
|
$
|
1,708
|
|
|
$
|
(391
|
)
|
|
$
|
1,317
|
|
|
$
|
1,138
|
|
|
$
|
(255
|
)
|
|
$
|
883
|
|
The remainder of 2014
|
$
|
66
|
|
2015
|
260
|
|
|
2016
|
244
|
|
|
2017
|
209
|
|
|
2018
|
163
|
|
|
Thereafter
|
315
|
|
|
|
$
|
1,257
|
|
Note 8.
|
Long-term Debt
|
Note 9.
|
Commitments and Contingencies
|
Note 10.
|
Stockholders' Equity
|
|
Shares Subject to Options Outstanding
|
|||||||||||
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(in thousands)
|
|
|
|
(in years)
|
|
(in millions)
|
|||||
Balance as of December 31, 2013
|
22,102
|
|
|
$
|
3.56
|
|
|
|
|
|
||
Stock options exercised
|
(5,015
|
)
|
|
0.91
|
|
|
|
|
|
|||
Balance as of September 30, 2014
|
17,087
|
|
|
$
|
4.34
|
|
|
3.22
|
|
$
|
1,276
|
|
Stock options vested and expected to vest as of September 30, 2014
|
17,071
|
|
|
$
|
4.33
|
|
|
3.22
|
|
$
|
1,275
|
|
Stock options exercisable as of September 30, 2014
|
13,719
|
|
|
$
|
2.48
|
|
|
2.56
|
|
$
|
1,050
|
|
(1)
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of our Class A common stock of
$79.04
on
September 30, 2014
.
|
|
Unvested RSUs
|
|||||
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Unvested at December 31, 2013
|
103,971
|
|
|
$
|
27.30
|
|
Granted
|
33,844
|
|
|
70.04
|
|
|
Vested
|
(33,450
|
)
|
|
24.77
|
|
|
Forfeited
|
(7,948
|
)
|
|
33.87
|
|
|
Unvested at September 30, 2014
|
96,417
|
|
|
$
|
42.64
|
|
Note 11.
|
Income Taxes
|
Note 12.
|
Geographical Information
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,468
|
|
|
$
|
940
|
|
|
$
|
3,857
|
|
|
$
|
2,438
|
|
Rest of the world
(1)
|
1,735
|
|
|
1,076
|
|
|
4,758
|
|
|
2,848
|
|
||||
Total revenue
|
$
|
3,203
|
|
|
$
|
2,016
|
|
|
$
|
8,615
|
|
|
$
|
5,286
|
|
(1)
|
No individual country exceeded 10% of our total revenue for any period presented.
|
|
September 30,
2014 |
|
December 31,
2013 |
||||
Property and equipment, net:
|
|
|
|
||||
United States
|
$
|
3,023
|
|
|
$
|
2,368
|
|
Sweden
|
513
|
|
|
415
|
|
||
Rest of the world
|
167
|
|
|
99
|
|
||
Total property and equipment, net
|
$
|
3,703
|
|
|
$
|
2,882
|
|
Note 13.
|
Subsequent Events
|
Cash
|
$
|
4,589
|
|
|
Common stock
|
13,787
|
|
||
Less: post-acquisition share-based compensation and other compensation expense
|
(1,067
|
)
|
||
Less: cash and promissory notes acquired on acquisition date
|
(116
|
)
|
||
Purchase consideration
|
$
|
17,193
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenue
|
$
|
3,210
|
|
|
$
|
2,019
|
|
|
$
|
8,637
|
|
|
$
|
5,292
|
|
Net income (loss)
|
$
|
526
|
|
|
$
|
136
|
|
|
$
|
1,289
|
|
|
$
|
(106
|
)
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Daily Active Users (DAUs).
We define a daily active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement.
|
•
|
Mobile DAUs
. We define a mobile DAU as a user who accessed Facebook via a mobile application or via mobile versions of our website such as m.facebook.com, whether on a mobile phone or tablet, or used our Messenger app on a given day.
|
•
|
Monthly Active Users (MAUs).
We define a monthly active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, used our Messenger app, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website or application that is integrated with Facebook, in the last 30 days as of the date of measurement. MAUs are a measure of the size of our global active user community.
|
•
|
Mobile MAUs
.
We define a mobile MAU as a user who accessed Facebook via a mobile application or via mobile versions of our website such as m.facebook.com, whether on a mobile phone or tablet, or used our Messenger app during the period of measurement.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in millions)
|
||||||||||||||
Revenue
|
$
|
3,203
|
|
|
$
|
2,016
|
|
|
$
|
8,615
|
|
|
$
|
5,286
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
565
|
|
|
507
|
|
|
1,501
|
|
|
1,384
|
|
||||
Research and development
|
608
|
|
|
369
|
|
|
1,555
|
|
|
1,006
|
|
||||
Marketing and sales
|
374
|
|
|
233
|
|
|
1,055
|
|
|
704
|
|
||||
General and administrative
|
259
|
|
|
171
|
|
|
643
|
|
|
520
|
|
||||
Total costs and expenses
|
1,806
|
|
|
1,280
|
|
|
4,754
|
|
|
3,614
|
|
||||
Income from operations
|
1,397
|
|
|
736
|
|
|
3,861
|
|
|
1,672
|
|
||||
Interest and other income/(expense), net
|
(61
|
)
|
|
(10
|
)
|
|
(65
|
)
|
|
(48
|
)
|
||||
Income before provision for income taxes
|
1,336
|
|
|
726
|
|
|
3,796
|
|
|
1,624
|
|
||||
Provision for income taxes
|
530
|
|
|
301
|
|
|
1,557
|
|
|
647
|
|
||||
Net income
|
$
|
806
|
|
|
$
|
425
|
|
|
$
|
2,239
|
|
|
$
|
977
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
|
(in millions)
|
||||||||||||||
Cost of revenue
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
31
|
|
Research and development
|
243
|
|
|
164
|
|
|
643
|
|
|
432
|
|
||||
Marketing and sales
|
53
|
|
|
34
|
|
|
146
|
|
|
91
|
|
||||
General and administrative
|
41
|
|
|
29
|
|
|
108
|
|
|
79
|
|
||||
Total share-based compensation expense
|
$
|
353
|
|
|
$
|
239
|
|
|
$
|
941
|
|
|
$
|
633
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Cost of revenue
|
18
|
|
|
25
|
|
|
17
|
|
|
26
|
|
Research and development
|
19
|
|
|
18
|
|
|
18
|
|
|
19
|
|
Marketing and sales
|
12
|
|
|
12
|
|
|
12
|
|
|
13
|
|
General and administrative
|
8
|
|
|
8
|
|
|
7
|
|
|
10
|
|
Total costs and expenses
|
56
|
|
|
63
|
|
|
55
|
|
|
68
|
|
Income from operations
|
44
|
|
|
37
|
|
|
45
|
|
|
32
|
|
Interest and other income/(expense), net
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
Income before provision for income taxes
|
42
|
|
|
36
|
|
|
44
|
|
|
31
|
|
Provision for income taxes
|
17
|
|
|
15
|
|
|
18
|
|
|
12
|
|
Net income
|
25
|
%
|
|
21
|
%
|
|
26
|
%
|
|
18
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||
Cost of revenue
|
—
|
%
|
|
1
|
%
|
|
1
|
%
|
|
1
|
%
|
Research and development
|
8
|
|
|
8
|
|
|
7
|
|
|
8
|
|
Marketing and sales
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
General and administrative
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Total share-based compensation expense
|
11
|
%
|
|
12
|
%
|
|
11
|
%
|
|
12
|
%
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising
|
$
|
2,957
|
|
|
$
|
1,798
|
|
|
64
|
%
|
|
$
|
7,898
|
|
|
$
|
4,641
|
|
|
70
|
%
|
Payments and other fees
|
246
|
|
|
218
|
|
|
13
|
%
|
|
717
|
|
|
645
|
|
|
11
|
%
|
||||
Total revenue
|
$
|
3,203
|
|
|
$
|
2,016
|
|
|
59
|
%
|
|
$
|
8,615
|
|
|
$
|
5,286
|
|
|
63
|
%
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
Cost of revenue
|
$
|
565
|
|
|
$
|
507
|
|
|
11
|
%
|
|
$
|
1,501
|
|
|
$
|
1,384
|
|
|
8
|
%
|
Percentage of revenue
|
18
|
%
|
|
25
|
%
|
|
|
|
17
|
%
|
|
26
|
%
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
Research and development
|
$
|
608
|
|
|
$
|
369
|
|
|
65
|
%
|
|
$
|
1,555
|
|
|
$
|
1,006
|
|
|
55
|
%
|
Percentage of revenue
|
19
|
%
|
|
18
|
%
|
|
|
|
18
|
%
|
|
19
|
%
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||
Marketing and sales
|
$
|
374
|
|
|
$
|
233
|
|
|
61%
|
|
$
|
1,055
|
|
|
$
|
704
|
|
|
50%
|
Percentage of revenue
|
12
|
%
|
|
12
|
%
|
|
|
|
12
|
%
|
|
13
|
%
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
General and administrative
|
$
|
259
|
|
|
$
|
171
|
|
|
51
|
%
|
|
$
|
643
|
|
|
$
|
520
|
|
|
24
|
%
|
Percentage of revenue
|
8
|
%
|
|
8
|
%
|
|
|
|
7
|
%
|
|
10
|
%
|
|
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
Interest income/(expense), net
|
$
|
4
|
|
|
$
|
(16
|
)
|
|
(125
|
)%
|
|
$
|
4
|
|
|
$
|
(35
|
)
|
|
(111
|
)%
|
Other income/(expense), net
|
(65
|
)
|
|
6
|
|
|
(1,183
|
)%
|
|
(69
|
)
|
|
(13
|
)
|
|
431
|
%
|
||||
Interest and other income/(expense), net
|
$
|
(61
|
)
|
|
$
|
(10
|
)
|
|
510
|
%
|
|
$
|
(65
|
)
|
|
$
|
(48
|
)
|
|
35
|
%
|
|
Three Months Ended September 30,
|
|
|
|
Nine Months Ended September 30,
|
|
|
||||||||||||||
|
2014
|
|
2013
|
|
% change
|
|
2014
|
|
2013
|
|
% change
|
||||||||||
|
(in millions, except for percentages)
|
||||||||||||||||||||
Provision for income taxes
|
$
|
530
|
|
|
$
|
301
|
|
|
76
|
%
|
|
$
|
1,557
|
|
|
$
|
647
|
|
|
141
|
%
|
Effective tax rate
|
40
|
%
|
|
41
|
%
|
|
|
|
41
|
%
|
|
40
|
%
|
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
users increasingly engage with other products or activities;
|
•
|
we fail to introduce new products that users find engaging or if we introduce new products or services that are not favorably received;
|
•
|
users feel that their Facebook experience is diminished as a result of the decisions we make with respect to the frequency, prominence, and size of ads that we display, or the quality of the ads displayed;
|
•
|
users have difficulty installing, updating, or otherwise accessing our products on mobile devices as a result of actions by us or third parties that we rely on to distribute our products and deliver our services;
|
•
|
user behavior on any of our products changes as a result of increasing use of mobile devices;
|
•
|
we are unable to continue to develop products for mobile devices that users find engaging, that work with a variety of mobile operating systems and networks, and that achieve a high level of market acceptance;
|
•
|
there are changes in user sentiment about the quality or usefulness of our products or concerns related to privacy and sharing, safety, security, or other factors;
|
•
|
we are unable to manage and prioritize information to ensure users are presented with content that is interesting, useful, and relevant to them;
|
•
|
users adopt new technologies where our products may be displaced in favor of other products or services, or may not be featured or otherwise available;
|
•
|
there are adverse changes in our products that are mandated by legislation, regulatory authorities, or litigation, including settlements or consent decrees;
|
•
|
technical or other problems prevent us from delivering our products in a rapid and reliable manner or otherwise affect the user experience, such as any failure to prevent spam or similar content;
|
•
|
we adopt policies or procedures related to areas such as sharing or user data that are perceived negatively by our users or the general public;
|
•
|
we elect to focus our user growth and engagement efforts more on longer-term initiatives, or if initiatives designed to attract and retain users and engagement are unsuccessful or discontinued, whether as a result of actions by us, third parties, or otherwise;
|
•
|
we fail to provide adequate customer service to users, marketers, or developers;
|
•
|
we, developers whose products are integrated with Facebook, or other companies in our industry are the subject of adverse media reports or other negative publicity; or
|
•
|
our current or future products, such as our development tools and application programming interfaces that enable developers to build mobile and web applications, reduce user activity on Facebook by making it easier for our users to interact and share on third-party mobile and web applications.
|
•
|
decreases in user engagement, including time spent on Facebook;
|
•
|
our ability to continue to increase user access to and engagement with Facebook through our mobile products;
|
•
|
product changes or inventory management decisions we may make that change the size, frequency, or relative prominence of ads displayed on Facebook or of other unpaid content shared by marketers on Facebook;
|
•
|
our inability to maintain or increase marketer demand, the pricing of our ads, or both;
|
•
|
differences between the pricing of our ads displayed on personal computers and mobile devices;
|
•
|
our inability to maintain or increase the quality of ads shown to users, particularly on mobile devices;
|
•
|
the availability, accuracy, and utility of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools;
|
•
|
decisions by marketers to use our free products, such as Facebook Pages, instead of advertising on Facebook;
|
•
|
loss of advertising market share to our competitors, including if prices for purchasing ads on Facebook increase or if competitors offer lower priced or more integrated products;
|
•
|
adverse legal developments relating to advertising, including legislative and regulatory developments and developments in litigation;
|
•
|
decisions by marketers to reduce their advertising as a result of adverse media reports or other negative publicity involving us, content on Facebook, developers with Facebook-integrated mobile and web applications, or other companies in our industry;
|
•
|
our inability to improve our existing products or create new products that sustain or increase the value of our ads or marketers' ability to analyze and measure the value of our ads;
|
•
|
the degree to which users opt out of social ads;
|
•
|
the degree to which users cease or reduce the number of times they click on our ads;
|
•
|
changes in the way advertising on personal computers or on mobile devices is measured or priced;
|
•
|
the impact of new technologies that could block or obscure the display of our ads; and
|
•
|
the impact of macroeconomic conditions or conditions in the advertising industry, in general.
|
•
|
the popularity, usefulness, ease of use, performance, and reliability of our products compared to our competitors' products, particularly with respect to mobile products;
|
•
|
the size and composition of our user base;
|
•
|
the engagement of our users with our products and competing products;
|
•
|
the timing and market acceptance of products, including developments and enhancements to our or our competitors' products;
|
•
|
our ability to monetize our products;
|
•
|
the frequency, size, quality, and relative prominence of the ads displayed by us or our competitors;
|
•
|
customer service and support efforts;
|
•
|
marketing and selling efforts, including our ability to provide marketers with a compelling return on their investments;
|
•
|
our ability to establish and maintain developers' interest in building mobile and web applications that integrate with Facebook;
|
•
|
changes mandated by legislation, regulatory authorities, or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;
|
•
|
acquisitions or consolidation within our industry, which may result in more formidable competitors;
|
•
|
our ability to attract, retain, and motivate talented employees, particularly software engineers, designers, and product managers;
|
•
|
our ability to cost-effectively manage and grow our operations; and
|
•
|
our reputation and brand strength relative to those of our competitors.
|
•
|
our ability to maintain and grow our user base and user engagement;
|
•
|
our ability to attract and retain marketers in a particular period;
|
•
|
fluctuations in spending by our marketers due to seasonality, such as historically strong spending in the fourth quarter of each year, or other factors;
|
•
|
the number and quality of ads shown to users;
|
•
|
the pricing of our ads and other products;
|
•
|
our ability to continue to scale monetization through our mobile products;
|
•
|
our ability to maintain or increase Payments and other fees revenue;
|
•
|
the diversification and growth of revenue sources beyond advertising and Payments;
|
•
|
the development and introduction of new products or services by us or our competitors;
|
•
|
increases in marketing, sales, and other operating expenses that we will incur to grow and expand our operations and to remain competitive;
|
•
|
our ability to maintain gross margins and operating margins;
|
•
|
costs related to the acquisitions of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and impairment loss;
|
•
|
our ability to obtain equipment and components for our data centers and other technical infrastructure in a timely and cost-effective manner;
|
•
|
system failures, which could prevent us from serving ads for any period of time, or breaches of security or privacy, and the costs associated with remediating any such failures or breaches;
|
•
|
inaccessibility of our products due to third-party actions;
|
•
|
share-based compensation expense, including acquisition-related expense;
|
•
|
adverse litigation judgments, settlements, or other litigation-related costs;
|
•
|
changes in the legislative or regulatory environment, including with respect to privacy, or enforcement by government regulators, including fines, orders, or consent decrees;
|
•
|
the overall tax rate for our business, which may be affected by a number of factors, including the financial results of our international subsidiaries and the timing, size, and integration of acquisitions we may make from time to time;
|
•
|
tax obligations that may arise from changes in laws or resolutions of tax examinations that materially differ from the amounts we have anticipated;
|
•
|
fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;
|
•
|
fluctuations in the market values of our portfolio investments and in interest rates;
|
•
|
changes in U.S. generally accepted accounting principles; and
|
•
|
changes in global business or macroeconomic conditions.
|
•
|
increased costs and diversion of management time and effort and other resources to deal with bad transactions or customer disputes;
|
•
|
potential fraudulent or otherwise illegal activity by users, developers, employees, or third parties;
|
•
|
restrictions on the investment of consumer funds used to transact Payments; and
|
•
|
additional disclosure and reporting requirements.
|
•
|
political, social, or economic instability;
|
•
|
risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy and tax and terrestrial infrastructure matters, and unexpected changes in laws, regulatory requirements, and enforcement;
|
•
|
potential damage to our brand and reputation due to compliance with local laws, including potential censorship or requirements to provide user information to local authorities;
|
•
|
fluctuations in currency exchange rates and compliance with currency controls;
|
•
|
higher levels of credit risk and payment fraud;
|
•
|
enhanced difficulties of integrating any foreign acquisitions;
|
•
|
burdens of complying with a variety of foreign laws;
|
•
|
reduced protection for intellectual property rights in some countries;
|
•
|
difficulties in staffing and managing global operations and the increased travel, infrastructure, and legal compliance costs associated with multiple international locations;
|
•
|
compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other jurisdictions; and
|
•
|
compliance with statutory equity requirements and management of tax consequences.
|
•
|
require repayment of any outstanding lease obligations or amounts drawn on our credit facility;
|
•
|
terminate our leasing arrangements and credit facilities;
|
•
|
terminate our access to the leased data centers and offices we utilize;
|
•
|
stop delivery of ordered equipment;
|
•
|
sell or require us to return our leased equipment; or
|
•
|
require us to pay significant damages.
|
•
|
actual or anticipated fluctuations in our revenue and other operating results;
|
•
|
the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
|
•
|
actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
|
•
|
additional shares of our Class A common stock being sold into the market by us, our existing stockholders, or in connection with acquisitions, including shares sold by our employees to cover tax liabilities in connection with RSU vesting events, or the anticipation of such sales;
|
•
|
investor sentiment with respect to our competitors, our business partners, and our industry in general;
|
•
|
announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
|
•
|
announcements by us or estimates by third parties of actual or anticipated changes in the size of our user base, the level of user engagement, or the effectiveness of our ad products;
|
•
|
changes in operating performance and stock market valuations of technology companies in our industry, including our developers and competitors;
|
•
|
price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
|
•
|
the inclusion or deletion of our Class A common stock from any trading indices, such as the S&P 500 Index;
|
•
|
media coverage of our business and financial performance;
|
•
|
lawsuits threatened or filed against us;
|
•
|
developments in anticipated or new legislation and pending lawsuits or regulatory actions, including interim or final
|
•
|
other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
|
•
|
until the first date on which the outstanding shares of our Class B common stock represent less than 35% of the combined voting power of our common stock, any transaction that would result in a change in control of our company requires the approval of a majority of our outstanding Class B common stock voting as a separate class;
|
•
|
we have a dual class common stock structure, which provides Mr. Zuckerberg with the ability to control the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares of our outstanding Class A and Class B common stock;
|
•
|
when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of common stock, certain amendments to our restated certificate of incorporation or bylaws will require the approval of two-thirds of the combined vote of our then-outstanding shares of Class A and Class B common stock;
|
•
|
when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders;
|
•
|
when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, our board of directors will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause;
|
•
|
when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, our stockholders will only be able to take action at a meeting of stockholders and not by written consent;
|
•
|
only our chairman, our chief executive officer, our president, or a majority of our board of directors are authorized to call a special meeting of stockholders;
|
•
|
advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders;
|
•
|
our restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, without stockholder approval; and
|
•
|
certain litigation against us can only be brought in Delaware.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
a)
|
Sales of Unregistered Securities
|
b)
|
Issuer Purchases of Equity Securities
The table below provides information with respect to repurchases of unvested shares of our Class A common stock.
|
Period
|
Total Number of Shares Purchased (1)
|
Weighted Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
July 1 – July 31, 2014
|
—
|
|
—
|
|
—
|
|
—
|
|
|
August 1 – August 31, 2014
|
70,484
|
|
$
|
0.000006
|
|
—
|
|
—
|
|
September 1 – September 30, 2014
|
—
|
|
—
|
|
—
|
|
—
|
|
Item 6.
|
Exhibits
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
|||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||
|
|
|
|
|
|
|
|||||||
2.1
|
|
Agreement and Plan of Merger and Reorganization, dated as of February 19, 2014, among the Registrant, Rhodium Acquisition Sub II, Inc., Rhodium Merger Sub, Inc., WhatsApp Inc., and Fortis Advisors LLC.
|
|
10-Q
|
|
001-35551
|
|
2.1
|
|
|
April 25, 2014
|
|
|
2.2
|
|
Amended and Restated Agreement and Plan of Merger, dated as of April 21, 2014, among the Registrant, Inception Acquisition Sub, Inc., Inception Acquisition Sub II, LLC, Oculus VR, Inc., and Shareholder Representative Services LLC.
|
|
10-Q
|
|
001-35551
|
|
2.2
|
|
|
April 25, 2014
|
|
|
4.1
|
|
Registration Rights Agreement, dated as of October 6, 2014, among the Registrant and the parties thereto.
|
|
S-3
|
|
333-199678
|
|
4.9
|
|
|
October 29, 2014
|
|
|
10.1
|
|
Offer Letter, dated as of October 6, 2014, between Registrant and Jan Koum.
|
|
|
|
|
|
|
|
|
|
X
|
|
10.2
|
|
Form of Non-Plan Restricted Stock Unit Award Notice and Award Agreement
|
|
S-8
|
|
333-199172
|
|
99.1
|
|
|
October 6, 2014
|
|
|
31.1
|
|
Certification of Mark Zuckerberg, Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
31.2
|
|
Certification of David M. Wehner, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
32.1#
|
|
Certification of Mark Zuckerberg, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
32.2#
|
|
Certification of David M. Wehner, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|||||||
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
FACEBOOK, INC.
|
|
|
|
Date: October 30, 2014
|
|
/s/ DAVID M. WEHNER
|
|
|
David M. Wehner
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
Date: October 30, 2014
|
|
/s/ JAS ATHWAL
|
|
|
Jas Athwal
Chief Accounting Officer
(Principal Accounting Officer)
|
Date: October 30, 2014
|
|
|
|
|
/s/ MARK ZUCKERBERG
|
|
|
Mark Zuckerberg
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
Date: October 30, 2014
|
|
|
|
|
/s/ DAVID M. WEHNER
|
|
|
David M. Wehner
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
•
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2014
(Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
Date: October 30, 2014
|
|
|
|
|
/s/ MARK ZUCKERBERG
|
|
|
Mark Zuckerberg
|
|
|
Chairman and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
•
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2014
(Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
|
Date: October 30, 2014
|
|
|
|
|
/s/ DAVID M. WEHNER
|
|
|
David M. Wehner
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|